MITCHELL ASSOCIATES, MUMBAI V. ITO WD 7(2), MUMBAI

ITA 6448/MUM/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3672 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 09-11-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 15-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Share purchase agreement

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI .. , ! ' ##, $ ' , % BEFORE SHRI R.S.SYAL, AM AND SHRI SANJAY GARG, JM ITA NO.6448/MUM/2009 : ASST.YEAR 1998-1999 M/S.MITCHELL ASSOCIATES F/12, EVEREST, 7 TH FLOOR 156 TARDEO ROAD MUMBAI 400 034. PAN : AAAFM7512K. THE INCOME TAX OFFICER WARD 16(1)(4) MUMBAI. ( &' / // / APPELLANT) ) ) ) ) / VS. ( *+&'/ RESPONDENT) &' , ,, , - - - - / APPELLANT BY : SHRI K.GOPAL *+&' , - , - , - , - / RESPONDENT BY : SHRI MOHIT JAIN ) , .! / / / / DATE OF HEARING : 06.05.2013 /01 , .! / DATE OF PRONOUNCEMENT : 08.05.2013 '2 '2 '2 '2 / / / / O R D E R PER R.S.SYAL ( AM) : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 06.1 0.2009 IN RELATION TO THE ASSESSMENT YEAR 1998-1999. IT IS A RECALLED MATTER INASMUCH AS THE EARLIER ORDER PASSED U/S 254(1) ON 21.12.2011 IN ITA NO.6448/MUM/2009 CAME TO BE RECALLED FOR VERIFICATI ON OF CERTAIN DETAILS AND EVIDENCE AS PER THE LATTER ORDER DATED 20.02.2013 IN MA NO.306/MUM/2012. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE CLAIMED LONG TERM CAPITAL GAIN OF ` 7.11 LAKH IN ITS RETURN OF INCOME AS EXEMPT U/S 54EA OF THE ACT. THE ASSESSEE STATED THAT IT PU RCHASED 1500 SHARES OF M/S.BABA BUSINESS SERVICES LIMITED ON 20. 04.1995 WHOSE ITA NO.6448/MUM/2009. M/S.MITCHELL ASSOCIATES. 2 NAME WAS SUBSEQUENTLY CHANGED TO M/S.VATSA MUSIC LI MITED FROM 07.01.1997. THE ASSESSEE DECLARED THE SAID INVESTME NT IN SHARES UNDER VDIS ON 16.12.1997 WHICH WAS ACCEPTED BY THE CIT VIDE CERTIFICATE DATED 31.12.1997. THE ASSESSEE SOLD THE SHARES ON 08.01.1998 AT THE RATE OF ` 484 PER SHARE THROUGH M/S.SANGHI CORPORATE SERVICES LIMITED, A SHARE BROKING FIRM. T HE A.O. DISALLOWED THE LONG TERM CAPITAL GAIN AND HELD THE AMOUNT AS INCOME FROM UNDISCLOSED SOURCES. THE LEARNED CIT(A) UPHELD THE ASSESSMENT ORDER. IN APPEAL BEFORE THE TRIBUNAL IN THE FIRST ROUND, THE ASSESSEE SUBMITTED THAT IT DELIVERED THE SHARES AND RECEIVED THE PAYME NT FOR SHARES BY ACCOUNT PAYEE CHEQUE. THE SALE ASPECT OF THE SHARES WAS ALSO CLAIMED TO BE NOT DISPUTED. THE TRIBUNAL VIDE ITS ORDER DAT ED 21.12.2011 PARTLY ACCEPTED THE ASSESSEES CONTENTION BY HOLDIN G THAT THE TRANSACTION OF SALE OF SHARES WAS CORRECT. HOWEVER, THE TRANSACTION OF PURCHASE OF SHARES WAS ALSO ACCEPTED BUT THE DATE O F SHARES WAS TAKEN AS THE DATE OF VDS CERTIFICATE. THIS RESULTED INTO DETERMINATION OF SHORT TERM CAPITAL GAIN BY CONSIDERING THE DATE OF PURCHASE OF SHARES AS 16.12.1997 AND DATE OF SALE AS 08.01.1998. IN TH E OPINION OF THE TRIBUNAL, THE ASSESSEE HAD FAILED TO PROVE THAT TH E SHARES WERE PURCHASED ON 20.04.1995. THE ASSESSEE FILED MISCELL ANEOUS APPLICATION AGAINST THIS ORDER RELYING INTER ALIA ON BROKERS NOTE DATED 04.05.1995 AND LETTER DATED 15.05.1995 TO THE SHARE REGISTRAR FOR TRANSFER OF SHARES AND LETTER FROM THE REGISTRA R REGARDING THE DELIVERY OF SHARE CERTIFICATE. IT WAS CONTENDED THA T THESE DOCUMENTS ITA NO.6448/MUM/2009. M/S.MITCHELL ASSOCIATES. 3 AMPLY PROVED THAT THE SHARES WERE PURCHASED IN 1995 AND NOT DECEMBER 1997 AS CONSIDERED BY THE TRIBUNAL. IT WAS ALSO SUBMITTED THAT THE CBDT CIRCULAR NO.754 DATED 10.06.1997 MAND ATES THAT THE DATE OF ACQUISITION OF ASSETS UNDER VDIS CANNOT BE CHANGED. CONSIDERING THESE SUBMISSIONS, THE TRIBUNAL RECALL ED THE ORDER BY MENTIONING IN PARA 4.1 AS UNDER :- SINCE THE EVIDENCE AS WELL AS THE CBDT CIRCULAR WH ICH REMAIN TO BE CONSIDERED ARE RELEVANT AND CRUCIAL MATERIAL IN DECIDING THE ISSUE INVOLVED IN THE APPE AL OF THE ASSESSEE; THEREFORE, A MISTAKE HAS CREPT ON REC ORD WHICH REQUIRES TO BE RECTIFIED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. THE CONTROVERSY BEFORE US REVOL VES AROUND THE DETERMINATION OF DATE OF PURCHASE OF 1500 SHARES OF M/S.BABA BUSINESS SERVICES LIMITED, WHICH THE ASSESSEE CLAIM ED TO HAVE PURCHASED ON 20.04.2005. IN THIS REGARD, PAGE NO. 44 OF THE PAPER BOOK IS RELEVANT WHICH IS A COPY OF PURCHASE BILL D ATED 04.05.1995 FROM M/S.PRAVIN RAIYANI. THIS BILL INDICATES QUANTI TY OF 1500 SHARES WITH THE NAME OF COMPANY AS `BABA BUSINESS. THE SH ARE CERTIFICATE NUMBER AS WELL AS DISTINCTIVE NUMBER OF THE SHARES ARE ALSO MENTIONED ON THIS PAGE. PAGE 45 IS THE ASSESSEES LETTER DATE D 15.05.1995 TO THE REGISTRARS OF BABA FINANCE SERVICES PRIVATE LIMITED SENDING THE ABOVE REFERRED SHARE CERTIFICATES WITH A REQUEST TO TRANSFER THEM IN ASSESSEES NAME. PAGE 46 IS THE RETURN LETTER DATED 01.10.1995 FROM THE REGISTRAR OF THE COMPANY SENDING THE SHARES DUL Y TRANSFERRED IN ITA NO.6448/MUM/2009. M/S.MITCHELL ASSOCIATES. 4 ASSESSEES NAME. PAGES 48 TO 77 ARE COPIES OF SHARE CERTIFICATES. FROM THE BACK SIDE OF THESE SHARE CERTIFICATES, IT CAN B E EASILY NOTICED THAT THE NAME OF THE ASSESSEE HAS BEEN ENDORSED AS `TRAN SFEREE WITH THE DATE OF TRANSFER ON 01.10.1995. THE ASSESSEE FILED ITS DECLARATION UNDER VDIS, A COPY OF WHICH IS PLACED ON PAGES 19 T O 21 OF THE PAPER BOOK. IN THIS DECLARATION, THE ASSESSEE CLEARLY DEC LARED INCOME OF ` 6300 TOWARDS 1500 SHARES OF BABA BUSINESS SERVICES LIMITED (NOW KNOWN AS M/S.VATSA MUSIC LIMITED). IT IS ON THE BAS IS OF THIS DECLARATION THAT THE CERTIFICATE U/S 68(2) OF VDIS 1997 ACCEPTING THE DECLARATION INTER ALIA IN RESPECT OF THESE SHARES WAS ISSUED. THE CORRECTNESS OF THIS CERTIFICATE IS NOT IN DISPUTE. THE ABOVE DISCUSSED FACTS ABUNDANTLY PROVE THAT THE ASSESSEE PURCHASED THESE SHARES IN 1995 WHICH WERE DECLARED UNDER VDIS IN 1997. SUCH D ECLARATION WAS APPROVED BY THE DEPARTMENT AND CERTIFICATE ISSUED. UNDER SUCH CIRCUMSTANCES THERE REMAINS NO DOUBT WHATSOEVER THA T THE SHARES WERE PURCHASED IN 1995 AS CLAIMED BY THE ASSESSEE AND NOT 1997. ONCE THE DATE OF PURCHASE IS ACCEPTED AS CORRECTLY STATED BY THE ASSESSEE IN ITS RETURN OF INCOME, THERE CAN BE NO C ASE OF CONVERTING LONG TERM CAPITAL GAIN INTO INCOME FROM UNDISCLOSED SOURCES BECAUSE THE SALES ASPECT OF THE ASSESSEE HAS ALREADY BEEN A CCEPTED. WE, THEREFORE, UPHOLD THE ASSESSEES CLAIM IN THIS REGA RD. 4. 3 .4 5 . 6 , . 78 IN THE RESULT, THE APPEAL IS ALLOWED. ITA NO.6448/MUM/2009. M/S.MITCHELL ASSOCIATES. 5 ORDER PRONOUNCED ON THIS 08 TH DAY OF MAY, 2013. '2 , /01 9')4 0 , # SD/- SD/- (SANJAY GARG) (R.S.SYAL) $ ' $ ' $ ' $ ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; 9') DATED : 08 TH MAY, 2013. DEVDAS* '2 , *$.:; <;1. '2 , *$.:; <;1. '2 , *$.:; <;1. '2 , *$.:; <;1./ COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. *+&' / THE RESPONDENT. 3. = () / THE CIT, MUMBAI. 4. = / CIT(A)-27 , MUMBAI 5. ;@# *$.$) , , / DR, ITAT, MUMBAI 6. #A B / GUARD FILE. '2) '2) '2) '2) / BY ORDER, +;. *$. //TRUE COPY// C C C C/ // /7 7 7 7 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI