Appeal details
Counselvise Citation
[2019] 112 COUNSELVISE.COM (IT) 1408 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
8 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-12-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
12-12-2019
Assessment Year
2015-2016
Appeal Filed On
02-04-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO. 6 4 9/BANG/201 9 ASSESSMENT YEAR : 201 5 - 1 6 SHRI RAMESHCHAND KOTHARI, HUF NO.39, 1 ST ANJANEYA TEMP LE, SHESHADRIPURAM, BANGALORE 560 020. PAN: ACZPK7883N VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, WARD 2 ( 2 ) (1), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI G.S PRASHANTH, CA REVENUE BY : SHRI K.N.DHANDAPANI, ADDL.CIT DATE OF HEA RING : 12 - 12 - 2019 DATE OF PRONOUNCEMENT : 13 - 12 - 2019 O R D E R PER SMT. BEENA PILLAI, JUDICIAL MEMBER 1. PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 31/01/19 PASSED BY LD. CIT (A) - 2, BANGALORE FOR ASSESSMENT YEAR 2015 - 16 . 2. BRIEF FACTS OF THE CASE ARE AS UNDER: PAGE 2 OF 6 ITA NO. 64 9/BANG/201 9 ASSESSEE IS A HUF AND FILED HIS RETURN OF INCOME FOR YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS. 12,84,670/ - . LD.AO OBSERVED THAT ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 10(38) AMOUNTING TO RS.1,16,85,790/ - TOWARDS SALE OF EQUITY SHARES. THE CASE WAS SELECTED FOR SCRUTINY TO VERIFY THE SUSPICIONS LONG TERM CAPITAL GAINS ON SHARES IN PURSUANCE TO THE INPUTS FROM INVESTIGATION WING. 2.1. LD.AO OBSERVED THAT, DURING THE YEAR ASSESSEE SOLD 2 5 ,000 SHARES OF M/S SUNRISE ASIAN LTD., AT RS.492/ - PER SHARE . ASSESSEE UPON BEING QU A R RIED BY LD.AO SUBMITTED THAT ORIGINALLY ASSESSEE BOUGHT 25,000 SHARES OF M/S CONART TRADERS LTD., FOR A PRICE OF RS.20/ - EACH ON TO NOVEMBER 2011 THROUGH M/S SANTOSHIMA TRADE LINKS LTD . IT HAS BEEN SUBMI TTED THAT, THIS COMPANY SUBSEQUENTLY MERGED INTO M/S.SUNRISE ASIAN LTD., AND SHARES OF TRANSFEREE COMPANY BEING M/S.SUNRISE ASIAN LTD., WERE ALLOTTED TO ASSESSEE. ASSESSEE SUBMITTED THAT THESE SHARES WERE IN PHYSICAL FORM AND ASSESSEE GOT THE SAME DEMATERI ALISED AND WAS SOLD DURING THE YEAR UNDER CONSIDERATION. ASSESSEE SUBMITTED BEFORE LD.AO THAT TRANSACTION OF SALE WAS DONE THROUGH RECOGNISED STOCK EXCHANGE OPENLY, AND HE WAS UNAWARE OF THE SCRIP BEING A PENNY STOCK COMPANY. 2.2. IT HAS BEEN SUBMITTED TH AT ASSESSING OFFICER CONCLUDED THE ASSESSMENT BY HOLDING THAT THE TRANSACTION IN THE SHARE PRICE OF M/S SUNRISE ASIAN LTD IS NOT OWING TO COMMERCIAL PRINCIPLES AND MARKET FACTORS AND THAT ASSESSEE RESORTED TO A PRECONCEIVED SCHEME TO PROCURE LONG TERM CAPI TAL GAINS BY WAY OF PRICE DIFFERENCE IN PAGE 3 OF 6 ITA NO. 64 9/BANG/201 9 SHARE TRANSACTIONS. LD.AO ALSO HELD THAT ASSESSEE DID NOT DISCHARGE HIS ONUS OF PROVING THE RISE IN SHARE PRICE TO BE NATURAL AND BASED ON MARKET FORCES, AND, IN VIEW OF ORDER OF SEBI FINDING THAT COMPANY SUNRISE ASI AN LTD., WAS INVOLVED IN PROVIDING BOGUS LONG TERM CAPITAL GAINS, CLAIM OF EXEMPTION OF LONG TERM CAPITAL GAINS EARNED BY ASSESSEE WAS DENIED. 3. ON APPEAL BEFORE LD.CIT (A), OBSERVATIONS AND FINDINGS BY LD.AO WERE UPHELD. 4. AGGRIEVED BY ORDER OF LD. CIT (A) ASSESSEE IS IN APPEAL BEFORE US. 4.1. AT THE OUTSET ASSESSEE, RAISED CLAIM TO CROSS EXAMINE PERSONS WHOSE STATEMENTS WERE USED AGAINST ASSESSEE TO WHICH LD.AO HAS REFERRED TO IN ASSESSMENT ORDER. IN SUPPORT, LD.AR PLACED RELIANCE UPON DECISION OF HONB LE KARNATAKA HIGH COURT IN CASE OF CHANDRA DEVI KOTHARI VS ITO IN WRIT PETITION NO. 39370/2014 DATED 02/02/2015 , WHEREIN MATTER WAS RESTORED BACK TO FILE OF AO FOR FRESH DECISION AFTER PROVIDING COPY OF STATEMENT AND OTHER RELATED DETAILS RELIED UPON BY LD .AO. IT HAS BEEN SUBMITTED BY LD.AR THAT ON IDENTICAL FACTS AND IN RESPECT OF SAME SCRIPT THIS TRIBUNAL IN CASE OF INDIVIDUAL SET ASIDE THIS ISSUE TOO LD.AO VIDE ORDER DATED 28/08/19 IN ITA NO. 699/B/2019 FOR ASSESSMENT YEAR 2014 - 1 5 . LD.SR.DR ON THE CONTRA RY FILED WRITTEN SUBMISSION STATING THAT ASSESSEES CLAIM OF GENUINENESS IS MERELY CONFINED TO THE ACT THAT THE SHARES WERE SOLD THROUGH RECOGNISED STOCK EXCHANGE AND PAYMENT/RECEIPT OF CONSIDERATION WAS THROUGH BANKING CHANNELS. HE SUBMITTED THAT THESE TR ANSACTIONS ARE TAILOR MADE AND WHEN THE CIRCUMSTANTIAL EVIDENCE POINT ON AN OPPOSITE DIRECTION THE CLAIM IS PAGE 4 OF 6 ITA NO. 64 9/BANG/201 9 PROVEN TO BE ILLEGITIMATE. LD.SR.DR PLACED RELIANCE UPON ORDER DATED 17/09/19 PASSED BY HONBLE DELHI HIGH COURT IN CASE OF SUMAN PODDAR VS ITO IN I TA NO. 841/2019 . WE HAVE PERUSED DECISION OF HON BLE DELHI HIGH COURT , WHEREIN ASSESSEE RAISED PLEA REGARDING FAILURE TO ACCORD OPPORTUNITY OF CROSS EXAMINATION, FOR WHICH HONBLE COURT RELIED ON JUDGMENT IN CASE OF PREM CASTINGS PVT.LTD. VS.CIT PASSED B Y HONBLE ALLAHABAD HIGH COURT REPORTED IN 88 TAXMANN.COM 189 , AGAINST WHICH, SLP FILED BEFORE HONBLE SUPREME COURT HAS BEEN DISMISSED. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 5. WE ARE CONSCIOUS OF PRINCIP LE LAID DOWN BY HONBLE SUPREME COURT AS WELL AS VARIOUS HIGH COURTS THAT , WITHOUT OPPORTUNITY O F CROSS - EXAMINATION, SUCH STATEMENTS CANNOT BE RELIED UPON AGAINST ANY PERSON . HOWEVER, SUCH RIGHT, AS HELD IN VARIOUS DECISIONS BY HONBLE SUPREME COURT , IS N OT AN ABSOLUTE RIGHT AND DEPENDS ON CIRCUMSTANCES OF THE CASE AND THE STATUTE CONCERNED , AS HELD IN STATE OF J&K VS. BAKSHI GULAM MOHD. AIR 1967 (SC) 122 , AND NATH INTERNATIONAL SALES VS. UOI REPORTED IN AIR 1992 DEL 295 . SIMILAR IS THE VIEW TAKEN BY HONB LE ALLAHABAD HIGH COURT IN CASE OF IN CASE OF PREM CASTINGS PVT.LTD. VS.CIT (SUPRA). AT THIS JUNCTURE WE REFERRED TO DECISION OF T. DEVASAHAYA NADAR V. CIT REPORTED IN (1964) 51 ITR 20 (MAD) , WHEREIN , IT HAS BEEN HELD THAT ; 'IT IS NOT AN UNIVERSAL RULE TH AT ANY EVIDENCE UPON WHICH THE DEPARTMENT MAY RELY SHOULD HAVE BEEN SUBJECTED TO CROSS - EXAMINATION, IF THE ASSESSING OFFICER REFUSES TO PRODUCE AN INFORMANT PAGE 5 OF 6 ITA NO. 64 9/BANG/201 9 FOR CROSS - EXAMINATION BY THE ASSESSEE THERE CANNOT BE ANY VIOLATION OF NATURAL JUSTICE. 6. FURTHE R I N CASE OF GTC INDUSTRIES LTD. V. ASSTT. CIT REPORTED IN (1998) 60 TTJ (BOM - TRIB) 308 , IT HAS BEEN HELD THAT , WHERE STATEMENT AND REPOR T OF THIRD PARTIES ARE ONLY SECONDARY AND SUBORDINATE MATERIAL WHICH WERE USED TO BUTTRESS THE MAIN MATTER CONNECTED W ITH THE QUANTUM OF ADDITION, DENIAL OF OPPORTUNITY TO CROSS EXAMINE THIRD PARTIES DID NOT AMOUNT TO VIOLATION OF NATURAL JUSTICE. EACH CASE HAS GOT TO BE DECIDED ON FACTS AND CIRCUMSTANCES OF THAT CASE. THUS IN OUR CONSIDERED OPINION, RELEVANT FACTORS TO B E CONSIDERED ARE SURROUNDING CIRCUMSTANCES, OBJECTIVE FACTS, EVIDENCE ADDUCED, PRESUMPTION OF FACTS BASED ON COMMON HUMAN EXPERIENCE IN LIFE AND REASONABLE CONCLUSIONS. 7. IN PRESENT FACTS OF THE CASE IT IS FURTHER OBSERVED THAT LD. AO HAS NOT EXAMINED/C ALLED FOR ANY EVIDENCES IN RESPECT OF PURCHASE/SALE OF ALLEGED SCRIPTS. ASSESSEE IS THEREFORE DIRECTED TO PROVIDE ALL RELEVANT DOCUMENTS TO ESTABLISH SOUND FINANCIAL OF ALLEDGED COMPANIES AND THAT FLUCTUATION IN PRICE WAS MARKET DRIVEN. LD.AO SHALL TAKE AL L EVIDENCES INTO CONSIDERATION AND THEN DECIDE THE ISSUE AS PER LAW. IN THE EVENT DE HORS STATEMENT, THERE ARE OVERWHELMING EVIDENCES AND ASSESSEE IS UNABLE TO ESTABLISH GENUINENESS OF SALE AND PURCHASE OF ALLEDGED SCRIPTS, ADVERSE VIEW WOULD BE TAKEN BY HOLDING THE TRANSACTION TO BE SHAM . 8. LD.AO IS DIRECTED TO PROVIDE ALL STATEMENTS RECORDED BY INVESTIGATION WING TO ASSESSEE, REFERRED TO IN ASSESSMENT ORDER. IN PAGE 6 OF 6 ITA NO. 64 9/BANG/201 9 THE EVENT, STATEMENTS RECORDED ARE NOT OF SECONDARY AND SUBORDINATE CATEGORY, CROSS EXAMINATI ON HAS TO BE GRANTED TO ASSESSEE. LD.AO IS DIRECTED TO RE - EXAMINE THE CASE OF ASSESSEE IN THE LIGHT OF AFORESTATED DIRECTION IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT PROPER OPPORTUNITY SHALL BE GRANTED TO ASSESSEE TO REPRESENT ITS CASE AS PER. ACCORDIN GLY WE ALLOW GROUND RAISED BY ASSESSEE ON PRELIMINARY LEGAL ISSUE. IN THE RESULT ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON ( A.K. GARODIA ) (BEENA PILLAI) ACCOUNTANT M EMBER JUDICIAL MEMBER BANGALORE, DATED AM* COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.
