Mrs. Rekha Jain, Delhi V. ITO, New Delhi

ITA 6632/DEL/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6973 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 09-05-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 14-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY VARMA
• Assessee Lawyers: DH K SAMPATH
• Section: 143(3); 133(6); 131

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI I.C.SUDHIR , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 6632/DEL/2015 (ASSESSMENT YEAR: 2004 - 05 ) REKHA JAIN, 4782/1, 23 ANSARI ROAD, DARYA GANJ, DELHI PAN:AAGPJ0550J VS. ITO, WARD - 30 (2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : DH. K. SAMPATH AND SH. RAJKUMAR, ADV REVENUE BY: SH. VIJAY VARMA, CIT DR DATE OF HEARING 12/05/ 2016 DATE OF PRONOUNCEMENT 08 / 07 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 35, NEW DELHI DATED 16.10.2015 FOR THE ASSESSMENT YEAR 2004 - 05. 2. THE ASSESSEE HAS RAISED THE FLOWING GROUNDS OF APPEAL: - 1. PASSING ORDER U/S 143(3) R.W.S. 254 OF THE INCOME - TAX ACT, 1961 AT AN INCOME OF RS. 1, 73,1307 - AGAINST RETURNED INCOME OF RS. 1,35,300/ - . THE ASSESSMENT ORDER WAS PASSED IN CONTRAVENTION OF DIRECTIONS ISSUED BY THE HON'BLE LTAT; 2. TREATING THE SHORT TERM CAPITAL GAINS AS DECLARE D AS INCOME FROM OTHER SOURCES 3. NOT ALLOWING SET OFF OF LOSS UNDER THE HEAD 'SHORT TERM CAPITAL GAIN' IN A SUM OF RS.29.710/ - . 3. THE BRIEF FACTS OF THE CASE IS THAT ORIGINAL ASSESSMENT IN THE CASE WAS PASSED ON 12.12.2007 WHEREIN, TOTAL RECEIPTS FROM SJ CAPITAL LTD. WAS CONSIDERED AS INCOME AS INCOME FROM OTHER SOURCES. THE MATTER REACHED TO THE ITAT AND SAME WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. THE LD ASSESSING OFFICER VIDE ORDER DATED 29.12.2009 ONCE AGAIN ASSESSED THE ABOVE INCO ME AS INCOME FROM OTHER SOURCES. THE MATTER WENT ONCE AGAIN BEFORE ITAT AND ISSUE WAS DECIDED VIDE ORDER DATED 14.10.2011 SETTING ASIDE THE ISSUE ONCE AGAIN TO THE FILE OF ASSESSING OFFICER. SUBSEQUENTLY, VIDE ORDER DATED 23.03.2013 THE INCOME WAS ONCE AGAIN TAXED AS INCOM E FROM OTHER SOURCES HOLDING THAT TRANSACTION SHOWN THROUGH SJ CAPITAL LTD ARE BOGUS AND ARE PAGE 2 OF 4 ONLY ACCOMMODATION ENTRY. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT ( A), WHO IN TURN UPHELD THE ORDER OF THE LD ASSESSING OFFICER AND THEREFORE REVENUE IS IN APPEAL BEFORE US. 4. THE LD AR SUBMITTED THAT THE ORDER U/S 143(3) WAS PASSED BY THE ASSESSING OFFICER DISREGARDING THE DIRECTION ITAT AND TREATED SHORT TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES. HE FURTHER SUBMITTED THAT A SET OF LOSSES OF RS. 29710 / - WAS ALSO NOT ALLOWED. HE FURTHER SUBMITTED THAT WHEN COPY OF THE BILL OF THE SALE BROKER IS PROVIDED WHEREIN, THE SEBI REGISTRATION CODE AND DELHI STOCK EXCHANGE CODE ARE PROVIDED THE SAME CANNOT BE CHARGED TO TAX UNDER THE INCOME FROM OTHER SOURCES. HE FURTHER SUBMITTED THAT SCRIPT - WISE DETAIL WAS ALSO PROVIDED. THEREFORE THESE TRANSACTIONS ARE ON ACCOUNT OF SHARES. HE FURTHER STATED THAT MERELY THE SUMMONS ISSUED TO THE SHARE BROKER RETURNED BACK UNSERVED IT DOES NOT SHOW THAT THE TRANSACTIONS ARE BOGUS. 5. AGAINST THIS THE LD DR RELIED ON THE ORDER LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THAT IN FACT SHE HAS ENTERED INTO ANY SHARE TRANSACTIONS AND THEREFORE THE INCOME IS RIGHTLY HELD AS INCOME FROM OTHER SOURCES. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE ASSESSEE HAS PRODUCED THE BILLS OF THE BROKER WHICH SHOWS THAT SUCH BROKER IS REGISTERED UNDER DELHI STOCK EXCHANGE AND ALSO REGISTERED WITH SEBI. ACCORDING TO THOSE BILLS ASSESSEE HAS PURCHASED AND SOLD CER TAIN SHARES AND HAS EARNED PROFIT TO THE TUNE OF RS. 121650/ - . ON ENQUIRY THE DELHI STOCK EXCHANGE HAS STATED THAT NO SUCH TRANSACTIONS HAVE BEEN ENTERED INTO ON THOSE DAYS AND IN THOSE SCRIPTS. HOWEVER, IT IS APPARENT THAT THE BROKER IS REGISTERED WITH DE LHI STOCK EXCHANGE AND ALSO IS REGISTERED MEMBER OF SEBI. THIS FACT HAS NEITHER BEEN DENIED BY THE STOCK EXCHANGE NOR ANY ADVERSE MATERIAL WAS FOUND BY THE ASSESSING OFFICER. REGARDING EXAMINATION OF THE BROKER IT IS NOT CLEAR WHETHER SUMMONS WERE ISSUED T O THE BROKER U/S 131 OR ENQUIRY LETTER WAS SENT U/S 133(6) OF THE ACT. THIS CONTRADICTION IS APPARENT ON READING PARA NO. 4 OF THE ASSESSMENT ORDER AND PARA 4.7 OF THE LD CIT(A)S ORDER. THE TRANSACTION WERE ENTERED INTO BY THE ASSESSEE IN APRIL 2003 WHERE AS THE SET ASIDE ASSESSMENT PROCEEDINGS WERE CARRIED ON IN 2013, THEREFORE IT MAY BE POSSIBLE THAT OVER A PERIOD OF 10 YEARS HAVE ELAPSED BETWEEN THE DATE OF TRANSACTION AND THE DATE OF ENQUIRY. IN SUCH A LONG PAGE 3 OF 4 PERIOD IT MAY HAPPED THAT SUCH BROKER MIGHT HA VE TRANSFERRED HIS ADDRESSES, HOWEVER, THE ASSESSEE HAS SUBMITTED THE SEBI REGISTRATION CERTIFICATE, CERTIFICATE OF INCORPORATION AND CERTIFICATE OF COMMENCEMENT OF BUSINESS AS WELL AS THE COPY OF PERMANENT A/C NO. OF THE BROKER. FURTHER THE RETURN OF INCO ME OF THE BROKER FOR AY 2002 - 03 WAS ALSO FURNISHED. IN VIEW OF THIS IT IS APPARENT THAT SUCH BROKER DOES EXIST ON THE RECORD OF THE REVENUE. IT IS ALSO APPARENT THAT VIDE LETTER DATED 14.12.2009 THE BROKER HAS RESPONDED TO THE LETTER OF ASSESSING OFFICER. FURTHER, THE OBSERVATION OF THE LD CIT(A) THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE WITH MATERIAL EVIDENCE THAT THE BROKER DOES NOT EXIST IS DEVOID OF ANY MERIT IN VIEW OF THE SUCH OVERWHELMING EVIDENCE SUBMITTED ABOUT THE IDENTITY OF THE BROKER. HOWEVER, O N PERUSAL OF THE BILLS SUBMITTED BY THE ASSESSEE BEFORE US IT IS APPARENT THAT THOSE BILLS ARE NOT TIME AND DATE STAMP BUT MERELY THAT FACT CANNOT LEAD TO A CONCLUSION THAT ASSESSEE HAS NOT PURCHASES AND SOLD THOSE SHARES. IT CAN ALSO BE AN OFF MARKET VALU E THOUGH MAY NOT BE PERMITTED AS PER SEBI ACT BUT CERTAINLY IS A TRANSACTION IN SHARE. THE LD ASSESSING OFFICER HAS FAILED TO MAKE ANY ENQUIRY WITH THE SEBI OF THE BROKER THAT WHETHER TRANSACTIONS ARE PERMITTED AS PER SECURITIES CONTRACT REGULATION ACT OR NOT. THE BILLS PRODUCED BY THE ASSESSEE CANNOT BE DISCARDED. IN VIEW OF THE FACT THAT THE ENQUIRY MADE BY THE ASSESSING OFFICER IS HALF HEARTED EVEN AFTER THE SETTING ASIDE THE ISSUE TWICE TO THE FILE OF THE ASSESSING OFFICER. THE TREATMENT OF SHORT - TERM C APITAL GAIN ON SALE OF SHARES CANNOT BE TREATED AS INCOME FROM OTHER SOURCES. FURTHER, THE SIMILAR ADDITIONS WERE MADE IN THE HANDS OF THE RELATIVE OF THE ASSESSEE WERE ALSO NOT BROUGHT ON RECORD. THE REQUISITE DIRECTION ISSUED BY THE ITAT VIDE ORDER DATED 14.10.2011 WAS ALSO NOT COMPLIED FULLY. FURTHERMORE, IN THE HANDS OF THE MOTHER - IN - LAW OF THE ASSESSEE COORDINATE BENCH IN ITA NO. 2751 AND 2752/DEL/2008 DATED 12.06.2009 HAS ALREADY DECLINED TO DECIDE THE ISSUE AS IT WILL NOT HAVE ANY TAX IMPACT. IN VIEW OF THIS WE AGREE WITH THE VIEW OF THE COORDINATE BENCH IF THE INCOME IS EITHER ASSESSED UNDER INCOME FROM OTHER SOURCES OR AS SHORT TERM CAPITAL GAIN WILL NOT HAVE ANY TAX IMPACT. IN VIEW OF THIS WE ALLOW THE APPEAL OF THE ASSESSEE HOLDING THAT THE SUM OF RS. 121650/ - IS CHARGEABLE TO TAX AS SHORT TERM CAPITAL GAIN AND NOT AS INCOME FROM OTHER SOURCES. CONSEQUENTLY, THE ASSESSEE IS ALSO ENTITLED TO LOSS UNDER THE HEAD SHORT TERM CAPITAL GAIN OF RS. 29710/ - . PAGE 4 OF 4 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 8 / 07 /2016 . - S D / - - S D / - ( I.C.SUDHIR ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 8 / 07 / 2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI