VISHAL DEEPAK SHAH, MUMBAI V. ACIT-14(1), MUMBAI

ITA 6720/MUM/2008

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2425 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 21-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 21-11-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K DHANDIAL
• Keywords: Share purchase agreement; Opportunity of being heard; Principle of natural justice

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN, AM AND PAWAN SINGH, JM ./ I.T.A. NO . 6720 / MUM/20 08 ( / ASSESSMENT YEA R : 200 4 - 05 ) VISHAL DEEPAK SHAH , 22, DARU MAHAL, 5 TH FLOOR, 84, MARINT DRIVE, F ROAD, MUMBAI - 400002 / VS. ASSTT. COMMISSIONER OF INCOME T AX, 14(1), EARNEST HOUSE, NARIMAN POINT, MUMBAI - 400021 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AOQPS9892A / APPELLANT BY SHRI RAJESH SHAH / RESPONDENT BY SHRI A K DHANDIAL / DATE OF HEARING : 16.11. 201 5 / DATE OF PRONOUNCEMENT: 16 .11. 2 01 5 / O R D E R P ER B R BASKARAN, AM : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 22.9.2008 PASSED BY THE LD.CIT(A) - 14, MUMBAI FOR THE ASSESSMENT YEAR 2004 - 05. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN HOLDING THAT THE CAPITAL GAIN ARISING ON SALE OF SHARES IS ASSESSABLE AS SHORT TERM CAPITAL GAINS(STCG) , AS AGAINST THE CLAIM OF THE ASSESSEE THAT IT SHOULD BE ASSESSED AS LONG TERM CAPITAL GAINS (LTCG). 3. WE HEARD THE PARTIES AND PERUSED T HE RECORD. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD 20000 SHARES OF BLUE CHIP INDIA LTD AND 20234 SHARES TO AMLUCKIE INVESTMENT CO.LTD. THE ASSESSEE HAD CLAIMED THAT SHARES OF M/S BLUE CHIP INDIA LTD WERE PURCHASED ITA NO. 6720 / MUM/2 008 2 THROUGH M/S PRINCE SEC URITIES IN THE MONTH OF APRIL , 2002. SIMILARLY, THE SHARES O F AMLUCKIE INVESTMENT CO.LTD. WERE CLAIMED TO HAVE BEEN PURCHASED FROM M/S PRAKASH NAHATA AND CO. IN THE MONTH OF JULY, 2002. ALL THESE ABOVE SAID SHARES HAVE BEEN SOLD THROUGH M/ S PRAKASH NAHA TA AND CO. DURING THE MONTHS OF SEPTEMBER, 2003 TO NOVEMBER, 2003. SINCE THE SHARES WERE CLAIMED TO HAVE BEEN HELD FOR MORE THAN 12 MONTHS, THE ASSESSEE COMPUTED LONG TERM CAPITAL GAINS ON SALE OF ABOVE SAID SHARES. THE AO DID NOT ACCEPT THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES AND ACCORDINGLY , ASSESSE D SALE CONSIDERATION AS INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. ALTERNATIVELY , THE AO HELD THAT THE ASSESSEE COULD NOT PROVE THE DATE OF PURCHASE OF SHARES AS THE DATE S MEN TIONED BY THE ASSESSEE AND HENCE THE CAPITAL GAINS WOULD BE ASSESSABLE AS STCG ONLY. 4. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) ACCEPTED THE FACT OF PURCHASE AND SALE OF SHARES. HOWEVER, THE LD.CIT(A) ALSO HELD THAT THE ASSESSEE COULD NOT PROVE THE PURCHASE DATE OF SHARES BEYOND DOUBT AND ACCORDINGLY HELD THAT THE CAPITAL GAINS ARISING OUT OF SALE OF SHARES IS ASSESSABLE AS STCG ONLY. IT IS PERTINENT TO NOTE THAT THE DEPARTMENT HAS NOT PREFERRED ANY APPEAL AND HENCE ONLY THE ISSUE THAT IS REQUIRE D TO BE ADJUDICATED IS WHETHER THE CAPITAL GAIN ARISING ON SALE OF SHARES IS ASSESSABLE AS STCG OR LTCG . 5. WE HEARD THE PARTIES AND PERUSED THE RECORD. WITH REGARD TO THE TRANSACTIONS RELATING TO THE SHARES OF AMLUCKIE INVESTMENT CO. LTD., WE NOTICE THA T THE ASSESSEE HAS FURNISHED THE COPIES OF SHARE CERTIFICATE S, WHICH SHOW THAT THE SHARES HAVE BEEN TRANSFERRED TO THE NAME OF THE ASSESSEE ON 12.8.2002. SUBSEQUENTLY , THE SHARES HAVE BEEN TRANSFERRED TO THE DEMAT ACCOUNT OF THE ASSESSEE MAINTAINED WITH M /S R.N.PATWA SHARES AND STOCK BROKERS (P) LTD. THE ASSESSEE ALSO FURNISHED A COPY OF TRANSACTION DETAILS FURNISHED BY THE DEPOSITORY, VIZ., M/S CENTRAL ITA NO. 6720 / MUM/2 008 3 DEPOSITORY SERVICES (I) LTD. I T IS ALSO SEEN THAT THE ASSESSEE HAS ALSO FURNISHED A COPY OF LEDGER ACCOUNT OF THE ASSESSEE AS AVAILABLE IN THE BOOKS OF M/S PRAKASH NAHATA AND CO.LTD , WHICH SHOW S THE DETAILS OF PURCHASES AN D PAYMENT MADE TOWARDS THE SAID PURCHASES. THUS, WE NOTICE THAT THE ASSESSEE HAS FURNISHED ALL THE RELEVANT DETAILS WITH REGARD TO THE PURCHASE AND SALE OF SHARES OF AMLUCKIE INVESTMENT CO. LTD. WE NOTICE THAT THE LD.CIT(A) DID NOT ACCEPT THE CLAIM OF THE ASSESSEE ONLY FOR THE REASON THAT THE COMPUTER GENERATED DOCUMENTS FURNISHED BY M/S PRAKASH NAHATA AND CO. LTD DID NOT CONTAIN SIG NATURE AND SEAL OF THE AUTHORIZED SIGNATORY. THE LD. AR SUBMITTED THAT THE COMPUTER GENERATED DOCUMENTS DOES NOT REQUIRE SIGNATURE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS OTHERWISE PROVED THE FACT OF PURCHASES BY FURNISHING COPY OF SHARE CERTIFICATE SHOWING DATE S OF TRANSFER AND HENCE THE LD.CIT(A) WAS NOT JUSTIFIED IN REJECTING THE SAID CLAIM WITHOUT DISPROVING THE FACTS OF TRANSFER OF SHARES TO THE ASSESSEES NAME. WE FIND MERIT IN THE SUBMISSIONS MADE BY THE LD.AR . A S OBSERVED EARLIER, THE DOCUMEN TS FURNISHED BY THE ASSESSEE SHOWS THAT THE ASSESSEE HAS ACTUALLY PURCHASED SHARES OF AMLUCKIE INVESTMENT CO.LTD AND HE HAS ALSO GOT THE SHARES TRANSFERRED TO HIS NAME AND THEN CONVERTED PHYSICAL SHARES INTO DEMAT FORM. WE NOTICE THAT ALL THESE DOCUMENTS HAVE NOT BEEN PROVED TO BE FALSE BY THE TAX AUTHORITIES . THE O NLY R E ASON CITED BY THE LD.CIT(A) WAS THAT THE COMPUTER GENERATED STATEMENT S DID NOT BEAR SIGNATURE OF AUTHORIZED SIGNATORY , WHICH ACCORDING TO THE LD A.R IS NOT REQUIRED . EVEN OTHERWISE, WE ARE OF THE VIEW THAT THE VARIOUS DOCUMENTS FURNISHED BY THE ASSESSEE ALONG WITH THE COPY OF LEDGER ACCOUNTS OF THE SHARE BROKER SUFFICIENTLY PROVE THE GENUINENESS OF THE TRANSACTIONS. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THERE IS NO REASON TO SUSPECT THE CLAIM OF THE ASSESSEE IN RESPECT OF PURCHASE AND SALES OF SHA R ES OF AMLUCKIE INVESTMENT CO. LTD. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD.CIT(A) ON ITA NO. 6720 / MUM/2 008 4 THIS ISSUE AND DIRECT THE AO TO ASSESS THE CAPITAL GAIN ARISING ON SALE OF AMLUCKIE INVESTMEN T CO.LTD AND AS LTCG. 6 . WITH REGARD TO THE SHARES OF BLUE CHIP INDIA LTD, WE NOTICE THAT THE LD.CIT(A) DID NOT ACCEPT THE CLAIM OF THE ASSESSEE , SINCE THE LETTER WRITTEN BY THE AO TO M/S PRINCE SECURITIES WAS RETURNED BACK. THE LD. AR SUBM ITTED THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO GET CONFIRMATION LETTER FROM M/S PRINCE SECURITIES AND ACCORDINGLY SUBMITTED THAT THE AO HAS VIOLATED THE PRINCIPLE OF NATURAL JUSTICE IN NOT PROVIDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7 . WE FIN D MERIT IN THE CONTENTION OF LD. AR. IN OUR VIEW, THE ASSESSEE SHOULD HAVE BEEN GIVEN PROPER OPPORTUNITY OF BEING HEARD TO SUBSTANTIATE THE CLAIM OF PURCHASE AND SALE OF SHARES FROM M/S PRINCE SECURITIES BEFORE TAKING ADVERSE VIEW AGAINST THE ASSESSEE, I. E., NORMALLY THE ASSESSEE COULD NOT BE FOUND FAULT WITH, IF THE LETTER SENT TO M/S PRINCE SECURITIES WAS RETURNED BACK . THE AO SHOULD HAVE CALLED FOR EXPLANATIONS FROM THE ASSESSEE AND THEREAFTER SHOULD HAVE TAKEN APPROPRIATE DECISION. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) ON TH E ISSUE RELATING TO SHARES OF M/S BLUECHIP INDIA LTD AND RESTORE THE SAME TO THE FILE OF AO WITH A DIRECTION TO EXAMINE THE ISSUE AFRESH AFTER PROVIDING THE NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8 . I N THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 16TH NOVEMBER , 2 015. 16TH NOV , 2 015 SD SD ( PAWAN SINGH ) ( B.R. BASKARAN) J UDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 16TH NOV , 2 015. ITA NO. 6720 / MUM/2 008 5 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT . 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI