M/s Bhopal Steel (P) Ltd., Kolkata V. ITO, 7(4), kOLKATA, Kolkata

ITA 700/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99776 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P K HIMMATSINGHKA
• Keywords: Corroborative evidences
• Section: 143(3); 43(5)

Judgement Text

I.T.A. NO . 700 / KOL ./20 1 4 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P. M . JAGTAP , ACCOUNTANT MEMBER I.T.A. NO. 700 / KOL / 20 1 4 ASSESSMENT YEAR : 200 7 - 20 0 8 M/S. BHOPAL STEEL (P) LIMITED,... .... ........... ...... ....... ... ........ ....APPELLANT K ETAN SATNALIA & CO., 1, GIBSON LANE, ROOM NO. 204, KOLKATA - 700 069 [PAN : A ABCB 2387 B ] - VS. - I NCOME TAX OFFICER , ............................ .......... . ......... .......... .RESPONDENT WARD - 7 ( 4 ) , KOLKATA , AAYAKAR BHAWAN, P - 7, CHOWRINGHEE SQUARE, KOLKA TA - 700 069 APPEARANCES BY: SHRI P.K. HIMMATSINGHKA, C.A. , FOR THE ASSESSEE S MT. RANU BISWAS , JCIT, SR. D.R. , FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 0 9 , 2 01 5 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 11 , 201 5 O R D E R TH IS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - VIII , KOLKATA D ATED 25 . 10 .20 1 3 FOR THE ASSESSMENT YEAR 200 7 - 0 8 ON THE FOLLOWING GROUNDS: - ( 1 ) THAT THE LD. CIT(A) ERRED IN DISPOSING THE APPEAL WITHOUT SERVICE OF NOTIC E OF HEARING. ( 2 ) THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE SHARE LOSS RS.1,94,670/ - BEING DISALLOWED BY AO DESPITE GENUINITY OF PARTY AND TRANSACTION BEING CONFIRMED TO HIM. ( 3 ) FOR THAT LD. CIT(A) ERRED IN CONFI RMING THE SHARE LOSS RS.1,94,670/ - BEING DISALLOWED BY AO INVOKING 43(5) OF I.T. ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY , WH ICH IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND INVESTMENTS. THE RETURN OF INCOME I.T.A. NO . 700 / KOL ./20 1 4 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 2 OF 5 FOR THE YEAR UNDER CONSIDER ATION WAS FILED BY IT ON 31.10.2007 DECLARING TOTAL INCOME AT NIL AFTER ADJUSTING LOSSES BROUGHT FORWARD FROM THE EARLIER YEARS. IN THE SAID RETURN , LOSS OF RS.1,57,950/ - ARISING FROM THE SALE OF SCRIP OF BALRAMPUR CHINI MILLS LIMITED AND RS.36,720/ - ARI SING FROM THE SALE OF SCRIP OF ZIGMA SOFTWARE LIMITED WAS CLAIMED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE SAID CLAIM WAS EXAMINED BY THE ASSESSING OFFICER AND ON SUCH EXAMINATION , HE FOUND THE SAME TO BE BOGUS FOR THE FOLLOWING REA SONS GIVEN IN THE ASSESSMENT ORDER: - (I) ASSESSEE HAS FAILED TO ESTABLISH THAT THERE WAS PHYSICAL PURCHASE OR SALE OF ANY OF THE ABOVE NAMED TWO SHARES. NO SHARE WAS TRANSFERRED AT THE TIME OF ALLEGED SALE SHOWN BY M / S. CARWIN TRACOM PVT. LTD. FROM ITS AC COUNT TO THE ASSESSEE COMPANY DESPITE IT HAD MAINTAINED A DEMAT ACCOUNT WITH G. RAJ AND CO. (CONSLT) LTD . NO SHARE WAS ALSO TRANSFERRED TO PURCHASERS BY M / S. CARWIN TRACOM PVT. LTD. WHEN THE SHARES WERE ALLEGEDLY SOLD BY THE ASSESSEE COMPANY. THE ASSESSEE COMPANY DID HOLD A DEMAT ACCOUNT, BUT NONE OF THE ALLEGED PURCHASE OF SHARES WAS CREDITED IN ITS DEMAT ACCOUNT. (II) M / S. CARWIN TRACOM PVT. LTD. COULD NOT FURNISH ANY EVIDENCE WHICH SHOWS THAT 4500 SHARES OF BCML AND 51,000 SHARES OF ZSL WAS PURCHASED F OR THE ASSESSEE. IT ALSO FAILED TO PROVE THAT THE IMPUGNED SHARES WERE SOLD TO ANOTHER PARTY WHEN IT HAD BEEN ALLEGEDLY SOLD BY THE ASSESSEE. IN FACT, M / S. CARWIN TRACOM PVT. LTD. COULD NOT PROVE WITH SUPPORTING EVIDENCE THAT SHARES WERE TRANSFERRED PHYSIC ALLY EITHER AT THE TIME OF SALE SHOWN BY IT TO THE ASSESSEE OR AT THE TIME OF PURCHASE SHOWN FROM THE ASSESSEE. (ILL) BOTH THE SHARES ARE COMPULSORY DEMAT SCRIP AND ANY TRANSACTIONS IN THESE SCRIPS HAVE TO BE CARRIED OUT THROUGH STOCK EXCHANGE AND THROUG H DEMAT TRANSFER ONLY. NONE OF THE ABOVE REGULATIONS HAD BEEN FOLLOWED IN THE CASE OF ANY OF THESE SCRIPS. NO CONTRACT NOTES WERE ISSUED BY M / S. CTPL TO ASSESSEE IN CONNECTION WITH THE PURCHASES AND SALES CLAIMED BY IT. (IV) THE COPY OF THE N EWSPAPER CUTT ING REFERRED BY THE ASSESSEE WAS ISSUED BY THE SEBI FOR THE BROKERS / SUB - BROKERS REGARDING THEIR HOLDING PERIOD OF SHARES BEFORE TRANSFERRING TO THE DEMAT ACCOUNT OF THEIR CLIENTS FOR A LIMITED PERIOD OF TIME. BUT IN THE CASE OF THE ASSESSEE, M/ S. CARWIN TRACOM PVT. LTD. WAS NEITHER THE BROKER NOR THE SUB-BROKER. THEREFORE, THE SAID DIRECTIVE IS NOT APPLICABLE IN ASSESSEE'SCASE. (V) CONCEPT OF RUNNING ACCOUNT IS APPLICABLE IN THE CASE OF BROKER/S U B - BROKER WITH THEIR CLIENT ONLY AND THAT IS ALSO FOR A LI MITED PERIOD. IT IS NOT APPLICABLE IN THE CASE OF TWO DIFFERENT I.T.A. NO . 700 / KOL ./20 1 4 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 3 OF 5 CLIENTS SUCH AS M/S. CARWIN TRACOM PVT, LTD. AND THE ASSESSEE, NONE OF THEM IS A BROKER / SUB - BROKER. (VI) REPLY FROM RELIGARE SECURITIES LTD. CLEARED THAT THEY DID NOT RECEIVE ANY SHARES OF BCML FROM M/S. CARWIN TRACOM PVT. LTD. HOWEVER, THE ASSESSEE OR M/S. CARWIN TRACOM PVT. LTD. IS ARGUING THAT M/S. CARWIN TRACOM PVT. LTD. WAS MAINTAINING A RUNNING ACCOUNT WITH RELIGARE SECURITIES LTD. THE TRANSACTIONS IT HAD REFERRED WERE THE TRADING MAD E BY M/S. CARWIN TRACOM PVT. LTD. IN BCML FOR THE ENTIRE FINANCIAL YEAR. THERE WAS NO RELEVANCE OF CLAIMING THAT IT HAD A BALANCE OF 6550 SHARES OF BCML ON THE ALLEGED DATE OF TRANSFER SHOWN TO THE ASSESSEE. IT COULD HAVE HAPPENED THAT SAME 4500 SHARES OR MORE OF BCML MIGHT HAVE BEEN SHOWN AS SOLD TO ANOTHER PARTY BY M/S. CARWIN TRACOM PVT. LTD. THEREFORE, UNLESS AND UNTIL THE PURCHASE OR SALE IS EVIDENCED WITH PROPER DOCUMENTATION, THE GENUINENESS OF THE TRANSACTION DID NOT GET ESTABLISHED. ONUS WAS ON THE PART OF THE ASSESSEE TO PROVE THAT IT HAD RECEIVED 4500 SHARES OF BCML. BUT IT IS NOT EVIDENCED ANYWHERE. (VII) REGARDING ZSL, M/ S. SAM GLOBAL, COULD HAVE MAINTAINED A RUNNING ACCOUNT WITH M/S. CARWIN TRACOM PVT. LTD. FOR VERY LIMITED PERIOD OF TIME AS M/S. SAM GLOBAL IS A MEMBER OF STOCK EXCHANGE: HOWEVER, THE SAME RELATIONSHIP CANNOT REMAIN BETWEEN M/S. CARWIN TRACOM PVT.LTD. AND THE ASSESSEE. IT HAD TO TRANSFER THE SHARES PHYSICALLY TO THE DEMAT ACCOUNT OF THE ASSESSEE WHEN IT HAD SOLD THE SHARES TO THE ASSESSEE. THIS IS ALSO DARING TO BELIEVE THAT DESPITE THE ASSESSEE POSSESSED A DEMAT ACCOUNT, ANY OF THE SHARES WERE NOT TRANSFERRED TO ITS DEMAT ACCOUNT. (VIII) THE CLAIM MADE BY THE ASSESSEE THAT M/ S. CARWIN TRACOM PVT. LTD. HAD 8250 SHARES WITH R ELIGARE SECURITIES LTD. AND ADVISED THAT OUT OF THOSE SHARES THE SAID 4500 SHARES OF BALRAMPUR CHINI MILLS LTD. WAS BELONGS TO THE ASSESSEE COMPANY. THE SAID CLAIM IS NOT TENABLE BECAUSE IN THAT CASE WE HAVE TO ACKNOWLEDGE THAT GOODS REMAINED AS IT WERE BA SIS, BUT TOTAL TRANSACTION OF PURCHASE AND SALE HAD BEEN CARRIED OUT WITHOUT TRANSFERRING ANY PART OF THOSE GOODS. (IX) EXPLANATION OF THE ASSESSEE ON THIS GROUND THAT THEY HAVE PAID PURCHASE PRICE FOR SHARES AND BILLS FOR PURCHASE WAS ISSUED TO THEM IS NOT TENABLE ON THE GROUND THAT MERE ISSUING OF BILL IS NOT AN EVIDENCE FOR PURCHASE. THE SELLER MUST PASS ON THE 'SHARES' PHYSICALLY TO THE ASSESSEE COMPANY OR THE SAME SHOULD HAVE BEEN CREDITED IN ITS DEMAT ACCOUNT. NONE OF THE ABOVE PROCEDURE HAS BEEN FO LLOWED, IN THE CASE OF THE ASSESSEE. ASSESSEE ALSO CANNOT DENY ITS RESPONSIBILITY MERELY BY SAYING THAT THEY ARE NOT RESPONSIBLE FOR THE ALLEGED LOSS. (X) THE PERSON TO WHOM THE ASSESSEE HAS PAID RS.4, 00 , 000 / - ALLEGEDLY FOR PURCHASE OF SHARES IS NOT A ME MBER OF ANY STOCK EXCHANGE. ANY PERSON WHO WANTS TO PURCHASE ANY SHARE FROM I.T.A. NO . 700 / KOL ./20 1 4 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 4 OF 5 STOCK EXCHANGE SHOULD APPROACH TO A MEMBER OF ANY STOCK EXCHANGE/SUB-BROKER AND NOT TO ANY PERSON WHO IS NOT A MEMBER OF ANY STOCK EXCHANGE/SUB - BROKER. THE REASON FOR PAYMENT OF AN ADVANCE OF RS.4, 00,000 / - TO M/S. CARWIN TRACOM PVT. LTD. MAY BE ANY OTHER THING BUT CERTAINLY NOT FOR PURCHASING OF SHARES. FOR THE REASONS GIVEN ABOVE, THE ASSESSING OFFICER DISALLOWED THE ASSESSEE S CLAIM FOR LOSS ARISING FROM THE SALE OF SCRIP OF BA LRAMPUR CHINI MILLS LIMITED AND ZIGMA SOFTWARE LIMITED TOTALLING TO RS.1,94,670/ - IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE ORDER DATED 22.12.2009. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3), AN APPEAL WAS PREFER RED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) CHALLENGING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ITS CLAIM FOR LOSS ARISING FROM TWO SCRIP S . DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. CIT(APPEALS) ISSUED NOTICES FIXING THE APPEAL OF THE ASSESSEE FOR HEARING ON 01.10.2013 AND 10.10.2013. THERE WAS, HOWEVER, NO COMPLIANCE ON THE PART OF THE ASSESSEE WITH THE SAID NOTICES. KEEPING IN VIEW THE SAID NON - COMPLIANCE, THE LD. CIT(APPEALS) DISPOSED OF THE APPEAL OF THE ASSESSEE EX PA RTE AND CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSESSEE S CLAIM FOR LOSS ARISING FROM TWO SCRIPS FOR THE SAME REASONS AS GIVEN BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFER RED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS THE PRELIMINARY ISSUE RAISED IN THIS APPEAL, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT NONE O F THE NOTICES STATED TO BE ISSUED BY THE LD. CIT(APPEALS) WAS ACTUALLY RECEIVED BY THE ASSESSEE. HE HAS CONTENDED THAT IT WAS THUS NOT A CASE OF NON - COMPLIANCE ON THE PART OF THE ASSESSEE WITH THE NOTICES ISSUED BY THE LD. CIT(APPEALS) AND THE APPEAL OF TH E ASSESSEE, IN FACT, HAS BEEN DISMISSED BY THE LD. CIT(APPEALS) WITHOUT GIVING PROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. HE HAS URGED THAT ONE MORE I.T.A. NO . 700 / KOL ./20 1 4 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 5 OF 5 OPPORTUNITY MAY, THEREFORE, BE GIVEN TO THE ASSESSEE BY SENDING THE MATTER BACK TO T HE LD. CIT(APPEALS) FOR DECIDING THE APPEAL OF THE ASSESSEE AFRESH ON MERIT. KEEPING IN VIEW THE FACTS OF THE CASE AND THE MATERIAL AVAILABLE ON RECORD, I FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE AND SINCE THE LD. D.R. HAS ALSO NOT RAISED ANY OBJECTION IN THIS REGARD, THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) IS SET ASIDE AND THE MATTER IS REMITTED BACK TO HIS FILE WITH A DIRECTION TO DISPOSE OF THE APPEAL OF THE ASSESS E E AFRESH ON MERIT AFTER GIVING PROPER AND SUFFICIENT OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED A S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 11 , 2015. SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER KO LKATA , THE 1 1 TH D AY OF SEPTEMBER , 201 5 COPIES TO : (1) M/S. BHOPAL STEEL (P) LIMITED, KETAN SATNALIA & CO., 1, GIBSON LANE, ROOM NO. 204, KOLKATA - 700 069 (2) INCOME TAX OFFICER, WARD - 7(4), KOLKATA, AAYAKAR BHAWAN, P - 7, CHOWRINGHEE SQUARE, KOLKATA - 70 0 069 (3) COMMISSIONER OF INCOME - TAX (APPEALS) - VIII, KOLKATA (4) COMMISSIONER OF INCOME TAX , KOLKATA ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDE R ASSISTANT REGISTRAR , INCOME TAX APPELLATE TRIBUNAL , KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .