Shri Sudhir Balraj Jumani,HUF, Ahmedabad V. The Income Tax Officer,Ward-3(3)(5), Ahmedabad

ITA 721/AHD/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7135 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 31-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Keywords: Reopening of assessment; Income from undisclosed sources; Opportunity of being heard; Wrong claim
• Section: 271(1)(c); 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 721/AHD/2015 (ASSESSMENT YEAR: 2003-04) SUDHIR BALRAJ JUMANI- HUF LANTE 12/234, SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD- 380015 V/S INCOME TAX OFFICER, WARD- 3 (3)(5), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABHJ5877K APPELLANT BY : SHRI PARIN SHAH, AR RESPONDENT BY : SHRI T. SANKAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 29 -01-201 9 DATE OF PRONOUNCEMENT : 29-03-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-3, AHMEDABAD DATED 24.02.2015 PERTAINING TO A.Y. 2003-04 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 721/ AHD/2015 . A.Y. 2003-0 4 2 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N REJECTING THE SUBMISSION MADE BY APPELLANT THAT THE AO HAS FAILED TO GIVE PROPER OPP ORTUNITY OF BEING HEARD BEFORE IMPOSING THE PENALTY U/S 271(1)(C) OF THE ACT AND O RDER PASSED IMPOSING PENALTY U/S. 271(1)(C) OF THE ACT IS AGAINST NATURAL JUSTIC E. IT IS THEREFORE PRAYED THAT PENALTY ORDER SO PASSED MAY BE SET-A-SIDE. 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N CONFIRMING ORDER IMPOSING PENALTY U/S 271(1)(C) OF THE ACT, WHEREAS, THE PENA LTY ORDER IS PASSED ON THE REOPENING OF ASSESSMENT PROCEEDINGS, FOR WHICH THE AO WAS NOT HAVING ANY JURISDICTION. THUS, ON FACTS AND IN LAW, THE ID. CI T(A) OUGHT TO HAVE CANCELLED PENALTY SO LEVIED. IT IS THEREFORE PRAYED THAT PENA LTY MAY KINDLY BE DELETED. 2. IN THIS CASE THE INFORMATION RECEIVED FROM DIT(LNV. )-1, MUMBAI FOR INVOLVEMENT IN FICTITIOUS SHARE TRANSACTION DURING THE F.Y. 2002-03 AND HAD AVAILED WHOPPING TAX BENEFITS. THE CASE WAS TRANSFE RRED IN FROM ITO WARD 10(4), AHMEDABAD AFTER RECORDING THE REASONS AND AF TER OBTAINING THE APPROVAL OF JT. CIT, RANGE-10, AHMEDABAD AND NOTICE U/AS 148 ISSUED TO THE ASSESSEE. THE ASSESSEE HAS CHALLENGED TO ITO WD. 10(4), AHMED ABAD THE NOTICE U/S 148 ON THE GROUND THAT SINCE THE ASSESSEE IS REGULARLY FILING HIS RETURN OF INCOME WITH ITO WARD 7(3), AHMEDABAD, THE ITO WARD 10(4) H AS NO JURISDICTION OVER THE ASSESSEE. BUT UNDER PROTEST THE ASSESSEE HAS CO MPLIED WITH THE NOTICE BY FURNISHING VARIOUS INFORMATION STATING THAT THE RET URN OF INCOME FOR A.Y. 2003- 04 FILLED ON 29/09/2003 DECLARING TOTAL INCOME OF R S. 2,54,280/- MAY BE TREATED AS RETURN FILLED IN RESPONSE TO NOTICE U/S 148. THEREAFTER NOTICE U/S 143(2) HAS BEEN ISSUED ON 30/04/2010 BY ITO WARD 10 (4), AHMEDABAD. THE ITO WARD 10(4), AHMEDABAD HAS TRANSFERRED THE CASE RECORDS TO THE ASSESSEE FOR THE SAME AY ON 16/01/2010. DUE TO CHANGE OF INC UMBENCY NOTICE U/S 143(2) WAS ISSUED ON 18/11/2010. ON REQUEST FOR FUR NISHING THE REASON RECORDED FOR RE-OPENING THE ASSESSMENT U/S 148 IN H IS CASE, REASON RECORDED FOR ITA NO. 721/ AHD/2015 . A.Y. 2003-0 4 3 RE-OPENING THE ASSESSMENT U/S 148 HAVE BEEN GIVEN T O THE ASSESSEE ON 22/11/2010. SUBSEQUENTLY, NOTICE U/S.142(1) WAS ISS UED ON 26/11/2010, ALONGWITH QUESTIONNAIRE, WHICH WAS DULY SERVED UPON THE ASSESSEE.. IN RESPONSE TO THE NOTICE THE ASSESSEE HAS SUBMITTED DETAILS. O RDER U/S 143(3) R.W.S. 147 OF THE IT. ACT, 1961 HAS BEEN PASSED ON 27/12/2010. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED THAT THE ASSESSEE HAS PURCHASED THE SHARES FROM GOLDSTAR FINVEST PVT. LTD AND CHOOSE TO SELL THE SHARES WITH THE SAME BROKER. IN FACT, THE ASSESSEE HAS NOT SUBMITTED 'DE-MAT ACCOUNT' AND THEREFORE IT IS PRESUMED THAT TRANSACT IONS STATED TO BE PURCHASE AND SALE IN PHYSICAL CERTIFICATES. THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCES I.E. DELIVERY NOTES, DE-MAT STATEMENT, AS THE ASSES SEE HAS INTRODUCED UNEXPLAINED INCOME OF RS. 3,99,070/- AND REDUCED CA PITAL GAINS CLAIM TO BE SET- OFF AGAINST CARRIED FORWARDED CAPITAL LOSS OF EARLI ER YEARS AND TRIED TO EVADE THE LEGITIMATE TAX PAYABLE BY THE ASSESSEE, CAPITAL GAI NS OF RS. 3,99,070/- WAS WITHDRAWN AND ADDED TO THE INCOME OF THE ASSESSEE A S INCOME FROM UNDISCLOSED SOURCES. PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT ARE ALSO INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 4. THE ASSESSEE HAS FILED APPEAL BEFORE CIT(A) AGAINST ORDER PASSED BY AO ON 27/12/2010. THE LD. CIT(A) VIDE ORDER DATED 15/05/2 012 DISMISSED THE APPEAL OF THE ASSESSEE. 5. A SHOW NOTICE U/S. 274 READ WITH SECTION 271(1)(C) DATED 12-07-2012 WAS ISSUED TO THE ASSESSEE WHICH WAS SERVED ON THE ASSE SSEE. THE ASSESSEE WAS REQUESTED TO APPEAR BEFORE THE A.O. AND TO SHOW CAU SE WHY AN ORDER IMPOSING A PENALTY SHOULD NOT BE MADE U/S. 271 OF THE IT. AC T. THE NOTICE CLEARLY MENTIONED THAT IF THE ASSESSEE DO NOT WISH TO AVAIL OF THE OPPORTUNITY OF BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIV E, HE MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CO NSIDERED BEFORE ANY SUCH ITA NO. 721/ AHD/2015 . A.Y. 2003-0 4 4 ORDER IS MADE UNDER SECTION 271, BUT THE SAME REMAI NED UN-REPLIED FROM THE ASSESSEE. THE ASSESSEE HAS NEITHER APPEARED BEFORE ME NOR SUBMITTED ANYTHING IN WRITING TILL DATE. IT IS, THEREFORE, PRESUMED TH AT THE ASSESSEE HAS NOTHING TO SAY IN THE MATTER. IT IS ALSO A FACT THAT THE WRONG CLAIM OF SET OFF OF LOSS WAS DETECTED BY THE ASSESSING OFFICER DURING THE COURSE OF SCRUTINY PROCEEDINGS. IT IS PERTINENT TO MENTION HERE THE FACT THAT THE ASSE SSEE WILLFULLY AND DELIBERATELY FURNISHED INACCURATE PARTICULARS AND MISGUIDED THE DEPARTMENT. THEREAFTER LD. A.O. IMPOSED A PENALTY OF RS. 1,25,707/-. 6. AGAINST THE SAID PENALTY, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE LD. A.O. 7. NOW APPELLANT HAS COME BEFORE US. 8. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER AND BOTH THE PARTIES. IN THIS CASE, IT WAS OBSERVED THAT ASSESSE E HAS PURCHASED THE SHARES FROM GOLDSTAR FINVEST PVT. LTD. AND CHOOSE TO SELL THE SHARES WITH THE SAME BROKER WHO WERE ENGAGED IN FRAUDULENT BILLING AND I N THE BUSINESS OF PROVIDING BOGUS SPECULATION. THE APPELLANT WAS FOUND TO BE ON E OF THE BENEFICIARIES OF BOGUS ENTRY FOR PURCHASING OF SHARES. IN QUANTUM PR OCEEDING, APPELLANT LOST HIS CASE TO THE LEVEL OF ITAT. 9. IN SUPPORT OF ITS CONTENTION, ASSESSEE CITED AN ORD ER OF ITAT, MUMBAI BENCH IN THE CASE OF SHRI RAMESHKUMAR D. JAIN VS. ITO IN ITA NO. 1093/MUM/2013 WHEREIN WITH FOLLOWING OBSERVATION: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D FROM THE ASSESSMENT ORDER THAT THE ADDITIONS IN RESPECT OF LTCG CLAIM MADE BY THE ASSESSEE WERE MADE BY ITA NO. 721/ AHD/2015 . A.Y. 2003-0 4 5 THE AO FOR WANT OF PROPER EVIDENCE TO PROVE THE GEN UINENESS OF TRANSACTIONS. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTE D THAT THE SHRI RAMESHKUMAR D. JAIN TRANSACTIONS WERE CARRIED OUT THROUGH A BRO KER AND THE CONTRACT NOTE WAS ISSUED BY THE BROKER IN THIS RESPECT. THE ASSESSEE HAD ALSO FURNISHED THE BILLS ISSUED TO THE ASSESSEE AGAINST THE TRANSACTIONS EXE CUTED BY BROKER ON HIS BEHALF. IT WAS ALSO SUBMITTED THAT THE SHARES IN QUESTION W ERE PURCHASED IN THE YEAR ENDED ON 31.03.05. IN THE SAME FINANCIAL YEAR, THE ASSESSEE MADE SPECULATIVE PROFIT OF RS.17,847/- FROM TRADING IN SHARES. THE S AID SHARE PROFIT WAS INVESTED IN PURCHASE OF THE SHARES IN QUESTION WHICH WAS EVIDEN T FROM THE PROFIT & LOSS ACCOUNT. THE INVESTMENT IN SHARES WAS SETTLED AGAIN ST THE SPECULATIVE PROFIT MADE. THE SAID SHARES WERE SOLD IN A.Y. 2006-07 AND THE LONG TERM CAPITAL GAINS EARNED WERE SHOWN IN THE RETURN OF INCOME. IT WAS A LSO STATED THAT THE TRANSACTION WAS DONE BEFORE DT.01.10.04, HENCE THE CONDITION OF EXECUTING THE TRANSACTION THROUGH EXCHANGE WAS NOT APPLICABLE TO THE TRANSACTIONS IN QUESTION. THE TRANSACTION WAS AN OFF MARKET TRANSACTION. THE LD. CIT(A), HOWEVER, DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT THE ASSESSEE COULD NOT PROVE ABOUT THE GENUINENESS OF TRANSACTION RELATING TO THE PURCHASE OF SHARES IN THE ABSENCE OF SUFFICIENT EVIDENCE. HE, THEREAFTER, HELD THAT ONCE THE PURCHASE OF SHARES WAS HELD AS NON GENUINE, THERE WAS NO REASON FOR HOLDING THE SALES ALSO AS GENUINE, THOUGH THE SAME WERE FOUND HAVING AFFECTED THROUGH BANKING CHANNELS AS WELL AS REFLECTED IN ASSESSEE'S D-MAT ACCOUNT. T HE TRIBUNAL, IN ITS ORDER DATED 15.06.11, WHILE DISMISSING THE APPEAL OF THE ASSESS EE IN RELATION TO QUANTUM ASSESSMENT PROCEEDINGS, HAS NOT HELD THAT THE REVEN UE HAS BEEN ABLE TO DISPROVE THE CONTENTIONS OF THE ASSESSEE. THE TRIBUNAL UPHEL D THE ADDITIONS MADE BY THE AO HOLDING THAT THE ASSESSEE COULD NOT SATISFACTORI LY PROVE THE GENUINENESS OF THE TRANSACTIONS. THE TRIBUNAL FURTHER OBSERVED THA T WHEN VIEWED WITH THE ANGLE OF HUMAN PROBABILITIES, THE CLAIM PUT FORWARD BY TH E ASSESSEE OF THE CAPITAL GAINS COULD NOT BE ACCEPTED. HOWEVER, THE FACT REMAINS TH AT THE CLAIM OF THE ASSESSEE OF LONG TERM CAPITAL GAINS WAS NOT ALLOWED BECAUSE THE ASSESSEE COULD NOT PROVE SHRI RAMESHKUMAR D. JAIN THE SAME BY WAY OF SUFFICI ENT POSITIVE EVIDENCE. THE REVENUE COULD NOT PROVE THAT THE CLAIM PUT BY THE A SSESSEE WAS WRONG OR BOGUS. IT HAS BEEN THE CASE OF THE ASSESSEE THAT THE PURCH ASE TRANSACTION WAS OFF MARKET TRANSACTION. THE ASSESSEE HAS PRODUCED THE PURCHASE BILL AND CONTRACT NOTE OF THE BROKER. THERE WAS NO COMPULSION UNDER ANY LAW THAT THE SHARES SHOULD BE HELD ONLY IN D-MAT ACCOUNT FORM. NO EVIDENCE WAS FOUND B Y THE REVENUE AUTHORITIES TO SHOW THAT THE PURCHASE OF SHARES IN PHYSICAL FOR M WAS WRONG OR ILLEGAL. EVEN NO DOUBT HAS BEEN RAISED BY ANY OF THE LOWER AUTHOR ITIES REGARDING THE GENUINENESS OF THE SALE TRANSACTIONS OF THE SHARES WHICH ADMITTEDLY HAVE BEEN ITA NO. 721/ AHD/2015 . A.Y. 2003-0 4 6 DONE THROUGH BANKING CHANNEL. MERELY BECAUSE THE BR OKER DID NOT TURN UP IN RESPONSE TO THE SUMMONS ISSUED BY THE AO UNDER SECT ION 131 OF THE ACT, THAT ITSELF, DID NOT DISPROVE THE FACTUM OF PURCHASE OF SHARES BY THE ASSESSEE THROUGH BROKER. THE ADDITION HAD BEEN MADE IN THE CASE OF T HE ASSESSEE ON THE BASIS OF ASSUMPTION THAT THE TRANSACTION OF PURCHASE DID NOT LOOK GENUINE. HOWEVER PENALTY PROCEEDINGS ARE SEPARATE FROM QUANTUM ASSES SMENT PROCEEDINGS. IN THE CASE OF LEVY OF PENALTY, IT SHOULD BE PROVED ON THE FILE THAT THE PARTICULARS FURNISHED BY THE ASSESSEE WERE INACCURATE PARTICULA RS OF INCOME OR THAT THERE WAS CONCEALMENT OF INCOME. EVERY CASE OF CONFIRMATI ON OF DISALLOWANCE CANNOT BE REGARDED AS A CASE OF FURNISHING OF INACCURATE P ARTICULARS OF INCOME OR CONCEALMENT OF INCOME. EVEN IT CANNOT BE SAID THAT THIS CASE OF THE ASSESSEE WAS A CASE OF NO EVIDENCE AT ALL. THE ASSESSEE HAS SUBM ITTED EVIDENCE IN THE SHAPE OF CONTRACT NOTE, PURCHASE BILLS, SALE BILLS, BANK STA TEMENT, D-MAT ACCOUNT STATEMENT REFLECTING THE SALE OF SHARES ETC. THE EV IDENCE PRODUCED ON THE FILE BY THE ASSESSEE HAS NOT BEEN PROVED WRONG OR FALSE. TH E HON'BLE BOMBAY HIGH COURT IN THE CASE OF 'CIT VS. UPENDRA V. MITHANI' ITA (L) NO.1860 OF 2009 DECIDED ON 05.08.2009, HAS OBSERVED IN THE MATTER OF LEVY OF P ENALTY UNDER SECTION 271(1)(C) OF THE ACT, THAT IF THE ASSESSEE GIVES AN EXPLANATI ON WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO SHRI RAMESHKUMAR D. JAIN NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE T HAT THE ASSESSEE'S CASE IS FALSE, THEN NO PENALTY CAN BE IMPOSED IN SUCH CASES. WHEN THE FACTS OF THE CASE IN HAND ARE CONSIDERED IN THE LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ' CIT VS. UPENDRA V. MITHANI' (SUPRA), TH E LEVY OF PENALTY CANNOT BE HELD TO BE JUSTIFIED IN THIS CASE. THE SAME IS ACCO RDINGLY ORDERED TO BE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. 10. ASSESSEE WAS GIVEN RELIEF BY THE ITAT. IN OUR CONS IDERED OPINION, BENEFIT OF THE CITED JUDGMENT CANNOT BE GIVEN TO THE APPELLANT AS FACTS AND CIRCUMSTANCES ARE DIFFERENT IN THIS CASE. IN THE ABOVE SAID CITED CASE, ASSESSEE SUBMITTED THE DETAILS OF DEMAT ACCOUNT AND TRANSACTIONS WERE DONE THROUGH BANKING CHANNELS. 11. ON THE OTHER HAND, IN ASSESSEES/APPELLANTS CASE HE DID NOT SUBMIT ANY EVIDENCE WHICH COULD ESTABLISH THE DELIVERY OF 9000 /- EQUITY SHARES OF BUNIYAD ITA NO. 721/ AHD/2015 . A.Y. 2003-0 4 7 CHEMICALS LTD. SUCH AS DEMAT STATEMENT, DELIVERY NO TE AND COMMUNICATION COMPANY ETC. MOREOVER, IT IS SEEM THAT THERE WERE S HARES PURCHASE ON THE DATE AND EVIDENTLY BILLS WERE FICTITIOUS. IN THIS CASE, APPELLANT HAS NOT COME BEFORE US WITH CLEAN HANDS AND HE HAS TAKEN FALSE AND FRIVOLO US PLEA IN ORDER TO GET EXONERATED FROM THE PENALTY PROCEEDING. THE LD. CIT (A) IN OUR VIEW, HAS RIGHTLY CONCLUDED THE ISSUE IN FAVOUR OF THE REVENU E IN THE GIVEN SET OF FACTS AS NOTED BY HIM. CONSEQUENTLY, WE DECLINE TO INTERFERE . 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON 29 - 03- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 29 /03/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD