VIKRAM KHANDELWAL, MUMBAI V. ASST CIT CEN CIR 33, MUMBAI

ITA 728/MUM/2013

• Counselvise Citation: 72819914 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2003-2004
• Appeal Filed On: 28-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CPT PRADIP SHAURYA ARYA
• Assessee Lawyers: MANISH SANGHAVI
• Keywords: Income from undisclosed sources; Search and seizure; Difference of opinion
• Section: 32; 132; 143(3); 153A

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - F BENCH. . , !'# !$%&' , %! () BEFORE S/SH.D.MANMOHAN, VICE-P RESIDENT & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.728/MUM/2013, ! ! ! ! * * * * / ASSESSMENT YEAR-2003-04 SHRI BIKRAM KHANDELWAL, 601-A, MILLENIUM GARDEN, UPPER GOVIND NAGAR, MALAD(W), MUMBAI-400064 VS ACIT CC-33, OLD CGO BUILDING, M.K.ROAD, MUMBAI-400020 PAN:AADPK9699N ( !+, / APPELLANT) ( -.+, / RESPONDENT) !/0 !/0 !/0 !/0 1 1 1 1 % %% % / ASSESSEE BY : SHRI MANISH SANGHAVI !$) 2 1 % / REVENUE BY : CPT. PRADIP SHAURYA ARYA ! ! ! ! 2 22 2 0! 0! 0! 0! / DATE OF HEARING : 26-06-2014 3* ! 2 0! / DATE OF PRONOUNCEMENT : 26-06-2014 , 1961 2 22 2 !! !! !! !! 254 )1( % %% % &040 &040 &040 &040 (%5 (%5 (%5 (%5 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM %! %! %! %! () () () () !$%&' !$%&' !$%&' !$%&' % %% % ! ! ! ! : CHALLENGING THE ORDER DATED 06.12.2012 OF THE CIT(A )-41, MUMBAI ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ID. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S.271(1)(C) IN RESPE CT OF THE ADDITION OF RS.10,50,250/- MADE BY THE AO ON ACCOUNT UNACCOUNTED INCOME REPRESENTING CONSI DERATION RECEIVED ON SALE OF SHARES ON THE PLEA OF COLLUSIVE TRANSACTIONS. 2.THE LD. CIT(A) FAILED TO APPRECIATED THAT: A)THE APPELLANT HAS NEITHER CONCEALED THE PARTICULA RS OF HIS INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF SUCH INCOME; B)ALL THE TRANSACTIONS OF SHARES RESULTING IN CAPIT AL GAINS ARE GENUINE AND SUPPORTED BY SUFFICIENT MATERIALS; C)IF THERE IS DIFFERENCE OF OPINION ON A PARTICULAR ISSUE THEN THERE CANNOT BE A CASE OF CONCEALMENT; AND D)MERE DISALLOWANCE OR REJECTION OF THE CLAIM OR ST AND OF THE APPELLANT BASED ON REASONABLE INTERPRETATION OF THE LAW IS NOT SUFFICIENT TO ATTR ACT PENALTY U/S.271(1)(C). 3.IN REACHING TO THE CONCLUSION AND CONFIRMING THE PENALTY LEVIED BY THE AO, THE ID. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSIDERATION S,PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVAN T CONSIDERATIONS AND FACTORS. 4.THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE ID. CIT(A) IS EXCESSIVE AND CONTRARY TO THE PROVISIONS OF LAW. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL. 2. ASSESSEE IS AN INDIVIDUAL.A SEARCH OPERATION U/S. 1 32 OF THE ACT WAS CONDUCTED ON 10.11.2006 AT THE RESIDENCE/BUSINESS PREMISES OF BALAJI YARN GROU P OF CASES, THE ASSESSEE IS ONE OF THE DIRECTORS OF M/S.PRAKASH EXPORTS LTD., A GROUP CONCERN OF BAL AJI YARN.ASSESSING OFFICER(AO)PASSED AN ORDER ON 29.12.2008 U/S.143(3) R.W.S. 153A OF THE A CT DETERMINING THE INCOME OF THE ASSESSEE AT RS.16.17 LAKHS.DURING THE ASSESSMENT PROCEEDINGS, T HE AO NOTICED THAT ASSESSEE HAD SHOWN LONG TERM CAPITAL GAIN (LTCG) OF MANTRA ONLINE AND PRIME CAPITAL MANAGEMENT LTD. SCRIPS, THAT ALTHOUGH THE SHARES WERE SOLD THROUGH A BROKER REGI STERED WITH THE STOCK EXCHANGE PURCHASE OF SHARE WAS UNSUBSTANTIATED.HE HELD THAT ASSESSEE HAD ADOPTED TAX EVASION PRACTICE AND TRIED TO 2 ITA NO. 728 /MUM/2013 SHRI BIKRAM KHANDELWAL CLAIM TAX FREE LTCGS FOR AY.S.2003-04, 2005-06 AND 2006-07,THAT ENTIRE SALE PROCEED I.E.RS. 10.50 LAKHS,WAS TO BE TREATED UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. FURTHER AN ADDITION RELATING TO COMMISSION PAID FOR ARRANGING THE TRANSACTIONS @ 5% WAS ALSO MADE BY THE AO.ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA),WHO CONFIRMED THE ADDITION MADE BY THE AO. 3. MEANWHILE,THE AO ISSUED A NOTICE TO THE ASSESSEE U/ S. 274 R.W.S. 271(1)(C) OF THE ACT FOR LEVYING PENALTY FOR CONCEALING THE PARTICULARS OF I NCOME. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,THE AO HELD THAT ASSESSEE HAD SHOWN BOGUS/ FICTITIOUS LTCG BY SHOWING DEALING IN PENNY STOCK SCRIPS,THAT SCRIPS OF MANTRA ONLINE AND PRIME CAPITAL MANAGEMENT LTD. WERE MANIPULATED,THAT THE ASSESSEE COULD NOT ESTABLISH A NY SHARE PURCHASE TRANSACTION DESPITE SEVERAL OPPORTUNITIES GRANTED TO HIM DURING THE ASSESSMENT/ APPELLATE PROCEEDINGS, THAT ASSESSEE HAD RESORTED TO WELL THOUGHT PLAN TO EVADE PAYMENT OF T AX, THAT IT WAS A FIT CASE FOR LEVY OF PENALTY. FINALLY,HE LEVIED PENALTY AT RS.3,47,370/-FOR CONCE ALING THE PARTICULARS OF INCOME. 4. IN THE APPELLATE PROCEEDINGS BEFORE THE FAA,THE ASS ESSEE SUBMITTED THAT MERELY BECAUSE CERTAIN ADDITIONS WERE MADE BY THE AO AND CONFIRMED BY THE FAA, SAME SHOULD NOT BE DEEMED TO REPRESENT CONCEALED INCOME, THAT HE HAD NOT FILED A NY INACCURATE PARTICULARS. AFTER CONSIDERING THE REPLY OF THE ASSESSEE,PENALTY ORDER AND THE ASSESSM ENT ORDER, FAA HELD THAT ADDITION IN RESPECT OF SALE CONSIDERATION ON THE ALLEGED SALE OF SHARES WA S MADE BY THE AO ON THE BASIS OF DETAILED INVESTIGATIONS CARRIED OUT BY THE DEPARTMENT AND TH E ENQUIRIES CONDUCTED BY THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS,THAT THE AO HAD FOUND THAT T HE GENUINENESS OF THE PURCHASE OF SHARES IN QUESTION HAD NOT BEEN PROVED BY THE ASSESSEE,THAT T RANSACTION CARRIED OUT BY THE ASSESSEE WAS BOGUS,THAT THE DECISION TAKEN BY THE AO AND THE FAA IN THE QUANTUM PROCEEDINGS HAD NOT BEEN OVERRULED. HE CONFIRMED THE PENALTY LEVIED BY THE A O. 5. BEFORE US,AUTHORISED REPRESENTATIVE (AR) STATED THA T TRIBUNAL,VIDE ITS ORDER DATED 20.05.2014, (ITA/5036/MUM/2009-AY2003-04)HAD QUASHED THE ORDER PASSED BY THE AO U/S. 143(3) R.W.S. 153A OF THE ACT. DEPARTMENTAL REPRESENTATIVE (DR) L EFT THE MATTER TO THE DISCRETION OF THE BENCH. WE HAVE PERUSED THE MATERIAL ON RECORD. WE FIND THA T F BENCH OF MUMBAI TRIBUNAL VIDE ITS ORDER DATED 20.05.2014(SUPRA) HAD ALLOWED THE APPEA L FILED BY THE ASSESSEE AGAINST THE ORDER OF THE FAA WHEREIN HE HAD UPHELD THE ADDITION MADE BY THE AO. IN THAT APPEAL ASSESSEE HAD RAISED AN ADDITIONAL GROUND ARGUING THAT THE ADDITION MADE BY THE AO WAS NOT SUPPORTED BY ANY INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE SEARCH AND SEIZURE OPERATIONS. FOLLOWING THE ORDER OF JAI STEEL INDIA(36TAXMANN.COM 523)OF THE H ONBLE RAJASTHAN HIGH COURT,TRIBUNAL HAD DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE.AS THE ADDITION MADE BY THE AO AND CONFIRMED BY THE FAA IN THE QUANTUM APPEAL HAS BEEN QUASHED BY T HE TRIBUNAL,SO,WE ARE OF THE OPINION THAT PENALTY ORDER SHOULD ALSO BE DELETED. EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FI LED BY THE ASSESSEE STANDS ALLOWED. 06 !/0 7!! (!8 2 4 )90 2 $!0 : . ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE, 2014 . (%5 2 3* ! % &!! ; <(! 26 $= , 201 4 2 4 > SD/- SD/- ( . / D.MANMOHAN) ( !$%&' !$%&' !$%&' !$%&' / RAJENDRA) !'# / VICE PRESIDENT %! %! %! %! () () () () /ACCOUNTANT MEMBER / MUMBAI, <(! /DATE:26.06.2014. SK (%5 (%5 (%5 (%5 2 22 2 -0? -0? -0? -0? @%?*0 @%?*0 @%?*0 @%?*0 / COPY OF THE ORDER FORWARDED TO : 3 ITA NO. 728 /MUM/2013 SHRI BIKRAM KHANDELWAL 1. ASSESSEE / !+, 2. RESPONDENT / -.+, 3. THE CONCERNED CIT(A)/ A B , 4. THE CONCERNED CIT / A B 5. DR F BENCH, ITAT, MUMBAI / ?C!4 -0 , . . &!! . 6. GUARD FILE/ 4! ! .!?0 .!?0 .!?0 .!?0 -0 -0-0 -0 //TRUE COPY// (%5!! / BY ORDER, / ! $! DY./ASST. REGISTRAR , /ITAT, MUMBAI