Shri Dhiren P.Shah(HUF), Surat V. The ACIT., Circle-6, Surat

ITA 739/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5843 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 15-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Principle of natural justice; Capital Gains
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MAHAVIR SINGH, JUDICIAL MEMBER) ITA.NO.739/AHD/2007 ASSTT.YEAR : 2004-2005 DHIREN P. SHAH (HUF) C/O. SHILIP INTERNATIONAL 6A/655 MOTI SHERI, LAL DARWAJA SURAT 395 003. VS. ACIT, CIR.6 SURAT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N.DIVETIA REVENUE BY : SHRI K. MADHUSUDAN O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(A)-IV, SURAT DATED 12. 12.2006 FOR A.Y.2004-2005 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER P ASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. IN THIS APPEAL BY THE ASSESSEE FOLLOWING GROUNDS ARE RAISED: 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE ADDITION OF RS.2,59,499/- MADE BY ACIT BEING ALLEGED DIFFERENCE IN THE ACCOUNT OF M/S.BABULAL HI RALAL & CO., SHARE BROKER IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND/OR ON FACTS IN CONFIRMING THAT THERE WAS A DIFFERENCE OF RS.2,59,4 99/- ON ACCOUNT OF M/S.BABULAL HIRALAL & CO. TOWARDS SALE CONSIDERATIO N AND AGGREGATE CONSIDERATION SHOWN BY THE APPELLANT FOR TAX. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE ADDITION OF RS.2,59,499/- MADE BY AO. 4. THE LD.CIT(A) HAS FAILED TO CONSIDER THE EXPLANA TION FURNISHED BY THE APPELLANT AS WELL AS THE NATURE OF TRANSACTIONS AND ENTRIES IN THE SAID ACCOUNT OF M/S.BABULAL HIRALAL & CO. THE IMPUGNED ADDITION HAS BEEN CONFIRMED MERELY ON PRESUMPTION AND SURMISE. ITA.NO.739/AHD/2007 -2- 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 2,59,499/- AS INCOME FROM CAPITAL GAIN. THE ADDITION WAS MADE ON THE GROUND THAT THERE WAS A DIFFERENCE OF RS.2,59,499/- IN ACCOUNT OF THE ASSESSEE WITH M/ S.BABULAL HIRALAL & CO., (BHC FOR SHORT) THROUGH WHOM THE ASSESSEE MADE PU RCHASE AND SALE OF SHARES. THAT BEFORE THE CIT(A) IT WAS EXPLAINED BY THE ASSESSEE THAT THERE WAS NO DIFFERENCE IN THE ACCOUNT OF THE ASSESSEE WITH BHC, ON THE OTHER HAND, THE SUM OF RS.2,59,699/- WAS THE CHEQUE ISSUED AGAINST THE PURCHASE CONSIDERATION OF THE SHARES. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS REPRODUCED THE ACCOUNT IN PAGE NO.2 OF HIS ORDER AN D HAS OBSERVED THAT HOW THE ENTRY FOR THE ISSUE OF CHEQUE OF RS.2,59,699/- WOUL D APPEAR IN THE DEBIT SIDE OF THE ACCOUNT. IT IS SUBMITTED BY THE LEARNED COUNSE L THAT AS PER THE ACCOUNTING PRINCIPLE FOR ANY PAYMENT TO THIRD PARTY, THE ACCOU NT OF SUCH PARTY WOULD BE DEBITED. HE THEREFORE SUBMITTED THAT FOR THE PAYME NTS OF CHEQUE OF RS.2,59,699/- THE ACCOUNT OF BHC WAS RIGHTLY DEBI TED. HE ACCORDINGLY SUBMITTED THAT THERE WAS NO DISCREPANCY IN THE ACCO UNT OF THE ASSESSEE WITH BHC AND THEREFORE THE ADDITION OF RS.2,59,699/- M AY BE DELETED. 4. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND HE SUBMITTED THAT THE ASSESSI NG OFFICER FOUND THE DISCREPANCY IN THE ACCOUNT OF THE ASSESSEE WITH BH C AND THEREFORE THE ADDITION WAS RIGHTLY MADE BY HIM. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED MATERIALS PLACED BEFORE US. THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) AT PAGE NO.2 OF HIS ORDER HAS RECORDED TH E LEDGER ACCOUNT OF BHC AND HAS ALSO GIVEN HIS OWN FINDING. IT IS APPROPRI ATE TO REPRODUCE THE SAME. BEFORE ME, THE LD. AR SUBMITTED THAT THERE WAS NO DISCREPANCY BUT IT WAS ONLY A MISUNDERSTANDING ON THE PART OF THE ASSE SSING OFFICER TO TREAT THE AMOUNT AS CAPITAL GAINS. IN SUPPORT THER EOF, THE APPELLANT FILED A COPY OF LEDGER ACCOUNT OF BABUBHAI HIRALAL & CO. AS UNDER: ITA.NO.739/AHD/2007 -3- I HAVE GONE THROUGH THE SUBMISSIONS AND THE ABOVE M ENTIONED LEDGER ACCOUNTS AND I DO NOT UNDERSTAND AS TO HOW THE CLAI M OF THE APPELLANT CAN BE CONSIDERED CORRECT. AS PER APPELLANTS OWN ADMISSION, THE DEBIT SIDE OF THE LEDGER ACCOUNT IS THE RECEIPT FROM SALE OF SHARES RESULTING IN SHORT TERM OR LONG TERM CAPITAL GAIN. THE NARRATIO N OF THIRD ENTRY ON THE DEBIT SIDE OF RS.2,59,699/- IS CHEQUES ISSUED FOR PURCHASE OF SHARES AND DEBITED TO SHARES ACCOUNT. HOW THIS ENTRY OF ISS UE OF CHEQUE APPEARS ON THE DEBIT SIDE OF THE SAID ACCOUNT IS NOT UNDERS TOOD. THIS APPEARS TO BE AN ENTRY TO SQUARE UP THE CREDIT AND DEBIT SIDE OF THE SAID ACCOUNT AND IS DEFINITELY A PART OF THE CAPITAL GAIN OF THE APPELLANT. I AM OF THE CONSIDERED VIEW THAT THIS ENTRY HAS BEEN PASSED ONL Y TO DEFRAUD THE REVENUE AND EVADE PAYMENT OF TAXES ON THE CAPITAL G AINS. THE ASSESSING OFFICERS ACTION, THEREFORE, IS IN ORDER AND ADDITI ON ON THIS ACCOUNT IS HEREBY CONFIRMED. FROM THE PERUSAL OF THE ABOVE ACCOUNT, IT IS EVIDEN T THAT THE ASSESSEE MADE CERTAIN PURCHASES AS WELL AS SALE OF SHARES. THE C HEQUES WERE RECEIVED AS WELL AS PAID BY THE ASSESSEE AND THE BOTH CREDIT AND DEB IT SIDE OF THE ACCOUNT FINALLY TALLIED. THE OBJECTION OF THE REVENUE IS WITH REGA RD TO THE ENTRY OF RS.2,59,699/- AT THE DEBIT SIDE OF THE ACCOUNT. TH E DEBIT IS FOR CHEQUE ISSUED BY THE ASSESSEE FOR THE PURCHASE OF SHARES. IN OUR OP INION WHEN THE CHEQUE IS ISSUED IN THE NAME OF BHC THE ENTRY FOR THE SAME WOULD CERTAINLY BE BY WAY OF DEBIT TO THE ACCOUNT OF BHC. THEREFORE, WE AR E OF THE OPINION THAT THE THERE WAS NO DISCREPANCY IN THE ACCOUNT OF BHC. ONCE THERE IS NO RS. CREDIT SIDE RS. DEBIT SIDE 374279 PURCHASE OF SHARES & DEBITED SHARES A/CS. 327296 SALE CONSIDERATION OF LONG TERM CAPITAL TRANSACTIONS. 25238 CHEQUE RECEIVED 102313 SALE CONSIDERATION OF SHORT TERM CAPITAL TRANSACTIONS. 138149 CHEQUE RECEIVED 259699 CHEQUES ISSUED FOR PURCHASE SHARES & DEBITED TO SHARES A/CS. 56642 CHEQUE RECEIVED 95000 TRANSFER TO PRUDENTIAL ICICI DEBIT FUND 689308 TOTAL 689308 TOTAL ITA.NO.739/AHD/2007 -4- DISCREPANCY IN THE ACCOUNT, THE QUESTION OF SUSTAIN ING ANY ADDITION IN THIS REGARD DOES NOT ARISE, THE SAME IS DELETED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30 TH JUNE, 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 30-06-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER AR, ITAT, AHMEDABAD