Sh. Iqbal Singh Gumber, Chandigarh V. DCIT, Chandigarh

ITA 74/CHANDI/2013

• Counselvise Citation: 7421514 RSA 2013
• Duration Of Justice: 2 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Gift; Assessment record
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.RANO JAIN, ACCOUNTANT MEMBER ITA NO. 74/CHD/2013 ASSESSMENT YEAR: 2006-07 SHRI IQBAL SINGH GUMBER, VS THE DCIT, C/O LAKSHMI ENERGY & CENTRAL CIRCLE-I, FOODS LTD., CHAN DIGARH. SCO 18-19, SECTOR-9, CHANDIGARH. PAN: AAIPS7022C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 16.11.2015 DATE OF PRONOUNCEMENT : 27.11.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS), CENTRAL, GURGAON DATED 26.11.2012 FOR ASSESSMENT YEAR 2006-07, CHALLENGING THE ADDITION OF RS. 3,08,68,602/- ON ACCOUNT OF INVESTMENT IN SHARES. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH WA S CONDUCTED IN THE CASE OF ASSESSEE ALONGWITH OTHER G ROUP CASES. DURING THE COURSE OF SEARCH, THE ASSESSEE W AS CONFRONTED WITH PAGE NO. 1 & 2 OF ANNEXURE A-1 SEIZ ED 2 FROM HIS RESIDENCE REGARDING SHARE TRANSACTIONS OF ASSESSEE SHRI I.S. GHUMBER DONE BY M/S JNR SECURITI ES BROKING PVT. LTD. AMOUNTING TO RS. 3.08 CR. THE AS SESSEE WAS REQUIRED TO EXPLAIN THE SAME. THE RELEVANT PAR T OF STATEMENT OF ASSESSEE RECORDED IS REPRODUCED IN THE ASSESSMENT ORDER IN WHICH THE ASSESSEE EXPLAINED TH AT HE HAS NOT TAKEN OR GIVEN ANY LOAN OR ADVANCE TO ANY COMPANY OF M/S LAKSHMI GROUP OF COMPANIES EXCEPT LO AN FROM CHAIRMAN PERSONAL COMPANIES FOR PURCHASE OF 50 000 SHARES. THIS IS RETURNABLE ON LIQUIDATION OF SHARE S. THE ASSESSEE WAS FURTHER ASKED TO EXPLAIN THE DETAILS O F SHARE TRANSACTIONS DONE BY M/S JNR SECURITIES BROKING PVT . LTD. IN A SUM OF RS.3.08 CR. THE ASSESSEE EXPLAINED IN HIS STATEMENT THAT AT THE TIME OF HIS JOINING, THERE WA S UNDERSTANDING THAT PROMOTERS OF THE COMPANIES WILL GIVE ONE LAKH SHARES AND PRICE WAS VERY LOW. HOWEVER, A FTER A LONG GAP FOR MORE THAN A YEAR, 50000 SHARES WERE TRANSFERRED TO HIM FOR WHICH, THEY RAISED LOAN OF R S. 3,08,68,602/- IN HIS NAME AND PRICE WAS RISEN TO MO RE THAN RS. 600 PER SHARE. THE AMOUNT WAS REPAYABLE A FTER LIQUIDATION OF ALL THE TRADERS OR IT MIGHT BE GRANT ED AS GIFT AS AN ALTERNATE. THE ASSESSEE WAS ALSO ASKED TO EX PLAIN THE DETAILS OF THE PERSON/ENTITY WHO HAS PAID FOR T HE TRANSACTION. THE ASSESSEE EXPLAINED THAT SHRI B.S. UPPAL/HIS PERSONAL ENTITY HAS PAID FOR THE TRANSACT ION AS ADVANCE FOR MOMENT. THE ASSESSING OFFICER THEREFOR E, ON THE BASIS OF THIS STATEMENT RECORDED DURING THE COU RSE OF SEARCH ASKED THE ASSESSEE WHY AN AMOUNT OF RS.3.08 CR 3 SHOULD NOT BE TREATED AS PERQUISITE RECEIVED BY HIM AS HIS INCOME FOR THE YEAR. THE ASSESSEE EXPLAINED THAT D ETAILS OF THE TRANSACTIONS HAVE ALREADY BEEN EXPLAINED DUR ING THE COURSE OF SEARCH, HOWEVER, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, ASSESSING OFFICER MADE ADDITI ON OF RS. 3,08,68,602/- AS UNDISCLOSED INCOME UNDER SECTI ON 69 OF THE INCOME TAX ACT. 3. THE ASSESSEE EXPLAINED BEFORE LD. CIT(APPEALS) T HAT THE SAID AMOUNT WAS PROVIDED BY SHRI BALBIR SINGH, THE CMD OF THE LAKSHMI GROUP OF CASES THROUGH TWO OF TH E GROUP CONCERNS NAMELY GANESHAY OVERSEAS INDUSTRY LT D. AND LOIL OVERSEAS FOODS LTD. OF RS. 1.25 CR. AND RS . 1.84 CR. RESPECTIVELY. THE CHEQUES RECEIVED FROM THE SA ID COMPANIES WERE DEPOSITED IN THE ASSESSEE'S BANK ACC OUNT IN MOHALI FIRM FROM WHERE THE SAME WERE CREDITED TO MUMBAI BY BANKING CHANNEL. FURTHER SHARES WERE PURCHASED THROUGH M/S JNR SECURITIES. IT WAS, THER EFORE, SUBMITTED THAT IT WAS A GENUINE TRANSACTION WHICH W ERE NOT DISPUTED AND ASSESSING OFFICER HAS MERELY ISSUE D SHOW CAUSE NOTICE FOR TREATING THE SAID AMOUNT AS PERQUISITE ONLY. THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND DISMISSED APP EAL OF THE ASSESSEE. 4. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE SEQUEN CE OF EVENTS AND SUBMITTED THAT ASSESSING OFFICER NEVER I SSUED 4 ANY SHOW CAUSE NOTICE FOR MAKING THE ABOVE ADDITION BECAUSE HE ISSUED NOTICE FOR TREATING IT FOR PERQUI SITE ONLY. HE HAS REFERRED TO SEIZED PAPER, COPIES OF THE CONF IRMATION OF BOTH THE CONCERNS WHO HAVE ADVANCED THE AMOUNT T O THE ASSESSEE THROUGH SHRI BALBIR SINGH UPPAL, THEIR BAN K ACCOUNTS, COPY OF ACCOUNT OF ASSESSEE IN THESE TWO COMPANIES AND STATEMENT OF ACCOUNT OF ASSESSEE WITH BANK ACCOUNT OF THE ASSESSEE. HE HAS SUBMITTED THAT ALL DOCUMENTARY EVIDENCES WERE FILED BEFORE LD. CIT(APP EALS) WHICH HAVE NOT BEEN CONSIDERED AND ASSESSING OFFICE R WITHOUT ANY REASONS, MADE THE ADDITION. BOTH THE G ROUP COMPANIES HAVE BEEN ASSESSED BY THE SAME ASSESSING OFFICER, THEREFORE, WHOLE ADDITION IS UNJUSTIFIED. 5. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE RECORD REVEALED THAT THE ASSESSEE, AT THE STAGE OF THE SEARCH ITSELF HAS EXPLAINED THAT LOAN WAS TAKEN FRO M CHAIRMAN PERSONAL COMPANIES FOR PURCHASE OF SHARES AND ASSESSEE ALSO EXPLAINED THE TRANSACTIONS OF SHARES DONE BY M/S JNR SECURITIES BROKING PVT. LTD. FOR ASSESSEE. IT WAS ALSO EXPLAINED THAT SHARES WERE TRANSFERRED IN THE NAME OF ASSESSEE AFTER RAISING A LOAN BY SHRI B.L. UPPAL FR OM HIS GROUP COMPANIES. THE ASSESSING OFFICER, HOWEVER, AT THE ASSESSMENT STAGE ONLY ASKED THE ASSESSEE AS TO WHY THE SAID AMOUNT BE NOT TREATED AS PERQUISITE FOR THE PU RPOSE OF MAKING ADDITION. NO NOTICE WAS GIVEN TO ASSESSE E FOR 5 MAKING ADDITION UNDER SECTION 69 OF THE INCOME TAX ACT. THE ASSESSEE SUBMITTED ALL COMPLETE DOCUMENTS BEFOR E LD. CIT(APPEALS) WHICH INCLUDES CONFIRMATION FROM BOTH THE GROUP CONCERNS NAMELY GANESHAY OVERSEAS INDUSTRIES LTD. AND LOIL OVERSEAS FOODS LTD. IN WHICH THEY HAVE CON FIRMED GIVING OF AMOUNT OF RS. 1.25 CR. AND RS. 1.84 CR. T O THE ASSESSEE THROUGH BANKING CHANNEL. COPY OF THE ACCO UNT OF ASSESSEE IN THESE COMPANIES ALONGWITH BANK STATEMEN T OF BOTH THESE LENDER COMPANIES ALONGWITH BANK ACCOUNT OF THE ASSESSEE ARE FILED ON RECORD WHICH CLEARLY PROV ED THAT THE AMOUNT IN QUESTION WAS ADVANCED BY THESE TWO COMPANIES TO THE ASSESSEE THROUGH BANKING CHANNEL F OR TRANSFER OF THE SHARES. THE SAME AMOUNT WAS TRANSF ERRED TO M/S JNR SECURITIES BROKING PVT. LTD. FOR SHARE TRANSACTIONS WHICH ENTRIES ARE ALSO RECORDED IN THE BANK ACCOUNT OF THE ASSESSEE. BOTH THESE ENTRIES AND SH ARE TRANSACTIONS, AS FOUND DURING THE COURSE OF SEARCH AND NOTED IN THE SEIZED DOCUMENT (COPY OF WHICH IS PB-2 7) TALLY WITH THE BANK STATEMENTS AND CONFIRMATIONS OF BOTH THESE COMPANIES. THE ASSESSING OFFICER DID NOT ISS UE ANY SHOW CAUSE NOTICE AT ASSESSMENT STAGE, THEREFORE, T HESE DOCUMENTS COULD NOT BE FILED BEFORE ASSESSING OFFIC ER. IT MAY BE NOTED THAT BOTH THESE GROUP COMPANIES WHO HA VE ADVANCED AMOUNT TO THE ASSESSEE WERE ASSESSED BY TH E SAME ASSESSING OFFICER WHICH FACT IS ALSO MENTIONED IN THE ASSESSMENT ORDER. BEING A SEARCH CASE, ALL THE GRO UP CASES WERE TAKEN UP TOGETHER. THEREFORE, IF THERE WAS ANY DOUBT REGARDING THE AMOUNTS ADVANCED BY GROUP CONCE RNS 6 TO THE ASSESSEE IN HOLDING SHARE TRANSACTIONS, FACT COULD BE VERIFIED FROM THE ASSESSMENT RECORD ITSELF. HOW EVER, NO ATTEMPTS HAVE BEEN MADE EITHER BY THE ASSESSING OFF ICER OR BY THE LD. CIT(APPEALS). THE LD. CIT(APPEALS) A LSO NOTED IN THE IMPUGNED ORDER THAT IT IS NOT IN DISPUTE THA T SOURCE FOR INVESTMENTS WAS FROM THE GROUP COMPANIES WHERE IN ASSESSEE IS THE EXECUTIVE DIRECTOR OF M/S LAKSHMI E NERGY AND FOODS LTD. ON THE FACE OF THESE FINDINGS OF LD . CIT(APPEALS), IT IS DIFFICULT TO SUSTAIN THE ADDITI ON AS MADE BY THE AUTHORITIES BELOW. 7. CONSIDERING THE SUFFICIENT EVIDENCES AND MATERIA L ON RECORD, WE ARE OF THE VIEW THAT ADDITION IS WHOLLY UNJUSTIFIED. THE ASSESSEE IS ABLE TO PROVE THE SOU RCE OF THE AMOUNTS ADVANCED BY THE GROUP COMPANIES TO HIM FOR DOING TRANSACTIONS THROUGH M/S JNR SECURITIES BROKI NG PVT. LTD. THUS, THE AUTHORITIES BELOW WERE NOT JUS TIFIED IN MAKING THE ADDITION AGAINST THE ASSESSEE. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BE LOW AND DELETE THE ADDITION OF RS. 3,08,68,602/-. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNES H SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH NOVEMBER, 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD