Preeti Aggarwal, Delhi V. ITO, ward- 61(5), New Delhi

ITA 7435/DEL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9534 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 26-11-2018
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.7435/DEL/2018 ASSESSMENT YEAR: 2015-16 PREETI AGGARWAL, KU-153, VISHAKHA ENCLAVE, PITAMPURA, NEW DELHI. V. ITO, WARD-61(5), NEW DELHI. TAN/PAN: AFPPA 1275D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SANJAY KUMAR GARG, ADV. & SHRI AKARSH GARG, ADV. RESPONDENT BY: SHRI S.L. ANURAGI, SR.D.R. DATE OF HEARING: 15 04 2019 DATE OF PRONOUNCEMENT: 28 06 2019 O R D E R THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 28.09.2018, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XX, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSES SMENT YEAR 2015-16. IN VARIOUS GROUNDS OF APPEAL, THE ASSE SSEE HAS MAINLY CHALLENGED THE ADDITION OF RS.1,23,273/- MADE U/S.69A OF THE ACT BY TREATING THE INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS BOGUS BY APPLYING PROVISION OF SECTION 115BEE AND TAXING IT @ 30%. 2. THE FACTS IN BRIEF ARE THAT ASSESSEE IS A DOCTOR BY PROFESSION AND HAS DECLARED INCOME BY WAY OF INCOME FROM PROFESSION, INCOME FROM SALARY AND INCOME FROM OTHER SOURCES. BESIDES THIS, ASSESSEE HAS ALSO DECLARED SHORT TERM CAPITAL GAIN ON SALE OF SEVERAL SCRIPS AT RS.16,01,696/- AND LONG TERM CAPITAL I.T.A. NO.7435/DEL/2018 2 GAIN AT RS.9,46,457/- AFTER INDEXATION ON SALE OF SH ARES. THE ASSESSEE HAS BEEN REGULAR INVESTOR IN SHARES AND HAS BEEN SHOWING CAPITAL GAIN FROM SUCH SHARES EVERY YEAR. IN SO FAR AS THE ISSUE RELATING TO SHORT TERM CAPITAL OF RS.1,23,273/-, THE ASSESSEE HAD SHOWN THESE GAIN FROM SALE OF EQUITY SHARES OF M/S. PEARL AGRICULTURE AND PSIT INFRASTRUCTURE WHICH WERE 55 0 SCRIPS AND 5000 SCRIPS (500 SHARES OF RS.10 EACH WERE SPLIT INT O 5000 SCRIPS OF RS.1 EACH) RESPECTIVELY. THE SALE CONSIDERATION FO R THESE SHARES WERE SHOWN AT RS.1,94,477/- (M/S. M/S. PEARL AGRICUL TURE) AND RS. 2,72,544/- (PSIT INFRASTRUCTURE). OUT OF 550 EQUI TY SHARES OF M/S. PEARL AGRICULTURE, 50 SHARES WERE SOLD THROUGH BROKER, SMC GLOBAL SECURITIES, NEW DELHI; AND BALANCE 500 SHARES OF M/S. PEARL AGRICULTURE AND 500 SHARES OF PSIT INFRASTRUCT URE WERE SOLD THROUGH BROKER, RELIGARE SECURITIES LTD., NEW DELHI. O N THESE SHARES, ASSESSEE HAS CLAIMED SHORT TERM CAPITAL GAIN AT RS.1,23,172/-. 3. LD. ASSESSING OFFICER NOTED THAT DIRECTORATE OF INVESTIGATION, KOLKATA HAD CARRIED OUT INVESTIGATION TO UNEARTH THE ORGAN IZED RACKET OF GENERATING BOGUS ENTRIES OF LONG TERM CAPITAL GAIN/SHORT TERM CAPITAL GAIN AND HAS ALSO INCORPORATED THE MODUS OPERANDI ADOPTED BY THESE ENTRY PROVIDERS. HE ALSO NOTED THAT THESE COMPANIES DID NOT HAVE FINANCIAL STRENGTH IN ORDER TO JUSTIFY THE SHARE PRICE. HE ALSO NOTED THAT, LOOKING TO THE MEAGER PROFIT SHOWN BY THESE COMPANIES, IT DOES NOT JUSTIFY THE CHOICE OF THESE COMPANIES AS AN INVESTMENT OPTION. IN RESPONSE TO THE SHOW CAUSE NOTICE, ASSESSEE HAS GIVEN DETAILED REPLY, HOW EVER SAME HAS BEEN REJECTED BY THE ASSESSING OFFICER AND PROCEEDE D TO TREAT THE SHORT TERM CAPITAL GAIN AS BOGUS AND HAS TAXED THE SAM E U/S.69A R.W.S. 115BBE @ 30%. HE ALSO NOTED ONE IMPOR TANT FACT I.T.A. NO.7435/DEL/2018 3 THAT ASSESSEE WAS ENGAGED IN TRADING SHARES, AND THEREF ORE, WAS WELL AWARE OF UPS AND DOWNS OF SHARE MARKET AND HOW SUCH A PERSON CAN MAKE INVESTMENT IN COMPANY WITH NO FINANCIA L UNDERSTANDING AND DISMAL FUTURE PROSPECTS. 4. LD. CIT (A) TOO HAS CONFIRMED THE SAID ADDITION. 5. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF TH E IMPUGNED MATERIAL PLACED ON RECORD, WE FIND THAT FIR STLY, ASSESSEE HAS BEEN REGULAR INVESTOR IN SHARES AND HAD SHOWN LO NG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN IN SALE OF SE VERAL SCRIPS. THE ONLY CONTROVERSY IS ONLY TO THE EXTENT OF SHORT TERM CAPITAL GAIN OF RS. 1,23,173/- WHICH HAS BEEN TREATED AS BOG US. NEITHER THE PURCHASE NOR THE SALE HAS BEEN DOUBTED FOR THE REAS ON THAT GROSS SALES HAVE NOT BEEN ADDED BY THE ASSESSING OF FICER. THE ASSESSEE HAD SHOWN PURCHASES OF THESE SHARES AGGREGA TING TO RS.4,67,021/- WHICH HAVE BEEN PURCHASED BETWEEN MAR CH, 2014 TO MAY, 2014 AND WERE SOLD BETWEEN MAY, 2014 TO NOVE MBER, 2014 AT RS.5,90,193/- AND THEREBY HAVE SHOWN SHORT TER M CAPITAL GAIN AT RS.1,23,173/-. NOWHERE THE ASSESSING O FFICER HAS POINTED OUT THE HISTORICAL DATA OF PRICES OF THESE SCRI PS AND WHETHER THERE WAS AN ASTRONOMICAL RISE OF PRICE FROM T HE DATE OF PURCHASES TO THE DATE OF SALES, LEADING TO ANY DUBIOU S NATURE IN MARGINAL OF GAIN OF RS.1,23,173/- ON SALE OF 5550 S HARE. HENCE IT CANNOT BE INFERRED THAT GAIN WAS ON ACCOUNT OF ASTRONOMI CAL PRICE RISE OF THE SHARES. IT APPEARS THAT ASSESSING OFFICER H AS MERELY GONE BY THE FACT THAT DURING THE INVESTIGATION CARRIED OUT BY THE DEPARTMENT IN KOLKATA, ONE OF THESE SCRIPS WERE FOUND TO BE USED BY BROKERS FOR PROVIDING ACCOMMODATION ENTRIES, BUT THA T MATERIAL FACT ALONE WITHOUT ANY OTHER FURTHER INQUIRY OR ANY OTHE R MATERIAL TO LINK THAT ASSESSEE TO BE INVOLVED IN ANY SHAM TRANSA CTION OR I.T.A. NO.7435/DEL/2018 4 BENEFICIARY OF ANY ACCOMMODATION ENTRY. THEORETICAL DI SCUSSION MADE BY THE ASSESSING OFFICER CANNOT NAIL THE ASSESSE E. THE SALES TURNOVER OF PSIT INFRASTRUCTURE GOES TO SHOW THAT IT H AD THE SALE TURNOVER AT RS. 328.38 CRORE IN MARCH, 2016 AND SIMIL ARLY IN CASE OF PEARL AGRICULTURE ALSO SALES TURNOVER WAS RS. 23.8 9 CRORE IN MARCH, 2014. THUS, TO HOLD THAT THESE COMPANIES WERE PU RELY A PAPER COMPANY WITHOUT ANY BUSINESS CREDENTIAL CANNOT B E ACCEPTED. AS DISCUSSED ABOVE, THE ASSESSEE HAD DEALT IN SEVERAL SCRIPS OVER THE PERIOD OF TIME AND HAS BEEN REGULAR I NVESTOR IN SHARES AND HAS BEEN SHOWING GAIN AND LOSS IN THE SHA RES ON YEAR TO YEAR BASIS. NO OTHER TRANSACTION HAS BEEN DOUBTED EXC EPT FOR TWO SMALL SCRIPS FOR OVER ALL TRANSACTION OF 1.23 LAC S. THIS GOES TO SHOW THAT BONAFIDE AND IT CANNOT BE HELD TO BE THAT THE ASS ESSEE WAS INVOLVED IN SOME KIND OF MONEY LAUNDERING OR AN Y KIND OF ACCOMMODATION ENTRY. NO MATERIAL WHATSOEVER HAS BEEN BR OUGHT ON RECORD TO SHOW THAT ASSESSEE HAS ROUTED HER UNACCOUN TED MONEY OR ANY OTHER FACTS ARE COMING ON RECORD. ASSES SEE HAS ALSO INCURRED SHORT TERM CAPITAL LOSS IN DEALING WITH MORE THAN 250 COMPANIES AND HAS INCURRED LONG TERM CAPITAL LOSS OF RS.53,227/-; AND SHORT TERM CAPITAL LOSS OF RS.2,42, 000/-. SUCH A NEGLIGIBLE AMOUNT OF SHORT TERM CAPITAL GAIN CANNOT BE HELD TO BE BOGUS SANS ANY INQUIRY OR MATERIAL. ACCORDINGLY, TREATING SHORT TERM CAPITAL GAIN OF RS.1,23,273/- AS BOGUS CANNOT BE SUSTAINED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JUNE, 2019. SD/- [AMIT SHUKLA] JUDICIAL MEMBER DATED: 28.06.2019 PKK