ITO-1(3), Agra V. Sh. Pradeep Kumar, Agra

ITA 83/AGR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6994 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-05-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 05-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Keywords: Cost of acquisition; Accommodation entries; Assessment record
• Section: 54F; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 83/AGRA/2010 ASSTT. YEAR : 2001-02 INCOME-TAX OFFICER, VS. SHRI PRADEEP KUMAR, 1(3), AGRA. 57, BHARATPUR HOUSE, AGRA. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.K. SHARMA, JR. D.R. FOR RESPONDENT : SHRI RAJENDRA SHARMA, ADVOCATE. ORDER PER H.S. SIDHU, JM: THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDE R DATED 27.01.2010 OF THE LEARNED CIT(A) ON THE FOLLOWING EFFECTIVE GROUNDS : 1. THAT THE CIT(APPEALS)-I, AGRA HAS ERRED IN LAW AND ON FACTS IN DELETING THE INCOME OF RS.13,63,727/- & RS.20,456/- MADE ON ACCOUNT OF BOGUS LONG TERM CAPITAL GAIN AND COMMISSION PAID TO OBTAI N ABOVE ENTRIES RESPECTIVELY WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE COUL D NOT PROVE THE GENUINENESS OF SHARE TRANSACTIONS. 2. BY DOING SO, THE LD. CIT(APPEALS)-1, AGRA IS BA D IN LAW AND ON FACTS BECAUSE IN ALLOWING THE ASSESSEES APPEAL HE HAS CO MPLETELY IGNORED THE FACT THAT IT HAS VEHEMENTLY BEEN PROVED THAT THE AMOUNTS INTR ODUCED AS CASH CREDITS WERE ASSESSEES OWN UNACCOUNTED MONEY ROUTED THROUGH THE LONG TERM CAPITAL GAIN ENTRIES. 2. THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSING OFFICER ISSUED NOTICE U/S. 148 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS THE ACT) ON THE BASIS OF SOME INFORMATION OF THE INVESTIGATION WING THAT SOME SHA RE BROKERS HAVE PROVIDED BOGUS ENTRY OF SALE PROCEEDS OF SHARES THROUGH BANK ACCOUNT TO THE ASSE SSEE. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S. 148 OF THE ACT, THE ASSESSEE DID NOT COMPLY WITH THE REQUIREMENT OF THE 2 SAID NOTICE. THE ASSESSEE HAS ALSO NOT COMPLIED WIT H THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S. 142(1) OF THE ACT. KEEPING IN VIEW OF THE FACT S AND CIRCUMSTANCES OF THE PRESENT CASE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 144 OF THE ACT ON 17.09.2008 BECAUSE THE ASSESSMENT WAS BEING TIME BARRED. THE ASSESSING OFF ICER COMPLETED THE ASSESSMENT AND ADDED THE AMOUNT OF CAPITAL GAIN AS INCOME FROM UNDISCLOS ED SOURCES. AGGRIEVED BY THE SAME, THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO VIDE ORDER DATED 27.01.2010 ALLOWED THE APPEAL OF ASSESSEE BY DELETING THE ENTI RE ADDITION MADE BY THE ASSESSING OFFICER. NOW THE REVENUE HAS FILED THE PRESENT APPEAL AGAINS T THE IMPUGNED ORDER. 3. AT THE TIME OF HEARING, THE LEARNED DR RELIED UP ON THE ORDER PASSED BY THE ASSESSING OFFICER. ON THE CONTRARY, THE LD. COUNSEL FOR THE A SSESSEE RELIED UPON THE ORDER PASSED BY THE LEARNED FIRST APPELLATE AUTHORITY. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORD AVAILABLE WITH US ESPECIALLY THE IMPUGNED ORDER, IN WHICH THE LEARNED FIRST APPELLATE AUTHORITY HAS DISCUSSED IN DETAIL ABOUT THE ADDITION IN DISPUTE AND COMMISSION THEREON @ 1.5%, I.E., AMOUNTING TO RS.20,456/-. THE ASSESSEE HAS FILED A WRITTEN SUBMI SSION DATED 10.01.2010 IN THE COURSE OF APPELLATE PROCEEDINGS, WHICH THE LEARNED FIRST APPE LLATE AUTHORITY HAS REPRODUCED IN PARA NO. 4.3 AND 4.4. FOR THE SAKE OF CONVENIENCE, THE ISSUE IN DISPUTE DEALT BY THE LEARNED FIRST APPELLATE AUTHORITY AT PARA NO. 4 TO 4.8 AT PAGE 2 TO 5 OF TH E IMPUGNED ORDER IS REPRODUCED AS UNDER : 4. GROUND NOS.3 TO 5 & 8 : IN THESE GROUNDS, THE APPELLANT HAS DISPUTED THE ADDITIONS OF RS.13,63,727/- AS 'INCOME FROM UNEXPLA INED RECEIPTS SHOWN AS RECEIPT ON SALE OF SHARES AND RS.20,456/- AS 1.5% COMMISSIO N ETC. DEEMED TO HAVE B E EN PA I D FOR OBTAINING THE UNEXPLAINED RECEIPTS OF RS.13,63, 727/-. 4.1. IN THE ASSESSMENT ORDER, THE AO HAS DETAILED T HE ABOVE RECEIPTS AS UNDER : 3 AMOUNT 13,63,727 SHARE BROKER AYUSHI STOCK BROKER BY BANK DD/ CHEQUE NO. DATE DEPOSITED BY THE ASSESSEE IN THE BANK ACCOUNT NO.OF BANK. DEPOSITED IN BANK ACCOUNT 1. 1,81,854 2. 5,00,000 3. 4,06,000 4. 2,81,873 1. 181740 2. 181665 3. 181654 4. 181708 4.2 IN THE ASSESSMENT ORDER, THE AO HAS REFERRED T O THE QUESTIONNAIRE ISSUED BY HIM TO THE APPELLANT REGARDING PURCHASE AND SALE OF SHARES . IN THE ABSENCE OF COMPLIANCE WITH THE SAID QUESTIONNAIRE / NOTICE, TH E AO TREATED THE ABOVE RECEIPTS AS THE APPELLANT'S INCOME WHILE DISCUSSING ELABORAT ELY THE MODUS OPERANDI OF BROKERS IN GIVING ACCOMMODATION ENTRIES BY WAY OF P URCHASE AND SALE OF SHARES. 4.3 THE APPELLANT HAS DISPUTED THE ABOVE FINDINGS OF THE AO. VIDE WRITTEN SUBMISSIONS DATED 10.01.2010 FILED IN THE COURSE OF APPELLATE P ROCEEDINGS, AR OF THE APPELLANT HAS STATED AS REPRODUCED BELOW:- 'GROUND NO.3- THAT GROUND NO. 3 IS AGAINST THE ADDITION MADE BY THE AO AT RS. 1363727/- MADE U/S 68 ON THE ALLEGED RECEIPT CREDIT ED TO THE ASSESSEE BANK WHICH AS PER AO VIEW ARE BOGUS RECEIPTS ON THE SALE OF TH E SHARES. ACCORDINGLY THE AO HAS ADDED THE ENTIRE AMOUNT TOWARDS THE INCOME OF T HE APPELLANT. IN THIS CONNECTION IT IS RESPECTFULLY SUBMITTED THAT AS PER THE OBSERVATIONS RECORDED BY THE AO IN THE BODY OF ASST ORDER THE ASSESSEE HAS R ECEIVED RS. 1363727/- FROM AYUSHI STOCK BROKER THROUGH THE VARIOUS DDS/CHEQUES AS MENTIONED BY THE AO IN THE BODY OF ASSESSMENT ORDER, WHICH WERE DEPOSITED BY THE ASSESSEE IN THE BANK A/C AND AS PER THE AO'S VIEW THE AFORESAID RECEIPTS ARE BOGUS ENTRIES OF SALE PROCEEDINGS OF THE SHARES. IN THIS CONNECTION IT IS SUBMITTED THAT ASSESSEE HAS NOT RECEIVED ANY OF SUCH RECEIPTS. HOWEVER, ASSESSEE HA S SOLD 13000 SHARES OF G.K. CONSULTANT LTD AT THE RATE OF RS. 52.50 ,AFTER DEDU CTING THE BROKERAGE AND SERVICE TAX AT RS.650/- AND RS. 32.50, NET AMOUNT FOR RS. 6 81817/- WAS RECEIVED BY THE ASSESSEE FROM THE COSMOS FINANCIAL SERVICES PVT. LT D. VIDE PURCHASE BILL NO. P- 42607 DATED 26.7.2000. THE COPY OF THE BILL ISSUED BY COSMOS FINANCIAL SERVICES (P) LTD. IS ENCLOSED HEREWITH FOR YOUR KIND AND FAV OURABLE CONSIDERATION. THE AFORESAID SHARES WERE PURCHASED BY THE ASSESSEE ON 27.7.99 FROM MOTLEY SECURITIES PVT. LTD. AT THE RATE OF RS. 4/- PER SHA RE FOR RS. 52,000/- AND WHICH WERE SOLD DURING THE YEAR AS STATED ABOVE. THE AO I N THE BODY OF ORDER IS WRONGLY MENTIONED THAT THE AMOUNT OF RS. 1363727/- HAS BEEN RECEIVED FROM THE AYUSHI 4 STOCK BROKER WHILE NO SUCH AMOUNT WAS RECEIVED FROM AYUSHI STOCK BROKER. THAT NO ADDITION ON ACCOUNT OF ALLEGED RECEIPT FOR RS.13 63727/- IS LIABLE TO BE MADE IN THE HANDS OF ASSESSEE. ADDITION MADE ON THIS SCORE IS LIABLE TO BE DELETED. GROUND NO.4 :THAT THE GROUND NO.4 IS AGAINST THE ADDITION FOR RS. 20456/MADE BY THE AD ON ACCOUNT OF ALLEGED COMMISSION PAID TOW ARDS THE ACQUIRING OF THE BOGUS ENTRIES FOR RS. 1363727/-. NO SUCH ENTRIES OR AMOUNT WAS RECEIVED TO ASSESSEE. THUS NO ADDITION ON THIS SCORE IS LIABLE TO BE MADE. ADDITION MADE ON THIS SCORE IS LIABLE TO BE DELETED. THE ASSESSEE HA S SOLD THE SHARES OF WHICH DETAILS ARE GIVEN ABOVE AND HAS NOT PAID ANY COMMISSION. NO ANY ENTRY HAS BEEN TAKEN BY ASSESSEE. ' 4.4. WITH THE ABOVE SUBMISSIONS, THE FOLLOWING HAVE BEEN FURNISHED: SALE BILL DATED 23.07.1999 SHOWING TRANSACTION OF P URCHSE OF 13000 SHARES OF G.K. CONSULTANTS LTD. @ RS.4/- PER SHARE FOR RS.52,000/- ON 16.07.1999. PURCHASE BILL DATED 26.07.2000 OF COSMOS FINANCIAL SERVICES PVT.LTD. SHOWING SALE OF 13000 SHARES ON 21.07.2000 @ RS.52.50 PER SHARE FOR TOTAL RS.6,81,817.50 CONTRACT NOTE DATED 21.07.2000 SHOWING BROKERAGE AN D SERVICE TAX OF RS.650/-AND RS.32.50 CHARGED BY COSMOS FINANCIAL SERVICES PVT. LTD. IN RESPECT OF THE ABOVE TRANSACTION. PHOTOCOPY OF BANK PASS BOOK ACCOUNT NO.13747 OF PNB SHOWING CREDIT OF RS.1,81,453.50 AND RS.4,99,400/- ON 10.08.2000. PHOTOCOPY OF COMPUTATION OF LONG TERM CAPITAL GAINS ON SALE OF 13000 SHARES OF M/S.G.K. CONSULTANTS LTD. FILED BY THE APPELLANT AS ANNEXURE TO HIS RETURN OF INCOME. THE ENTIRE AMOUNT OF LONG TERM CAPITAL GAINS HAS BE EN CLAIMED AS EXEMPT U/S. 54F OF THE ACT AS HAVING BEEN INVESTED IN A RESIDENTIAL HO USE AT 0, BHARATPUR HOUSE, AGRA AS UNDER : 'D A TE O F ACQU I S I T I ON 16.07.1999 D A TE OF S A LE 21.07.2000 SAL E C ONS I DE R AT I O N 6,81,827/- LESS: BANK CHA R GES (-) 964/- 6,80,853/- LESS COST OF ACQUISITION (-) 52,055/- 6,28,798/- LESS U/S. 54F 6,28,798/- THE ASSESSEE IS CONSTRUCTING HIS RESIDENTIAL HOUSE AT 9, BHARATPUR HOUSE, AGRA AND HAS INVESTED THE ENTIRE SALE CONSIDERATION IN CONST RUCTION OF HOUSE AS DETAILED BELOW 3,00,000 23.08.2000 2,00,000 24.08.2000 1,90,000 28.08.2000 6,90,000 NIL 5 4.5. ON THE ABOVE BASIS, IT IS CONTENDED BY THE AP PELLANT THAT THE AO ERRED IN - A. TREATING RS.13,63, 727 J- AS THE APPELLANT'S INCOME ON ACCOUNT OF REMITTANCE OF SALE PROCEEDS OF SHARES AS AGAINST RS . 6,81 ,817/- B. TREATING THE IMPUGNED RECEIPTS AS 'INCOME FROM OTHE R SOURCES' THEREBY DENYING THE CLAIM OF LONG TERM CAPITAL GAINS AND CO NSEQUENT BENEFIT UJS.54F OF THE ACT. 4.6. I HAVE CONSIDERED THE RELEVANT FACTS AND RIVAL CONTENTIONS. ON PERUSAL OF THE ASSESSMENT RECORDS IT IS SEEN THAT THE CASE WAS ALS O TAKEN UP FOR SCRUTINY BY THE ITO4(3), AGRA. IN RESPONSE TO REQUISITION DATED 21.07.2008 I SSUED BY ITO-4(3), AGRA TO THE PNB, THE BANK HAS FURNISHED THE APPELLANT'S ACCOUNT REFL ECTING THE IMPUGNED RECEIPTS OF RS.6,81,817 J- AND PHOTOCOPIES OF THE PAY-IN-SLIPS THROUGH WHICH THE DDS WERE DEPOSITED. THEREFORE, THE ADDITION OF RS.6,81,910/- [RS.13,63,727 (-) RS. 6,81,817/-] IS ERRONEOUS AND HENCE DELETED. 4.7 WITH REGARD TO THE BALANCE ADDITION OF RS.6,81 ,817/- ON ACCOUNT OF THE SALE PROCEEDS ACTUALLY RECEIVED BY THE APPELLANT, I FIND THAT THERE IS NO MATERIAL I EVIDENCE ON RECORD TO PROVE THAT THE PURCHASE AND SALE OF THE I MPUGNED SHARES MADE BY THE APPELLANT WERE NON-GENUINE. THE APPELLANT HAS FURNISHED VARIO US DOCUMENTS IN SUPPORT OF THE PURCHASE AND SALE OF THE IMPUGNED SHARES. NONE OF T HESE HAS BEEN FOUND TO BE FALSE OR FABRICATED. THERE IS NO COMPARABLE CASE ON RECORD W HEREIN ON SIMILAR FACTS AND CIRCUMSTANCES, SUCH CONCLUSION DRAWN AND CONSEQUENT ADDITION MADE BY THE AO HAS BEEN UPHELD BY ANY APPELLATE J JUDICIAL AUTHORITY. UNDER THESE CIRCUMSTANCES, THE ADDITION OF RS.6,81,817/- AS 'INCOME FROM OTHER SOURCES' IS NOT SUSTAINABLE AND HENCE DELETED. THE AO IS DIRECTED TO ADOPT LONG TERM CAPITAL GAINS AS PER RETURN AND ALLOW DEDUCTION CLAIMED BY THE APPELLANT U/S.54F OF THE ACT, AFTER DUE AND PROPER VERIFICATION. 4.8. AS REGARDS THE ADDITION OF RS.20,456/- ON ACC OUNT OF COMMISSION DEEMED TO HAVE BEEN PAID FOR OBTAINING THE REMITTANCE, THE SAME IS NOT SUSTAINABLE AS THERE IS NO EVIDENCE TO SHOW THAT ANY SUCH PAYMENT WAS MADE BY THE APPELLANT TO THE BROKER. ACCORDINGLY, THE ADDITION OF RS.20,456/- IS DELETED . IN THIS CONTEXT, RELIANCE IS PLACED ON DECISION OF CIT(A)-II, KANPUR IN THE CASE OF SHRI S UBHASH CHANDRA TIBEREWALA, & HON'BLE ITAT, LUCKNOW IN THE CASE OF BALRAM MANWANI VS ACIT IN 2005(6) MTC 974. 5. KEEPING IN VIEW THE AFORESAID SUBMISSIONS MADE B Y THE ASSESSEE BEFORE THE LEANED FIRST APPELLATE AUTHORITY ALONG WITH DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY APPRECIATED THE EVIDENCE AND DELETED THE ADDITION IN DISPUTE BECAUSE THE REV ENUE AUTHORITIES HAS NOT PLACED ANY EVIDENCE ON RECORD TO PROVE THE PURCHASE AND SALE OF IMPUGNE D SHARES MADE BY THE ASSESSEE WERE NON- 6 GENUINE. IN ABSENCE OF THE DOCUMENTARY EVIDENCE ON RECORD, WE ARE UNABLE TO SUSTAIN THE ADDITION MADE BY THE ASSESSING OFFICER AND WE ARE OF THE VIE W THAT ADDITION IN DISPUTE HAS RIGHTLY BEEN DELETED BY THE LEARNED FIRST APPELLATE AUTHORITY DU E TO LACK OF EVIDENCE AVAILABLE WITH THE DEPARTMENT. THEREFORE, WE UPHOLD THE IMPUGNED ORDER IN WHICH THE LEARNED FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION OF RS.13,63,727/ - AND RS.20,456/- BY DISMISSING THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.06.2011. SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH JUNE, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY