Manoj Kapoor, Ranchi V. ITO,Ward-1(4), Ranchi

ITA 86/RAN/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1752 (ITAT-RANCHI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 27-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P.K. MONDAL
• Assessee Lawyers: AJAY PODDAR
• Keywords: Unexplained investment; Bogus
• Section: 69; 143(3); 201; 22; 20

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH , RANCHI , BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ./ ITA NO. 86 / RAN /20 1 9 ( / ASSE SSMENT YEAR : 20 1 5 - 20 1 6 ) MANOJ KAPOOR, C/O SRI JAGMOHAN PODDAR, ADV SHREE MAHADEO COMPLEX, 10, SHRADHANAND ROAD, RANCHI - 834001 VS. ITO, WARD - 1( 4 ), RANCHI ./ ./ PAN/GIR NO. : A DPPK 3503 L ( / APPELLANT ) .. ( / RESPON DENT ) /AS SESSEE BY : SHRI AJAY PODDAR, ADVOCATE /REVENUE BY : SHRI P.K.MONDAL , ACIT( DR ) / DATE OF HEARING : 2 1 / 0 5 /201 9 / DATE OF PRONOUNCEMENT 22 / 0 5 /201 9 / O R D E R THI S APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), RANCHI , JHARKHAND, DATED 14.11.2018 PASSED IN FIRST APPEAL NO. CIT(A), RANCHI/10 094 /201 7 - 1 8 FOR THE ASSESSMENT YEAR 201 5 - 201 6 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE ASSESSMENT ORDE R AND APPELLATE ORDER ARE CONTRARY TO LAW AND AGAINST THE FACTS ON RECORD. 2. FOR THAT, THE ADDITION OF RS.5,40,000/ - BEING THE INITIAL INVESTMENT/COST PRICE OF SHARES PURCHASED ON 16.05.2013 OUT OF PAST SAVINGS & EARNINGS DULY SHOWN IN THE BALANCE SHEET OF THE ASSESSEE IS AB INITIO ILLEGAL, ARBITRARY AND BAD IN LAW. 3. FOR THAT ONLY THE INCOME OF THE RELEVANT YEAR SHOULD HAVE BEEN ADDED AND NOT THE ENTIRE RECEIPT WHICH COMPRISES OF THE INITIAL INVESTMENTS MADE BY THE ASSESSEE AND THEREFORE RS.5,40,000/ - MAY BE DELETED. 4. FOR THAT CHARGING OF INTEREST U/S.234 B & C ON THE ASSESSED INCOME IS IN CONTRARY TO LAW IN VIEW OF THE DECISION OF HONBLE JHARKHAND HIGH COURT IN THE CASE OF AJAY PRAKASH VE RMA DAT E D ITA NO. 86 / RAN /201 9 2 25.07.2012 IN TAX APPEAL NO. 38 OF 2010 REPORTED IN 2013 (1) JCR 580 (JHR.) RELYING UPON SMT. TEJ KUMARI VRS. CIT (2001)114 TAXMAN 404 (PAT) (FB) CONFIRMED BY HON'BLE SUPREME COURT VIDE ORDER DATED 01.08.2000 WHEREIN LNTERALIA, IT HAS BEEN HELD T HAT INTEREST CAN BE CHARGED ON THE RETURNED INCOME ONLY AND NOT ON THE ASSESSED INCOME. 5. FOR THAT ANY OTHER GROUND OR GROUNDS MAY BE URGED AT THE TIME OF HEARING. RELIEF PRAYED FOR: - THE ENTIRE ADDITION OF RS. 5,40,000/ - BEING THE INITIAL INVESTMENT / COST PRICE OF SHARES PURCHASED ON 16.05.2013 OUT OF PAST SAVINGS & EARNINGS DULY SHOWN IN THE BALANCE SHEET OF THE ASSESSEE MAY BE DELETED FULLY. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVING INCOME FROM TRADING OF SPARE - PARTS OF MOTORCAR AND MOBILE PHONES AND FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.6,61,080/ - ELECTRONICALLY ON 17.09.2015. T HE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT. IN RESPONSE TO NOTICES, THE ASSESSEE APPEARED & PRODUCE D ALL BOOKS OF ACCOUNTS, PAPERS & DOCUMENTS. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE VOLUNTARILY SURRENDERED THE AFORESAID LTCG FOR TAXATION. BUT THE LD. A.O. ADDED THE ENTIRE RECEIPT FROM SALE OF SHARES AMOUNTING TO RS.10,45,266/ - INCLUDING THE C OST PRICE/INVESTMENT MADE BY THE ASSESSEE AMOUNTING TO RS.5,40,000/ - AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. AGAINST WHICH THE ASSESSEE CARRIED THE MATTER TO THE CIT(A). IN THE APPELLATE PROCEEDINGS THE CIT(A) UPHELD THE ACTION OF AO AND DISMISSED TH E APPEAL OF THE ASSESSEE . 4. AGGRIEVED BY THE ORDER OF CIT(A), NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. LD. AR SUBMITTED THAT RS.5,40,000/ - IS THE INITIAL INVESTMENT/COST PRICE OF SHARES PURCHASED ON 16.05.2013 WHICH IS OUT OF PAST SA VINGS & EARNINGS AND THE SAME HAS DULY BEEN SHOWN IN THE BALANCE SHEET OF THE ITA NO. 86 / RAN /201 9 3 ASSESSEE. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT ONLY THE INCOME OF THE RELEVANT YEAR SHOULD HAVE BEEN ADDED AND NOT THE ENTIRE RECEIPT WHICH COMPRISES OF THE INITIAL INVEST MENTS MADE BY THE ASSESSEE AND THEREFORE PRAYED THAT THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) MAY BE DELETED 6. REPLYING TO THE ABOVE, LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS NOT SHOWN AN Y INCOME IN THE PROFIT AND LOSS ACCOUNT NOR ANY INCOME WAS REFLECTED WHILE COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 2015 - 2016, THEREFORE, BOTH THE AUTHORITIES HAVE RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE. 7 . I HAVE HEARD THE RIVAL SUBMISSIONS OF B OTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED IN THE RECORD OF THE TRIBUNAL . I FIND FROM THE ASSESSMENT ORDER AS WELL AS APPELLATE ORDER, THAT T HE ASSESSEE & HIS HUF HAD PURCHASED 30,000/ - SHARES OF M/S. KAILASH AUTO LTD., ON 16.05.2013 FOR RS.5,40,000/ - OUT OF PAST INCOME & SAVINGS DULY SHOWN IN THE ACCOUNTS. AS PER THE LD. AR OF THE ASSESSEE T HE SHARES PURCHASED BY HUF WERE ALSO TRANSFERRED TO THE ASSESSEE AS THERE WAS NO DEMAT ACCOUNT IN THE NAME OF HUF. SUBSEQUENTLY THE SHARES WERE SO LD BY THE ASSESSEE FOR RS.10,45,265.55 EARNING LTCG OF RS.5,05,265.55 AND THE ASSESSEE CLAIMED EX EMPTION U/S. 10(38) OF THE ACT IN HIS RETURN AS DYE SECURITIES TRANSACTION TAX WAS PAID BY THE ASSESSEE. WHEN THE ASSESSEE CAME TO KNOW THAT THE SAID TRANSACTI ON IS NOT CORRECT AND THEREFORE TO BUY PEACE, THE ASSESSEE SURRENDER ED THE AFORESAID LTCG AS INCOME FROM OTHER SOURCES IN HIS REVISED COMPUTATION OF TAXABLE INCOME. THEREAFTER ITA NO. 86 / RAN /201 9 4 THE AO ISSUED NOTICE U/S. 143(3) OF THE I.T.ACT,1961 DATED 06.12.2017 , THE AO AD DED THE ENTIRE SALE CONSIDERATION OF RS. 10,45,265.55 RECEIVED FROM SALE OF SHARES TO THE TOTAL INCOME OF THE APPELLANT AS UNEXPLAINED INVESTMENTS U/S. 69 OF THE I.T. ACT, 1961. FROM THE FACTS AVAILABLE ON RECORD BEFORE THE TRIBUNAL, I FIND THAT THE A.O. S HOULD HAVE ADDED THE LONG TERM CAPITAL GAIN OF RS. 5,05,265 / - ONLY INSTEAD OF RS.10,45,265/ - BEING THE INCOME OF THE ASSESSEE AND NOT THE ENTIRE SALE RECEIPT S, WHICH INCLUDED RS.5,40,000/ - BEING THE INVESTMENT MADE BY THE ASSESSEE IN PURCHASE OF SHARES. THE INVESTMENT WAS DULY SHOWN IN BALANCE SHEET OF THE ASSESSEE IN PREVIOUS YEAR AND WAS MADE OUT OF PAST EARNING & SAVINGS. TO SUPPORT HIS CLAIM, LD. AR OF THE ASSESSEE PRODUCED COPIES OF BALANCE SHEET AS ON 31.03.2014. ON PERUSAL OF THE SAME, IT REVEALS THAT RS.3,60,000/ - AND RS.1,80,000/ - TOTALLING TO RS.5,40,000/ - HAVE BEEN SHOWN IN THE BALANCE SHEET IN THE NAME OF KAILASH AUTO ON PURCHASE OF 2000 AND 1000 SHARES RESPECTIVELY FOR THE ASSESSMENT YEAR 2014 - 2015, WHICH IS THE INVESTMENTS OF PREVIOUS YEAR AND CANNOT BE TAXED IN THE SUBSEQUENT YEAR . THEREFORE, IN MY OPINION, THE AO COULD HAVE ADDED ONLY INCOME EARNED DURING ASSESSMENT YEAR 2015 - 16 AND CANN O T TAX THE INVESTMENT MADE IN PURCHASE OF SH ARES BEING INCOME OF PAST YEARS , AS THERE WAS NO FINDINGS GIVEN BY THE AO THAT THE PURCHASES TRANSACTIONS WAS BOGUS TRANSACTIONS. ACCORDINGLY, I DIRECT THE AO TO DELETE RS. 5,40,000/ - OUT OF THE TOTAL ADDITION MADE U/S.69 OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT. AS THE ASSESSEE IN THE PRESENT APPEAL HAS NOT CHAL LENGED THE TOTAL ADDITION MADE BY THE AO U/S.69 OF THE ACT AND HAS ITA NO. 86 / RAN /201 9 5 ONLY CHALLENGED ADDITION OF RS.5,40,000/ - , WHICH I HAVE DIRECTED TO THE AO TO BE DELETED, THEREFORE, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. 8. THE C HARGING OF INTEREST U/S. 234 B &C ON THE ASSESSED INCOME IS IN CONTRARY TO LAW IN VIEW OF THE DECISION OF HON'BLE JHARKHAND HIGH COURT IN THE CASE OF AJAY PRAKASH VERMA DATD 25.07.2012 IN TAX APPEAL NO. 38 OF 2010 REPORTED IN 2013 (1) JCR 580 (JHR.) RELYING UPON SMT.TEJ KUMARI VRS. CIT (2001)114 TAXMAN 404(PAT) (FB) , CONFIRMED BY HON'BLE SUPREME COURT VIDE ORDER DATED 01.08.2000 WHEREIN, INTERALIA , IT HAS BEEN HELD THAT INTEREST CAN BE CHARGED ON THE RETURNED INCOME ONLY AND NOT ON THE ASSESSED INCOME . RESPECTFULLY, FOLLOWING THE ABOVE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, I DIRECT THE AO TO DELETE THE INTEREST AS CHARGED U/S.234B OF THE ACT. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN CO URT ON 22 / 05 / 201 9 . SD/ - ( CHANDRA MOHAN GARG ) / JUDICIAL MEMBER / RANCHI ; DATED 22 / 05 /201 9 PRAKASH KUMAR MISHRA , S R.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITA T, RANCHI 1. / THE APPELLANT - . MANOJ KAPOOR, C/O SRI JAGMOHAN PODDAR, ADV SHREE MAHADEO COMPLEX, 10, SHRADHANAND ROAD, RANCHI - 834001 2. / THE RESPONDENT - ITO, WARD - 1(4 ), RANCHI 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, RANCHI 6. / GUARD FILE. //TRUE COPY//