KRISHNADEVI KEJRIWAL, MUMBAI V. ITO WD 14(2)(1), MUMBAI

ITA 93/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1270 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-01-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 06-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A PRASAD
• Keywords: Unexplained cash credit; Deduction for capital gain; Unexplained expenditure; Capital asset; Income from undisclosed sources; Share purchase agreement; Cost of acquisition; Penny stocks
• Section: 69C; 54F; 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS. 93/MUM/2009 & 2961/MUM/2008 (ASSESSMENT YEARS: 2002-03 & 2003-04) MRS. KRISHNADEVI KEJRIWAL INCOME TAX OFFICER, 14(2) (1) 5B, 285, SANJAY BUILDING 3RD FLOOR, EARNEST HOUSE MITTAL INDL. ESTATE, ANDHERI-KURLA RD. VS. NARIMAN POINT, MUMBAI ANDHERI (E), MUMBAI PAN - AAPPK 2779 K APPELLANT RESPONDENT ASSESSEE BY: SHRI SASHI TULSIYAN REVENUE BY: SHRI A. PRASAD O R D E R PER B. RAMAKOTAIAH, A.M. THESE ARE ASSESSEES APPEALS AGAINST THE ORDER OF T HE CIT(A)-XIV, MUMBAI DATED 14.11.2008 & 01.10.2007 RESPECTIVELY F OR THE ASSESSMENT YEARS 2002-03 & 2003-04. SINE THERE ARE COMMON ISSU ES IN BOTH THE APPEALS THESE ARE HEARD TOGETHER AND DECIDED BY THI S COMMON ORDER. ITA NO. 93/MUM/2009 2. THE ASSESSEE HAS RAISED 5 GROUNDS IN THIS APPEAL OU T OF WHICH GROUND NO. V) IS SUMMARY OF THE OTHER GROUNDS, WHICH IS EX TRACTED AS UNDER: - (V) THE APPELLANT PRAYS THAT A) ASSESSMENT MADE U/S. 148 BE TREATED AS VOID AND ILL EGAL. B) RECEIPT OF RS.31,42,150/- BE TREATED AS BEING RECEI VED ON SALE OF SHARES, BEING LONG TERM CAPITAL ASSET AND N OT AS INCOME FROM OTHER SOURCES AND CONSEQUENTIALLY ASSES SING RS.30,55,061/- AS LONG TERM CAPITAL GAINS. C) EXEMPTION OF RS.30,55,061/- BE ALLOWED U/S 54F ON INVESTMENT OF PROCEEDS OF LONG TERM CAPITAL ASSET I N RESIDENTIAL HOUSE. D) ADDITION OF RS.1,89,000/- U/S. 69C ON ACCOUNT OF LO W WITHDRAWALS BE DELETED. ITA NO. 93&2961/MUM/2009 MRS. KRISHNADEVI KEJRIWAL 2 3. DURING ARGUMENT THE ASSESSEE DID NOT PRESS FOR GROU ND NO. A) WITH REFERENCE TO INITIATION OF ASSESSMENT PROCEEDINGS U NDER SECTION 148. ACCORDINGLY THE GROUND IS TREATED AS WITHDRAWN. GRO UND NOS. B) & C) PERTAIN TO THE CLAIM OF LONG TERM CAPITAL GAIN AND CONSEQUE NT INVESTMENT IN RESIDENTIAL HOUSE CLAIMED BY THE ASSESSEE BEING TRE ATED AS INCOME FROM OTHER SOURCE AND ANY OTHER DEDUCTION THEREON. 4. BRIEFLY STATED, THE ASSESSEE HAS SHOWN LONG TERM CA PITAL GAINS ON SALE OF 25,00,000 SHARES OF BOLTON PROPERTIES LTD. FOR R S.31,42,150/-, WHICH WAS ACQUIRED ON 17.04.2000 FOR COST OF RS.83,000/-. THE TOTAL GAINS OF RS.30,55,061/- ARISING THERE FROM WAS CLAIMED EXEMP T UNDER SECTION 54F IN VIEW OF THE PURCHASE OF NEW RESIDENTIAL PREMISES. T HE A.O., ON ENQUIRY IN THE A.Y. 2003-04, FOUND THAT THE ASSESSEE HAS NOT P URCHASED SHARES OF M/S. BOLTON PROPERTIES LTD. ON 17.04.2000 AND ACCORDINGL Y THE SALE WAS CONSIDERED NOT GENUINE. FOR THE REASONS DISCUSSED I N A.Y. 2003-04 THE ASSESSMENT FOR THIS YEAR WAS REOPENED AND ON THE SA ME REASONS AS WAS DONE IN A.Y. 2003-4 THE A.O. TREATED THE SALE PROCE EDS RECEIVED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES AND DENIED TH E DEDUCTION UNDER SECTION 54F. IN ARRIVING AT THIS CONCLUSION THE A.O . RELIED UPON VARIOUS NEWS PAPER REPORTS ON DETECTION OF FRAUD BY DIFFERENT WI NGS OF THE DEPARTMENT SUCH AS BUSINESS STANDARD DATED 10.03.2006, INDI AN EXPRESS DATED 23.03.2006, ECONOMIC TIMES DATED 23.03.2006 AND A LSO ENQUIRIES PERTAINING TO VARIOUS SCRIPS WHICH INDICATED THAT B OLTON PROPERTY LTD. AND M/S. PRAKASH NAHATA & CO. HAVE SUPPOSED TO HAVE INV OLVED IN CONVERTING BLACK MONEY INTO LONG TERM CAPITAL GAINS AND SINCE THE ASSESSEE HAS TRANSACTED WITH THE SAME BROKER, THE ASSESSEE WAS A SKED TO FURNISH NECESSARY DETAILS AND NOTICES UNDER SECTION 133(6) WERE ALSO ISSUED TO THE BROKER M/S. PRAKASH NAHATA & CO. REPLIES WERE RECEI VED FROM M/S. PRAKASH NAHATA & CO. BUT SINCE SOME OF THE DETAILS OF THE O RIGINAL SELLERS OF THE SHARES COULD NOT BE SUBMITTED AND THAT THERE SEEMS TO BE CASH DEPOSITS IN THE BANK ACCOUNT OF M/S. PRAKASH NAHATA & CO. FROM VARIOUS PERSONS, IT WAS PRESUMED THAT THE ASSESSEE HAS DEPOSITED ITS CA SH WITH THE BROKERS AND CONVERTED ITS UNACCOUNTED MONEY INTO SALES PROCEEDS OF THE SHARES. IT IS ALSO ONE OF THE CONTENTION THAT PURCHASE OF SHARES IS TH ROUGH OFF MARKET ITA NO. 93&2961/MUM/2009 MRS. KRISHNADEVI KEJRIWAL 3 TRANSACTIONS BY VIRTUE OF SALE OF THE SHARES OF M/S . DSQ SOFTWARE WHICH WAS SQUARED OFF AGAINST THE PURCHASE PRICE OF THE SHARE S OF M/S. BOLTON PROPERTIES LTD. AND SINCE THE TRANSACTION WITH M/S. BUBNA SHARE BROKING SERVICES LTD. HAD NOT BEEN CONFIRMED, THE A.O. TREA TED THE TRANSACTION WITH M/S. BOLTON PROPERTIES LTD. AS BOGUS AND THE SALE P ROCEEDS RECEIVED OF RS.31,42,150/- IS TAKEN AS UNEXPLAINED CASH CREDIT AND ACCORDINGLY TREATED AS INCOME FROM OTHER SOURCES UNDER SECTION 68 OF I. T. ACT. BEFORE THE CIT(A) IT WAS CONTENDED THAT THE ASSESSEE HAS PURCHASED SH ARES ON 17.04.2000, WHICH WAS SENT FOR TRANSFER TO THE COMPANY ON 08.01 .2001 AND THE COMPANY HAD ISSUED A BLOCK SHARE CERTIFICATE. SUBSEQUENTLY THESE WERE SENT FOR DAMAT PURPOSES AND THE ASSESSEE HAS FURNISHED NECESSARY E VIDENCES OF ORIGIN OF SHARES IN THE BLOCK FORMAT AS WELL AS DEMAT FORMAT AND FURTHER CONFIRMATIONS FROM M/S. PRAKASH NAHATA & CO. AND AL SO THE NECESSARY PURCHASE AND SALE DETAILS, BROKERS COPIES, BANK AC COUNT IN WHICH THE SALE PROCEEDS WERE RECEIVED, CONTRACT NOTE ETC. THE CIT( A), HOWEVER, DID NOT AGREE WITH ASSESSEES CONTENTION AND CONFIRMED THE ACTION OF THE A.O. 5. BEFORE US THE LEARNED COUNSEL REFERRED TO THE PAPER BOOK FILED IN THIS REGARD AND SUBMITTED THAT THE ASSESSEE HAS PURCHASE D 30,000 SHARES OF M/S. BOLTON PROPERTIES LTD. THROUGH M/S. BUBNA SHAR E BROKING SERVICES LTD., WHICH IS AN OFF MARKET TRANSACTION AND THE PU RCHASES HAVE BEEN ADJUSTED WITH THE SALE OF DSQ SOFTWARE WHICH THE AS SESSEE WAS HOLDING EARLIER AND IN SUPPORT FURNISHED NECESSARY CONTRACT NOTES WITH SHARE NUMBERS, ETC. IT WAS SUBMITTED THAT THESE PURCHASE TRANSACTIONS WERE ALSO REPORTED TO THE STOCK EXCHANGE BUT THE ASSESSEE IS NOT ABLE TO FURNISH THE EVIDENCES. HOWEVER, THE ASSESSEE ALSO FURNISHED THE SHARE TRANSFER DEED IN FAVOUR OF THE ASSESSEE AND ALLOTMENT OF BLOCK SHARE CERTIFICATE WITH THE SEAL OF THE COMPANY DATED 25.01.2001 AND FURTHER DEMAT R EQUEST DATED 21.12.2001 WHICH WAS ACCEPTED AND SHARES WERE DEMAT ERIALISED. LATER ALL THESE SHARES WERE SOLD IN 3 LOTS, OF 25,000 SHARES THIS YEAR AND 5,000 SHARES IN THE NEXT YEAR. THE LEARNED COUNSEL ALSO REFERRED TO THE CONFIRMATIONS GIVEN BY THE M/S. BUBNA SHARE BROKING SERVICES LTD. TO THE ITO DIRECTLY AND ALSO THE NECESSARY CLIENT REGISTRATION FORMS AND BA NK ACCOUNT IN ORDER TO SUBSTANTIATE THAT THE TRANSACTIONS ARE GENUINE TRAN SACTIONS. THE LEARNED ITA NO. 93&2961/MUM/2009 MRS. KRISHNADEVI KEJRIWAL 4 COUNSEL DREW OUR ATTENTION TO PARA 10 OF THE CIT(A) WHEREIN THE DETAILS OR SHARE TRANSFER DEMATERIALISATION WAS CONFIRMED BEFO RE THE CIT(A) TO SUBMIT THAT THE ASSESSEE HAD INDEED IN PERSONAL POSSESSION OF THE SHARES AND SOLD THEM THROUGH THE STOCK EXCHANGE AND THE SALE IS NOT AN OFF MARKET TRANSACTION AND WAS CONFIRMED BY THE CALCUTTA STOCK EXCHANGE. HE DREW OUR ATTENTION TO CIT(A)S OBSERVATION IN PARA 10 TH AT THE A.O. TOOK NOTE OF THE FACT THAT IN THE LAST FEW YEARS, SEVERAL ASSESS EES IN COLLUSION WITH CERTAIN BROKERS HAD SHOWN UNREALISTIC LONG TERM CAPITAL GAI NS FROM SALE OF PENNY STOCKS. IT WAS HIS SUBMISSION THAT THE ASSESSEE WAS NOT INVOLVED IN THAT MODUS OPERANDI EVEN THOUGH THE ASSESSEE IS INCIDENT AL BENEFICIARY IN THE INCREASE IN STOCK PRICE WHICH THE ASSESSEE HAS PURC HASED LONG BACK AND REFLECTED IN THE REGULAR RETURNS OF THE ASSESSEE. M OREOVER, IT IS ALSO SUBMITTED THAT THE A.O. HAS RELIED ON VARIOUS NEWSP APERS SUCH AS BUSINESS STANDARD, INDIAN EXPRESS AND ECONOMIC TIMES WHICH R EPORTED THE TRANSACTIONS SOMETIMES IN 2006 WHEREAS THE ASSESSEE HAS SOLD AS EARLY AS DECEMBER 2001 AND MARCH 2002 ALL THE SHARES AND THO SE REPORTS ARE NOT CONNECTED WITH THE ASSESSEES TRANSACTIONS HAPPENED EARLIER. MOREOVER, THE PERSONS WHO HAVE DEPOSITED LARGE AMOUNTS OF MONEY F OR TRANSACTIONS IN THE RESPECTIVE SHARES WITH THE BROKERS HAVE NO CONNECTI ON WITH THE ASSESSEE AND IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS PAID CASH AND OBTAINED THE BENEFIT IN THIS TRANSACTION. HE ALSO R EFERRED TO THE CONFIRMATION GIVEN BY M/S. PRAKASH NAHATA & CO. TO SUBMIT THAT T HEY HAVE CONFIRMED THE TRANSACTIONS. HE ALSO SUBMITTED THAT JUST BECAUSE M /S. PRAKASH NAHATA & CO. HAS TRANSACTED FROM THE SAME ADDRESS OF THE ULT IMATE BUYERS OF THE SHARES, THE ASSESSEES TRANSACTIONS HAPPENED WITH T HE BROKER, THAT TOO ON CALCUTTA STOCK EXCHANGE, CANNOT BE DISREGARDED. WI TH REFERENCE TO SECTION 54F DEDUCTION, IT WAS SUBMITTED THAT THE ASSESSEE H AS PURCHASED RESIDENTIAL HOUSE IN FINANCIAL YEAR 2001-02 RELEVANT TO A.Y. 20 02-03 ON 30.11.2001 AT A TOTAL CONSIDERATION OF RS.35,58,809/- AND CLAIMED E XEMPTION ON SALE OF 25,000 SHARES OF M/S. BOLTON PROPERTIES LTD. HAVING LONG TERM CAPITAL GAINS OF RS.30,55,061/- IN THIS YEAR WHICH THE CIT(A) ALS O DISALLOWED AS THE SALE CONSIDERATION ON SHARES AND PROFITS WAS NOT CONSIDE RED AS LONG TERM CAPITAL GAINS. HE REFERRED TO THE REPORT OF THE PAPER AND O RDER OF THE A.O. TO SUBMIT ITA NO. 93&2961/MUM/2009 MRS. KRISHNADEVI KEJRIWAL 5 THAT THE ASSESSEE NOWHERE WAS INVOLVED IN ANY OF TH E TRANSACTIONS WHICH THE DEPARTMENT RELIED UPON AND SINCE THE ASSESSEE HAS P URCHASED SHARES AND TRANSFERRED THEM THROUGH THE STOCK EXCHANGE AT THE RELEVANT POINT OF TIME AND NECESSARY EVIDENCES HAVE BEEN FURNISHED THE SAM E IS TO BE CONSIDERED AS GENUINE TRANSACTION. THE LEARNED DR HOWEVER SUBM ITTED THE MODUS OPERANDI AND HOW SOME PERSONS CONVERTED THEIR BLACK MONEY TO CAPITAL GAINS AT NIL OR LESS TAX. HE SUPPORTED THE ORDERS O F THE AUTHORITIES. 6. WE HAVE CONSIDERED THE ISSUE AND RELEVANT DOCUMENTS AND ORDERS OF THE AUTHORITIES. AS SEEN FROM THE ORDER OF THE A.O. IT WAS MOSTLY GUIDED BY THE REPORTS OF HAWALA TRANSACTIONS IN VARIOUS NEWSP APERS DURING MARCH 2006. IT IS TO BE NOTED THAT THERE CAN BE HAWALA TR ANSACTIONS AND THAT TOO IN MANIPULATING SHARES TOWARDS OBTAINING LONG TERM CAP ITAL GAINS. HOWEVER, IT IS NOTICED THAT THESE REPORTS HAVE ARISEN IN MARCH 2006 WHEREAS THE ASSESSEE HAS PURCHASED THE SHARES IN APRIL 2000 AND SOLD THEM DURING 2000-2001. THERE ARE EVIDENCES THAT THE ASSESSEE HA S TRANSFERRED IN HER NAME BY SENDING THEM TO THE RESPECTIVE COMPANIES AN D DEMATERIALISED THE SHARES AND THEN SOLD THE SHARES IN 2 DIFFERENT ASSE SSMENT YEARS. THE ONLY ISSUE WHICH THE A.O. COULD NOT VERIFY IS THE SOURCE OF PURCHASE COST ON 17.04.2000 WHEN THE ASSESSEE WAS SUPPOSED TO HAVE P URCHASED SHARES OF M/S. BOLTON PROPERTIES LTD. BY SALE OF M/S. DSQ SOF TWARE WHICH THE ASSESSEE WAS HELD FOR A YEAR BY THAT TIME. THAT TRA NSACTION ALONE WAS AN OFF MARKET TRANSACTION. BUT SUBSEQUENT SALES WERE THROU GH THE STOCK EXCHANGE AND THROUGH THE BROKERS NOTES. MONIES HAVE BEEN RE CEIVED THROUGH THE BANKING CHANNEL. ALL THE ABOVE DETAILS/FACTS WERE M ADE AVAILABLE TO THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND M/S . PRAKASH NAHATA & CO. HAVE ALSO CONFIRMED THE TRANSACTIONS BEFORE THE A.O. THERE WAS CORRESPONDENCE WITH M/S. BOLTON PROPERTIES LTD., WH ICH ALSO CONFIRMS THE ISSUE OF JUMBO SHARE CERTIFICATE FOR THE ENTIRE 30, 000 SHARES AND SUBSEQUENT DEMATERIALISATION ALSO. EVENTHOUGH THE INVESTIGATIO N TEAM HAVE IDENTIFIED THAT VARIOUS PERSONS HAVE DEPOSITED LARGE AMOUNT OF CASH IN THE BANK ACCOUNT OF M/S. PRAKASH NAHATA & CO., NOWHERE THE A SSESSEES NAME HAS FIGURED IN THAT. WE ARE NOT SURE WHETHER THE ULTIMA TE BUYERS OF THE SHARES HAVE DEPOSITED THE MONEY IN THE BROKERS ACCOUNT FO R PURCHASE OF SHARES FOR ITA NO. 93&2961/MUM/2009 MRS. KRISHNADEVI KEJRIWAL 6 WHATEVER REASON, AT A HIGHER PRICE. JUST BECAUSE TH E ASSESSEE HAS SOLD THE SHARES AT A HIGHER PRICE AND OBTAINED LONG TERM CAP ITAL GAIN THE TRANSACTIONS OF THE ASSESSEE CANNOT BE DOUBTED, UNLESS THERE IS EVIDENCE THAT THE ASSESSEE HAS DEPOSITED CASH AND OBTAINED THE CHEQUE S IN RETURN. THE FINDINGS ON RECORD DOES NOT INDICATE SO. THE A.O. H IMSELF RECORDED ALL THE ABOVE FACTS/MATERIAL AND DISBELIEVED THE AMOUNT REC EIVED ON SALE OF SHARES OF M/S. BOLTON PROPERTIES LTD. MAINLY ON THE GROUND THAT THE INVESTIGATION WING OF THE DEPARTMENT IN THE ENQUIRY CONDUCTED IN THE CASE OF M/S. PRAKASH NAHATA & CO. COME TO THE CONCLUSION THAT TH E SAID BROKER HAS FACILITATED NUMBER OF PARTIES IN ACCEPTING CASH AND NOT REFERRED OFF MARKET TRANSACTIONS TO THE STOCK EXCHANGE. A.O. ALSO RELIE D ON THE NEWSPAPER REPORTS OF MARCH 2006 WITH REFERENCE TO HAWALA TRAN SACTIONS IN OBTAINING LONG TERM CAPITAL GAINS. 7. THE EVIDENCES FILED BY THE ASSESSEE AND THE ENQUIRI ES CONDUCTED BY THE AO MAINLY ESTABLISHES THAT THE ASSESSEE HAS PUR CHASED AND SOLD SHARES AFTER HOLDING FOR A PERIOD OF MORE THAN 12 MONTHS. THEREFORE THE GAIN ON THE SALE OF SHARES IS TO BE CONSIDERED AS LONG TERM CAP ITAL GAINS. THERE IS NO REASON AS TO WHY THE ABOVE TRANSACTIONS SHOULD BE C ONSIDERED AS BOGUS. THE A.O. HAS RELIED ON THE INVESTIGATION CARRIED ON BY THE INVESTIGATION WING AND THE NEWSPAPER REPORTS. THERE IS NOTHING IN THE FORM OF EVIDENCE WHICH RELATES THE ASSESSEE. THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THE SHARES PURCHASED OR SOLD BY T HE ASSESSEE WERE ALSO PART OF THE BOGUS CAPITAL GAIN DEALS REPORTED BY TH E INVESTIGATION TEAM. THE ASSESSEE HOWEVER FURNISHED ALL THE NECESSARY EVIDEN CES TO SUBSTANTIATE THE TRANSACTIONS AS GENUINE AND AOS ENQUIRIES ALSO CON FIRM THE SAME. 8. IN THESE CIRCUMSTANCES, IT IS TO BE CONCLUDED THAT THE ADDITION HAS BEEN MADE BY THE A.O. WITHOUT ANY BASIS AND MERELY ON CONJECTURES AND SURMISES. WE ALSO NOTICED THAT THE LEARNED CIT(A), WHILE CONFIRMING THE CASE OF THE A.O., HAS REFERRED TO CERTAIN DETAILS NOT FU RNISHED SUCH AS PURCHASE AND SALE OF M/S DSQ SOFTWARE WHICH WAS SQUARED OF A GAINST THE PURCHASE OF THE SHARES OF M/S BOLTON PROPERTIES LTD. AND ALSO T HE FACT THAT THE ULTIMATE BUYERS OF THE SHARES WERE OPERATING FROM THE SAME B ROKERS ADDRESS. THESE INFERENCES RELIED UPON BY THE LEARNED CIT(A) IN THE LIGHT OF THE DOCUMENTARY ITA NO. 93&2961/MUM/2009 MRS. KRISHNADEVI KEJRIWAL 7 EVIDENCE ARE NOT SUFFICIENT TO COME TO THE CONCLUSI ON THAT THESE TRANSACTIONS OF PURCHASE AND SALE OF SHARES BY THE ASSESSEE RESU LTING IN CAPITAL GAINS IS BOGUS. NOT ONLY THAT THE COMPANY ALSO TRANSFERRED T HE SHARES IN THE NAME OF THE ASSESSEE BY ISSUANCE OF JUMBO CERTIFICATE AND O WNERSHIP OF THE SHARES WERE ALSO RECORDED IN THE FORM OF DEMAT ACCOUNT MAI NTAINED IN BANK OF BARODA. THE MEMBER CLIENT AGREEMENT WAS ALSO FURNIS HED WHICH INDICATE THAT THE ASSESSEE WAS REGISTERED WITH THE BROKER AS PER THE NORMS. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE CAPITAL GAIN AS DECLARED BY THE ASSESSEE IS TO BE ACCEPTED AND THE ADDITION MADE BY THE A.O. DESERVES TO BE DELETED. CONSEQUENT TO THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54F. THE A.O. IS DIREC TED TO DO SO. ACCORDINGLY THE RESPECTIVE GROUNDS ARE CONSIDERED ALLOWED. 9. IN THE COURSE OF ARGUMENT THE LEARNED COUNSEL RELI ED ON THE PRINCIPLES ESTABLISHED BY THE FOLLOWING DECISIONS IN SUPPORT O F VARIOUS CONTENTIONS: - I) CIT VS. KORLAY TRADING CO. LTD. 232 ITR 820 (CAL) II) MUKESH R. MAROLIA VS. ACIT 6 SOT 247 (MUM) III) ACCHYALAL SHAW VS. ITO 19 DTR (KOL) (TRIB) 177 IV) DCIT VS. SMT. SAROJBALA A JAIN ITA NO. 3356/MUM/20 07 DATED 04.02.2009 V) ACIT VS. GAURAV P. SHAH ITA NO. 1537/MUM/2006 DATED 16.03.2009 VI) ITO VS. SANDEEP R. SHOREWALA, HUF ITA NOS. 5722 & 5 723/MUM/ 2007 DATED 26.02.2009 10. SINCE THE ISSUE IS ONE OF FACTS AND VARIOUS DECISIO NS HAVE BEEN TAKEN BY EXAMINING THE FACTS ONLY, WE DO NOT CONSIDER IT NECESSARY TO DISCUSS THE ABOVE CASES SEPARATELY. SUFFICE TO SAY THAT WE HAVE CONSIDERED THE PRINCIPLES ESTABLISHED IN THE ABOVE DECISIONS BUT THE ISSUE IS MOSTLY ON FACTS. ACCORDINGLY DETAILED DISCUSSION OF THE ABOVE CASE L AW IS CONSIDERED NOT NECESSARY IN THIS ORDER. 11. NEXT GROUND D) IS WITH REFERENCE TO ADDITION UNDER SECTION 69C ABOUT LOW WITHDRAWALS OF RS.1,89,000/-. THE A.O. NOTICED THAT THE ASSESSEE HAS DRAWN ONLY RS.30,000/- FOR THE FAMILY OF 6 MEMBERS WHEREAS THE ASSESSEE DESCRIBED THAT THE TOTAL WITHDRAWAL FOR HOUSEHOLD E XPENDITURE WAS ITA NO. 93&2961/MUM/2009 MRS. KRISHNADEVI KEJRIWAL 8 RS.60,000/-. THE A.O. ASKED FOR DETAILS OF THE FAMI LY EXPENSES WHICH THE ASSESSEE HAS NEVER FURNISHED. IN THE ABSENCE OF DET AILS FROM THE ASSESSEE AND CONSIDERING THE STANDARD OF LIVING IN MUMBAI TH E A.O. ESTIMATED THE EXPENDITURE AT RS.100/- PER DAY PER PERSON TO RS.2, 16,000/- AND FURTHER EDUCATION EXPENSES AT RS.20,000/- AND ANOTHER RS.20 ,000/- FOR RENT, SOCIETY MAINTENANCE, TELEPHONE EXPENSES, ETC. CONSI DERING THESE AN ADDITION OF RS.1,89,000/- WAS MADE AS UNEXPLAINED EXPENSES. THE SAME WAS CONFIRMED BY THE CIT(A). AFTER CONSIDERING THE ARGU MENTS OF THE LEARNED COUNSEL AND THE ORDER OF THE A.O. WE ARE OF THE OPI NION THAT THIS ISSUE REQUIRES RECONSIDERATION BY THE A.O. IT IS A FACT T HAT THE ASSESSEE HAS SHOWN ONLY RS.60,000/- EXPENDITURE OF THE HOUSEHOLD EXPEN SES BUT ABOUT THE SPECIFIC NATURE OF EXPENDITURE AND THE STANDARD OF LIVING, THE ASSESSEE HAS NOT FURNISHED ANY DETAILS. IT IS NOT ON RECORD WHET HER THE ASSESSEE WAS HAVING OWN HOUSE PRIOR TO THE PURCHASE OF THE HOUSE AND THE AMOUNT OF RENT PAID TO THAT HOUSE. IT IS ALSO NOT SHOWN WHAT ARE T HE EXPENDITURES INCURRED BY THE ASSESSEE AND THE SOURCE THEREOF. THE CAPITAL ACCOUNT OF THE ASSESSEE SEEMS TO HAVE NOT BEEN EXAMINED BY THE A.O. IN DETA IL, WHETHER THERE ANY INVESTMENTS IN LIC ETC. WERE ALSO REQUIRE EXAMINAT ION. UNLESS, THE ASSESSEE COMES FORWARD AND FURNISHES THE EXPENDITURE OF PERS ONAL NATURE WHICH IS IN THEIR KNOWLEDGE, IT IS VERY DIFFICULT TO ACCEPT ASS ESSEES CONTENTION. IN THE ABSENCE OF ANY INFORMATION ON RECORD WE DEEM IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF THE A.O. TO GIVE ONE MORE OPPORTUNIT Y TO THE ASSESSEE TO FURNISH THE NECESSARY DETAILS IN SUPPORT OF THE EXPENDITURE . IN THE ABSENCE OF ANY DETAILS FROM THE ASSESSEE, THE A.O. IS FREE TO ESTI MATE THE EXPENDITURE KEEPING IN MIND THE CAPITAL ACCOUNT OF THE ASSESSEE IN FIRMS AND ALSO HUSBANDS CAPITAL ACCOUNT. WITH THESE DIRECTIONS, T HE ISSUE IS RESTORED BACK TO THE FILE OF THE A.O. GROUND IS ALLOWED. APPEAL P ARTLY ALLOWED. ITA NO. 2961/MUN/2008 12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN TH IS APPEAL: - (I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN LAW AND FACTS IN CONFIRMING THE ACTION OF THE LEARNED A SSESSING OFFICER IN TREATING THE TRANSACTIONS RESULTING IN LONG TERM CAPITAL GAIN OF RS.3,81,324/- AS NOT GENUINE AND ASSESSING THE SAME AS INCOME FROM UNDISCLOSED SOURCES. ITA NO. 93&2961/MUM/2009 MRS. KRISHNADEVI KEJRIWAL 9 (II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN LAW AND FACTS IN NOT ALLOWING THE CLAIM OF DEDUCTION U/ S. 54F OF RS.3,81,324/- ON PURCHASE OF RESIDENTIAL HOUSE. (III) THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN LAW AND FACTS IN CONFIRMING THE ADDITION OF RS.1,96,000 /- ON ACCOUNT OF LOW WITHDRAWALS, AS UNEXPLAINED EXPENDITURE U/S 69C OF THE INCOME TAX ACT, 1961. 13. AS DISCUSSED FOR THE EARLIER ASSESSMENT YEAR ABOVE, THE A.O. HAS ORIGINALLY COMPLETED THE ASSESSMENT IN A.Y. 2003-04 AND REOPENED THE ASSESSMENT IN A.Y. 2002-03. HOWEVER, THE CAPITAL GA IN IN THIS YEAR WAS ONLY RS.3,81,324/- ON THE SALE OF 5,000 SHARES OF M/S. B OLTON PROPERTIES LTD. FOR THE REASONS DISCUSSED ABOVE IN THE OTHER APPEA,L TH E A.O. IS DIRECTED TO TREAT THE CAPITAL GAIN AS GENUINE AND ALLOW THE DEDUCTION UNDER SECTION 54F. ONE OF THE CONTENTIONS FOR DISALLOWING THE DEDUCTION UN DER SECTION 54F WAS THAT THE ASSESSEE HAS CLAIMED SIMILAR INVESTMENT IN EARL IER YEAR ON THE SAME PROPERTY. THERE WAS NO RESTRICTION THAT THE ASSESSE E CANNOT CLAIM INVESTMENT IN HOUSE PROPERTY OVER A PERIOD OF 2 YEA RS. THIS ISSUE WAS DISCUSSED ELABORATELY BY THE ITAT C BENCH, MUMBAI IN THE CASE OF SMT. ANAGHA AJIT PATNEKAR VS. ITO 9 SOT 685 WHREIN IT WA S HELD AS UNDER: - THREE IS NO BAR IN SECTION 54F FOR CLAIMING DEDUCT ION SECOND TIME OR THIRD TIME FOR THE SAME PROPERTY IF COST OF THE PRO PERTY IS WITHIN THE CAPITAL GAIN ARISING TO THE ASSESSEE. IN THE INSTAN T CASE, TOTAL CAPITAL GAIN ARISEN TO THE ASSESSEE IN ALL THE THREE YEARS 1995- 96 TO 1997-98 WAS LESS THAN THE COST OF FLAT. FURTHER, FROM THE LANGU AGE OF SECTION 54F IT IS CLEAR THAT THE LEGISLATURE HAS PROVIDED LEVERAGE TO THE ASSESSEE FOR CLAIMING DEDUCTION UNDER SECTION 54F IN THE SENSE T HAT THE ASSESSEE CAN BUY THE PROPERTY FIRST AND CLAIM DEDUCTION LATER ON , I.E., WITHIN ONE YEAR OR CAN HAVE CAPITAL GAIN FIRST AND CAN CLAIM DEDUCT ION WITHIN TWO YEARS BY PURCHASING THE RESIDENTIAL FLAT. IN ALL THE ASSE SSMENT YEARS, THESE CONDITIONS WERE SATISFIED. THEREFORE, IN RESPECT OF RESIDENTIAL PROPERTY TILL COST OF PURCHASE OF PROPERTY IS EXHAUSTED BY THE CL AIM OF THE CAPITAL GAIN BUT REMAINING IN THE TIME-FRAME STIPULATED IN SECTI ON 54F, DEDUCTION UNDER SECTION CANNOT BE DENIED. IF THE ASSESSEE FAL LS OUT OF THE TIME-LIMIT IN SECTION 54F THEN PROBABLY DEPARTMENT CAN HAVE A CASE. THE COMMISSIONER (APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE BY INTERPRETING SUB-SECTION (4) BY HOLDING THAT THE AS SESSEE HAD NOT APPROPRIATED THE SALE CONSIDERATION TOWARDS PURCHAS E OF FLAT, BUT THE COMMISSIONER (APPEALS) HAD IGNORED THE MAIN PROVISI ONS OF SECTION 54F. SUB-SECTION (4) HAS BEEN INSERTED WITH A VIEW TO FA CILITATE THE ASSESSEE TO CLAIM THE CAPITAL GAIN EXEMPTION WHEN THE ASSESSEE OPTS FOR PURCHASE OF FLAT AFTER ARISING OF THE CAPITAL GAIN AND DEPOSIT THE SALE CONSIDERATION IN THE BANK ACCOUNT TILL SUCH APPROPRIATION. THE ASSES SEE CANNOT BE ITA NO. 93&2961/MUM/2009 MRS. KRISHNADEVI KEJRIWAL 10 EXPECTED TO APPROPRIATE THE SALE CONSIDERATION IN R ESPECT OF THE ALREADY PURCHASED FLAT. IF SUCH INTERPRETATION OF THE COMMI SSIONER (APPEALS) WAS ACCEPTED, IT WOULD FRUSTRATE THE OBJECT OF THE PROV ISIONS OF SECTION 54F AND LEAD TO ABSURDITY. THEREFORE, THE ORDER OF COMM ISSIONER (APPEALS) WAS SET ASIDE AND THE ASSESSEE WAS ENTITLED TO DEDU CTION UNDER SECTION 54F IN THE RELEVANT ASSESSMENT YEAR. 14. ACCORDINGLY THE ASSESSEE IS ENTITLED TO CLAIM DEDUC TION UNDER SECTION 54F ON THE PROPERTY PURCHASED IN A.Y. 2002-03 SINCE THE LONG TERM CAPITAL HAS ARISEN WITHIN ONE YEAR FROM THE PURCHASE OF THE ABOVE PROPERTY. THE A.O. IS DIRECTED TO ALLOW DEDUCTION UNDER SECTION 5 4F AS CLAIMED. 15. THE OTHER ISSUE IS WITH REFERENCE TO THE ADDITION M ADE UNDER SECTION 69C FOR THE LOW WITHDRAWALS. FOR THE REASONS DISCUS SED IN GROUND NO. D) ABOVE IN PARA 11 ABOVE, THE ISSUE IS RESTORED BACK TO THE FILE OF THE A.O. TO EXAMINE AND DECIDE AFRESH. ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY IN EXPLAINING THE SOURCE OF HOUSEHOLD EXPENSES IN HER HANDS AS WELL AS IN HER HUSBANDS HANDS. THIS ISSUE IS RESTORED TO THE FILE OF THE A.O. APPEAL IS PARTLY ALLOWED. 16. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE 2010. SD/- SD/- (D.K. AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH JUNE 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIV, MUMBAI 4. THE CIT XIV, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.