Shri Om Prakash Phatandas Panjwani, Indore V. THE ACIT 1(2), Indore

ITA 968/IND/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2349 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 22-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Question of law; Onus to prove
• Section: 143(3); 142(1); 68

Judgement Text

ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.968/IND/2016 ASSESSMENT YEAR: 2008-09 ORDER PER MANISH BORAD, AM. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, INDORE [IN SHORT REFERRED TO AS THE CIT (A)] DATED 23.05.2016 IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT DATED 15.12.2010 FRAME D BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(2), INDORE PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF A PPEAL. SHRI OMPRAKASH PHATANDAS PANJWANI, 44, GOPAL BAGH, INDORE VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1(2) INDORE (APPELLANT) (RE SPONDENT ) PAN NO.ADMPP8053F RESPONDENT BY SHRI RAJEEV JAIN , SR. DR APPELLANT BY SHRI GIRISH AGRAWAL, CA (AR) DATE OF HEARING: 02.01.2018 DATE OF PRONOUNCEMENT: 19.01.2018 ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 2 1 BECAUSE OF FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(APPEAL) HAS ERRED IN CONFIRMING ACTION OF LD. ASSESSING OFFICER OF TREATING SHORT TERM CAPITAL GAINS AS INCOME U/S 68 OF THE IT ACT 1961 AT RS.6,62,870/- 2. THE LEARNED CIT(A), ERRED IN MAKING HIS ON VIEW THAT THE PURCHASE OF SHARES CAN BE CONSIDERED ONLY ON THE DATE OF DEMATE RIALIZATION AND HENCE, ERRED IN HOLDING THAT THE PURCHASE VALUE OF THE SHA RES SOLD BE TAKEN AT THE AVERAGE PRICE OF THE SHARES TRADED ON THE NSE AND B SE ON THE DATE DEMATERIALIZATION VIZ. RS.7,82,400/- AND TREATING T HE DIFFERENCE AS INCOME FROM UNKNOWN SOURCES THEREFORE THE LD. CIT IS WRONG IN HOLDING THAT THE SHORT TERM CAPITAL GAINS OF RS.6,62,870/- (7,82,400 1,19,530) BE TAXED AS UNEXPLAINED CREDIT U/S 68 OF THE IT ACT 1961. 3. THE LEARNED CIT(APPEALS), ERRED IN CONFIRMING TH E FINDING OF THE ASSESSING OFFICER IN NOT CONSIDERING THE GAINS ON T HE SALE OF SHARES OF RS.6,44,816/- AS SHORT TERM CAPITAL GAINS AND THERE BY ALSO CONFIRMING THE CONSEQUENT DENIAL OF INCOME TAX RATE OF 10% U/S 111 A OF THE INCOME-TAX ACT, 1961. 4. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, BOTH LD. ASSESSING OFFICER AND LD. CIT(A) HAS ERRED IN GOING INTO UNDU E CONSIDERATIONS AND MAKING BASELESS OBSERVATIONS. 5. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, NO ATTENTION WAS GIVEN TO THE SUBMISSIONS MADE BY THE ASSESSEE EITHE R BY THE LD. ASSESING OFFICER OF LD. CIT(A) AND BOTH OF THEM GONE INTO SE LF MADE STORIES WITHOUT BRINGING ANYTHING ON RECORD. 6. WITHOUT PREJUDICE TO ABOVE, THE APPELLANT HAS MA DE INVESTMENT IN SHARES IN EARLIER YEAR WHICH WERE DULY REFLECTED IN THE BALANCE SHEET OF THE APPELLANT, HENCE THE ADDITION OF RS.6,61,870/- UNDE R 68 OF THE IT ACT MAY BE DELETED. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE MANUFACTUR ING AND TRADING OF PVC TUBING ROLLS. RETURN OF INCOME FILED ON 15.1 0.2008 DECLARING TOTAL INCOME OF RS.14,23,060/- WHICH INTER-ALIA INC LUDED SHORT TERM CAPITAL GAIN OF RS.6,44,816/- EARNED FROM SALE OF E QUITY SHARES OF IFCI LIMITED. CASE SELECTED FOR SCRUTINY. NO TICES U/S 143(2) AND ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 3 142(1) OF THE ACT WERE DULY SERVED UPON THE ASSESSE E. NECESSARY DETAILS AS CALLED FOR WERE EXAMINED. LD. ASSESSING OFFICER WHILE EXAMINING THE TRANSACTION OF SALE OF EQUITY SHARES OF IFCI LIMITED OBSERVED THAT THE ASSESSEE PURCHASED THE SHARES ON 17.10.2006 THROUGH A BROKER BUT THE SHARES WERE TRANSFERRED TO DEMAT ACCOUNT ON 13.8.2007 AND IMMEDIATELY THEREAFTER THESE SHARE S WERE SOLD. PURCHASE PRICE OF RS.1,19,530/- WAS PAID ON 1.07.20 07. THE LD.AO CALLED FOR THE DETAILS FROM THE BROKER CHANDRAVADAN BHAICHAND MUCHCHALA, MUMBAI AS WELL AS NATIONAL SECURITY EXCH ANGE. HE WAS NOT CONVINCED EVEN THOUGH CONFIRMATION OF ACCOU NT CONFIRMING THE IMPUGNED TRANSACTION WAS RECEIVED. THE LD.A.O DOUBTED THE PURCHASES AND TOOK A VIEW THAT THE ALLEGED TRANSACT ION OF SHORT TERM CAPITAL GAIN IS BOGUS AND ACTUALLY RS. 7,64,34 6/- IS UNEXPLAINED CREDIT LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE. ALONGWITH OTHER MINOR DISALLOWANCES INCOME ASSESSED TO RS.15,76,610/-. 4. AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE THE LD . CIT(A) AND PARTLY SUCCEEDED. HOWEVER THE ISSUE RELATING TO UNE XPLAINED CREDIT OF RS.7,64,346/- WAS DEALT BY THE LD.CIT(A) OBSERVI NG AS FOLLOWS THEREBY RESTRICTING THE ADDITION TO RS.6,62,870/-; 2. FINDING AND ORDER :- DURING THE APPELLATE PROCEEDINGS THE A/R OF THE APPELLANT APPEARED. HE CONFIRMED FOLLOWING FACTS: 1. THE APPELLANT ASKED THE BROKER M/S CHANDRAVADAN BHAICHAND MUCHCHALA TO BUY 12000 SHARES OF IFCI ON 17.10.2006 . 2. THE PAYMENT FOR THESE SHARES @9.95 PER SHARE WAS MADE ON 1/7/2007 BY A/C PAYEE CHEQUE. 3. THE SHARES WERE TRANSFERRED TO THE APPELLANTS D MAT ACCOUNT ON 13/8/2007 ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 4 4. THE SHARES WERE SOLD ON 17 AUGUST 2007 THROUGH B ROKER ANGEL CAPITAL & DEBT MARKET LTD 5. APPELLANT WAS NOT RELATED TO M/S. CHANDRAVADAN B HAICHAND MUCHCHALA AND IN PAST NOT MANY TRANSACTIONS WERE DONE THROUGH THEM. THESE FACTS SPEAK FOR THEMSELVES. AS PER PREVAILIN G PRACTICE IN THE SHARE MARKET THE PAYMENT FOR PURCHASE OF SHARES IS DONE WITHIN 24 HOURS. IF THE PAYMENT IS NOT DONE WITHIN THE SPECIFIED TIM E THE SHARES ARE AUCTIONED I.E. SHARES ARE SOLD BY AUCTION AND THE D IFFERENCE BETWEEN THE CONTRACTED PURCHASE PRICE AND THE AUCTIONED SALE PR ICE IS DEBITED TO THE CLIENTS (PURCHASER) ACCOUNT. UNDER NO CIRCUMSTANC ES THE PAYMENT CAN BE DELAYED BEYOND 48 HOURS. THE APPELLANT CLAIMS THAT HE ASKED THE BROKER M/S. CHANDRAVADAN BHAICHAND MUCHCHALA TO BUY 12000 SHARES OF IFCI ON 17/10/2006. IFCI ON 17/10/2006. THE APPELLANT A DMITS THAT HE DID NOT MAKE ANY PAYMENT TO THE BROKER TILL 1/2007. IF SHARES WERE BROUGHT ON 17/10/2006 WHO MADE THE PAYMENT? AND WHY? ADMITT EDLY APPELLANT IS NOT RELATED TO THE BROKER AND DID NOT HAVE MANY TRANSACTIONS THROUGH THEM EVEN THE SALE OF THESE SHARES WAS NOT DONE THR OUGH THEM, THEN WHY BROKER WILL MAKE PAYMENT ON BEHALF OF THE APPELLANT ? THE APPELLANT DID NOT CLAIM THAT THE BROKER OR SOMEBODY ELSE MADE PAY MENT ON HIS BEHALF ON 17/10/2006. IF NO PAYMENT WAS DONE THEN HOW WERE S HARES PURCHASED? THIS QUESTION THE APPELLANT COULD NOT ANSWER. THE A/R PRODUCED BANK STATEMENT OF THE APPELL ANT SHOWING PAYMENT ON 1/7/2007. AFTER RECEIPT OF THE PAYMENT THE BROK ER MUST HAVE ACTED ON THE INSTRUCTION OF THE APPELLANT TO BUY SHARES. TH E SHARES WERE CREDITED TO THE DMAT ACCOUNT OF THE APPELLANT ON 13/8/2007. CO MMON SENSE TELLS THAT THE SHARES MUST HAVE BEEN PURCHASED ON ONE OR TWO DAYS EARLIER. IT TAKES TWO TO THREE DAYS TO GET THE SHARES IN THE DM AT ACCOUNT AFTER PURCHASE. THE A/R FURNISHED THE RATE OF IFCI SHARE S AS QUOTED IN STOCK EXCHANGE ON 13/8/2010 WAS AROUND RS.68 THE CLOSING RATE ON 13/8/2007 WAS RS.66.05. CLOSING RATE OF IFCI SHARES ON 10/8/ 2007 (WHICH IS MOST LIKELY TO BE THE DATE OF PURCHASE BEING THREE DAYS PRIOR TO THE DATE ON WHICH SHARES WERE CREDITED TO THE APPELLANTS DMAT ACCOUNT) WAS RS.65.20. AS MENTIONED ABOVE THE SHARES WERE SOLD ON 17 /8/2007 I.E. ONLY AFTER FOUR DAYS AFTER ACTUAL PURCHASE. SHORT TERM CAPITAL GAIN ON PURCHASE AND SALE OF IFCI SHARES WILL BE AS UNDER: SALE PRICE FOR 12000 SHARES AS DECLARED R S.764346. LESS COST OF SHARES AS ON 13/8/2007 AT AVERAGE @ RS .65.2 = 67 X 12000 = 782400. THUS THIS TRANSACTION WOULD HAVE RESULTED IN SHORT TERM CAPITAL LOSS OF RS.18054. ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 5 THE APPELLANT HAS NOT SHOWN SOURCE OF RS 78240 0/- WHICH HE MUST HAVE PAID TO BUY SHARES. THE APPELLANT HAS SHOWN P AYMENT OF RS 119530/- TO M/S. CHANDRAVADAN BHAICHAND MUCHCHALA. ON 10/8/2007 APPELLANT COULD NOT HAVE PURCHASED 12000 SHARES OF IFCI FOR RS.119530/- SINCE THE COST AT PREVAILING STOCK EXCHANGE RATE WA S RS.782400 @ RS.65.20 PER SHARE. LOGICALLY THE APPELLANT MUST H AVE PAID THE BALANCE AMOUNT I.E. 782400 119530 = 662870 FROM UNKNOWN S OURCES. 5. AGGRIEVED, THE ASSESSEE IS NOW FILED AN APPEAL BEFORE THE TRIBUNAL RAISING 7 GROUNDS OF APPEAL OUT OF WHICH G ROUND NO.7 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION AND G ROUND NO. 1 TO 6 ARE FOCUSED TOWARDS ADDITION OF RS. 6,62,870/- CO NFIRMED BY THE LD.CIT(A). THE LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT; ASSESSEE PURCHASED 12,000 SHARES OF THE IFCI LIMIT ED ON 17.10.2006 AT A PRICE OF RS.9.95 PER SHARE. THE SAME CAN BE VERIFI ED FROM THE CONTRACT NOTE AND BILL ISSUED BY THE BROKER. IFCI LIMITED IS A LI STED COMPANY. IFCI, PREVIOUSLY INDUSTRIAL FINANCE CORPORATION OF INDIA, IS AN INDIAN GOVERNMENT OWNED DEVELOPMENT BANK TO CATER TO THE LONG-TERM FI NANCE NEEDS OF THE INDUSTRIAL SECTOR AND IS A A WELL RECOGNIZED GOVER NMENT UNDERTAKING. ASSESSEE GOT THESE SHARES OF IFCI CONVERED INTO D-MAT FORM A ND RECEIVED THE SAME IN HIS D-MAT ACCOUNT ON 13.08.2007. AFTERWARDS, THE ASSESS EE SOLD THESE SHARES ON 17.08.2007 FOR A SUM OF RS.7,64,346/- (AVERAGE PRIC E OF RS.63.69 APPROX.). ASSESSEE DISCLOSED THESE TRANSACTIONS IN HIS RETURN AND OFFERED THE DIFFERENCE AMOUNT OF RS.6,44,816/- (7,64,346 1,19,530) AS SH ORT TERM CAPITAL GAIN. DATE OF ACTUAL PURCHASE AND DATE OF DEMATERIALIZATION AR E NOT RELEVANT SINCE THE CHARACTER OF GAIN RESULTING FROM SALE OF SHARES OF IFCI REMAINS SHORT TERM CAPITAL GAIN, WHICHEVER DATE IF CONCERNED. IT IS N OT A CASE WHERE BENEFIT OF LONG TERM CAPITAL GAIN IS BEING CLAIMED BY THE ASSESSEE. HE FURTHER MENTIONED THAT IIN THE PRESENT CAS E, THE LD. CIT(A) HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT THE AS SESSEE HAS IN FACT PURCHASED THE SHARES OF IFCI LTD ON 10.08.2007 AT T HE ALLEGED PRICE OF RS.7,82,400/- AND ON THE CONTRARY HE HAS SUMMARILY REJECTED THE EVIDENCES REGARDING THE PURCHASE OF THESE SHARES PLACED BEFOR E HIM. MORE SO HE HAS ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 6 ACCEPTED THE AMOUNT OF PURCHASE PRICE ORIGINALLY PA ID OF RS.1,19,530/- AND HAS ALSO ALLOWED CREDIT OF THE SAME FROM HIS HYPOTH ETICAL CALCULATION OF ALLEGED PURCHASE PRICE PAID. THIS ENTIRE EXERCISE, IT IS MO ST RESPECTFULLY SUBMITTED, IS BASED PURELY ON GUESS WORK. NONE OF THE DOCUMENTS INCLUDING CONTRACT NOTE FOR PURCHASE, FOR SALE, CONFIRMATION LETTER FROM TH E BROKER ALONG WITH LEDGER ACCOUNT OF THE ASSESSEE IN HIS BOOKS OF ACCOUNT REL ATING TO PURCHASE TRANSACTION, DMAT ACCOUNT, BANK PASS BOOK, SHARE PR ICE FROM THE WEBSITE OF WWW.BSEINDIA.COM HAVE BEEN PROVED TO BE BOGUS, FABRICATED, SHAM, FA LSE, FICTITIOUS BY THE AUTHORITIES BELOW. THE IMPUGNED T RANSACTION MADE THROUGH DMAT ACCOUNT IS IN ITSELF A SUFFICIENT EVIDENCE TO PROVE ITS GENUINENESS. THE BASIS OF ADDITION U/S 68 AND THE BASIS OF SUSTAININ G THE SAME, BOTH ARE CONTRARY TO LAW AND ALSO TO THE FACTS OF THE CASE. IT IS A SETTLED POSITION OF LAW THAT ONUS OF PROOF THAT THE APPARENT IS NOT REAL LI ES UPON THE PERSON WHO CLAIMS IT TO BE SO. IN THE PRESENT CASE THE LD.CIT (A) HAS NOT BROUGHT ON RECORD ANY DOCUMENTARY OR OTHER EVIDENCE TO SUBSTANTIATE H IS CONCLUSION (ASSUMPTION) THAT THE ASSESSEE HAS PURCHASED THE SA ID SHARES ON 10.08.2007. THIS VIEW WAS UPHELD BY THE HONBLE SUPREME COUR T IN THE CASE OF CIT VS DUALAT RAM RAWATMULL [87 ITR 349 (SC)] THE RELEVANT PARAGRAPHS OF THE ORDER ARE REPRODUCED BELOW:- THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REA L IS ON THE PARTY WHO CLAIMS IT TO BE SO. AS IT WAS THE DEPARTMENT WHICH CLAIMED THAT THE AMOUNT OF FIXED DEPOSIT RECEIPT BELONGED TO THE RESPONDENT FIRM EVEN THOUGH THE RECEIPT HAD BEEN ISSUED IN THE NAME OF B , THE BURDEN LAID ON THE DEPARTMENT TO PROVE THAT THE RESPONDENT WAS THE OWNER OF THE AMOUNT DESPITE THE FACT THAT THE RECEIPT WAS IN THE NAME OF B. A SIMPLE WAY OF DISCHARGING THE ONUS AND RESOLVING THE CONTR OVERSY WAS TO TRACE THE SOURCE AND ORIGIN OF THE AMOUNT AND FIND OUT IT S ULTIMATE DESTINATION. SO FAR AS THE SOURCE WAS CONCERNED, THERE WAS NO MA TERIAL ON THE RECORD TO SHOW THAT THE AMOUNT CAME FROM THE COFFERS OF TH E RESPONDENT FIRM OR THAT IT WAS TENDERED IN B CALCUTTA BRANCH OF THE CE NTRAL BANK, ON BEHALF OF THE RESPONDENT. AS REGARDS THE DESTINATION OF T HE AMOUNT, THERE WAS NOTHING TO SHOW THAT IT WENT TO THE COFFERS OF THE RESPONDENT. ON THE CONTRARY, THERE WAS POSITIVE EVIDENCE THAT THE AMOU NT WAS RECEIVED BY B. IT WOULD THUS FOLLOW THAT BOTH AS REGARDS THE SOURC E AS WELL AS THE DESTINATION OF THE AMOUNT, THE MATERIAL ON THE RECO RD GAVE NO SUPPORT TO THE CLAIM OF THE DEPARTMENT FURTHER THE ADDITION U/S 68 TO THE EXTENT OF RS.6,6 2,870/- HAS BEEN CONFIRMED BY THE LD.CIT(A) ONLY ON THE BASIS OF ASS UMPTIONS AND CONJECTURES (THAT THE ASSESSEE MUST HAVE PAID SOME AMOUNT AND WAS NOT ABLE TO PROVE THE SOURCE OF THE SAME). IT IS MO STLY RESPECTFULLY SUBMITTED THAT THE ASSESSEE CANNOT PROVE SOURCE OF A PAYMENT WHICH HAS BEEN ASSUMED TO HAVE BEEN MADE, BY THE LD. CIT(A). ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 7 HE ADDED THAT IT IS WELL SETTLED POSITION IN LAW THAT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF CONJECTURES AND SURMISES. T HE ADDITION MUST BE BASED UPON RELEVANT INFORMATION AND EVIDENCES. AN ADDITI ON SUSTAINED ONLY ON THE BASIS OF CONJECTURES AND SURMISES IS VITIATED AND D ESERVES TO BE DELETED. THIS VIEW HAS BEEN FORTIFIED BY THE HONBLE APEX COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT (26 ITR 775 (SC)] RELEVANT PARAGRAPHS ARE REPRODUCED FOR SAKE OF CONVENIENCE TO YOUR HONOURS: - AS REGARDS THE SECOND CONTENTION, ALTHOUGH ITO IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADINGS, AND THAT HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW, BUT THERE THE AGREEMENT ENDS; BECAUSE IT IS EQUALLY CLE AR THAT IN MAKING THE ASSESSMENT UNDER SECTION 23(3) HE IS NOT ENTITLED T O MAKE A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO A NY EVIDENCE OR ANY MATERIAL AT ALL AND THERE MUST BE SOMETHING MOR E THAN BARE SUSPICION TO SUPPORT THE ASSESSMENT ALSO IN THE CASE OF SHREELEKHA BANERJEE AND OTHERS VS. CIT(A) 49 ITR 112. THE HONBLE SUPREME COURT HAS HELD THAT BEFORE DEPARTMENT REJECTS ANY EVIDENCE, IT MUST EITHER SHOW AN INHERE NT WEAKNESS IN THE EXPLANATION OR REBUT THE SAME BY PUTTING TO THE ASS ESSEE SOME INFORMATION OR EVIDENCE WHICH IT HAS IN ITS POSSESS ION. THE DEPARTMENT CANNOT BY MERELY REJECTING UNREASONABLY A GOOD EXPL ANATION CONVERT GOOD PROOF INTO NO PROOF. 6. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ORDER OF LOWER AUTHORITY. 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS CAREFULLY. 8. IN GROUND NO. 1 TO 6 RAISED BY THE ASSESSEE, THE SOLE GRIEVANCE IS AGAINST THE ORDER OF LD.CIT(A) PARTLY CONFIRMING TH E ADDITION MADE BY LD. A.O BY TREATING THE SHORT TERM CAPITAL GAIN OF RS.6,62,870/- AS INCOME FROM UNDISCLOSED SOURCES WHICH WAS ADDED BY THE LD.A.O APPLYING PROVISIONS OF SECTION 68 OF THE AC T. WE OBSERVE ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 8 THAT THE ISSUE REVOLVES ROUND THE TRANSACTION OF SH ORT TERM CAPITAL GAIN FROM SALE OF SHARES. THE LD.A.O HAS DOUBTED T HE GENUINENESS OF PURCHASE OF IFCI SHARES WHICH WERE BOUGHT THROUG H THE BROKER M/S. CHANDRAVAN BHAICHAND MUCHCHALA, MUMBAI BY CONT RACT NOTE NO.7024 DATED 17.10.2006. AT THAT POINT OF TIME PR ICE PER EQUITY SHARE OF IFCI LTD WAS RS.9.95. HOWEVER THE PAYMENT FOR THIS PURCHASE OF RS.1,19,530/- WAS MADE AFTER NINE MONTH S I.E. 1.7.2007. THE 12000 EQUITY SHARES BOUGHT BY THE AS SESSEE @RS.9.95 PER SHARE WERE TRANSFERRED TO DMAT ACCOUNT ON 13.8.2007 AND THEN THESE WERE SOLD ON 17.8.2007 AND THE PRICE PER EQUITY SHARE ON THE DATE OF SALE WAS AROUND RS.63. 9. THE LD.A.O DOUBTED THE IMPUGNED PURCHASE BECAUS E THE PAYMENT WAS MADE AFTER NINE MONTHS EVEN WHEN THERE WAS NO REGULAR TRANSACTION BETWEEN THE ASSESSEE AND BROKER AND ALSO THERE WAS EXTRA ORDINARY INCREASE IN THE PRICES OF THE EQ UITY SHARES. AS MENTIONED BY THE LD.A.O IN THE IMPUGNED ASSESSMENT ORDER THAT NATIONAL STOCK EXCHANGE DENIED OF HAVING ANY TRANSA CTION OF PURCHASE OF IFCI TD. SHARES BY THE ASSESSEE DUE TO THIS REASON THE PURCHASES WERE DOUBTED AND THE TRANSACTION WAS TREA TED AS SPAM AND THE ALLEGED SALE RECEIPT FROM SALE OF SHARES WA S TREATED AS UNEXPLAINED INCOME.WHEN THE MATTER CAME UP BEFORE T HE LD.CIT(A), HE IGNORED THE EXISTENCE OF ANY PURCHASE MADE ON 1 7.10.2006 AND CALCULATED THE SHORT TERM CAPITAL GAIN BY TAKING C OST OF EQUITY SHARES ON THE DATE OF DEMATIZING OF 12000 EQUITY SH ARES. THIS RESULTED INTO THE SHORT TERM CAPITAL GAIN LOSS TOTA LING RS.18,504/-. ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 9 THE LD.CIT(A) ACCORDINGLY TREATED RS.6,62,870/- AS INCOME FROM UNKNOWN SOURCES AFTER GIVING BENEFIT OF PURCHASE CO ST OF RS.1,19,530/- AGAINST THE SALE CONSIDERATION. 10. BEFORE MOVING FURTHER WE WILL LIKE TO REPRODUCE THE FINDINGS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S H IMANI M VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) WHEREIN SIMI LAR ISSUE AND ALMOST IDENTICAL FACTS CAME UP FOR ADJUDICATION AND HONBLE HIGH COURT DISMISSED THE REVENUES APPEAL OBSERVING AS F OLLOWS; WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE ITAT IS RIGHT IN DELETING THE ADDITION OF RS.36,72, 631/- MADE U/S 68 BY THE ASSESSING OFFICER BY TREATING THE SHORT TERM CAPITA L GAIN AS UNEXPLAINED CASH CREDIT? 2. THE ASSESSMENT YEAR IS 2006-07 AND THE RELEVANT ACCOUNTING PERIOD IS 1.04.2005 TO 31.3.2006. THE RESPONDENT CASSESSEE , AN INDIVIDUAL, FILED HER RETURN OF INCOME SHOWING TOTAL INCOME OF RS.8,7 2,299/- INCLUDING SHORT TERM CAPITAL GAIN OF RS.2,78,413/- AND LONG TERM CA PITAL GAIN OF RS.3,41,683/-. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE CLAIMED LONG TERM CAPITAL GAIN OF RS.34,65,171/- ON A SCRIP NAMED SHRI NIDHI TRADING LIMITED. ON SCRUTINIZING THE COMPLETE TRAN SACTION THE TOTAL SALE VALUE CAME TO RS.36,72,631/- AND TOTAL PURCHASE VAL UE CAME TO RS.2,07,460/-. THE ASSESSEE ACCORDINGLY SHOWED CAP ITAL GAIN OF RS.34,65,171/-. THE ASSESSING OFFICER AFTER SEEKIN G DETAILS FROM THE PARTIES TREATED THE SUM OF RS.36,72,631/- CREDITED IN THE BOOKS OF ACCOUNTS UNEXPLAINED CASH CREDIT UNDER SECTION 68 O F THE ACT AND BROUGHT IT TO TAX. THE ASSESSEE CARRIED THE MATTER IN APPE AL BEFORE THE COMMISSIONER (APPEALS) WHO ALLOWED THE SAID GROUND OF APPEAL AND DIRECTED THE ASSESSING OFFICER TO ACCEPT THE CLAIM OF THE ASSESSEE OF RS.34,65,171/- AS CAPITAL GAINS. THE REVENUE CARRI ED THE MATTER IN APPEAL BEFORE THE TRIBUNAL, BUT DID NOT SUCCEED. 3. MR. MANAV MEHTA, LEARNED COUNSEL FOR THE APPELLA NT HAS ASSAILED THE IMPUGNED ORDER BY PLACING RELIANCE UPON THE REASONI NG ADOPTED BY THE ASSESSING OFFICER. 4. AS CAN BE SEEN FROM THE IMPUGNED ORDER, THE TR IBUNAL, AFTER APPRECIATING THE EVIDENCE ON RECORD, HAS FOUND THAT BEFORE THE ASSESSING ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 10 OFFICER THE ASSESSEE HAD EXPLAINED THAT THE PURCHAS E TRANSACTIONS WERE MADE ON THE ONLINE TRADING SYSTEM AND THESE TRANS ACTIONS ARE GENUINE. EARLIER, THIS IS PRIOR TO 1.4.2005, IT WAS NOT COMP ULSORY FOR THE CLIENT TO HAVE HIS OWN TRANSACTION RECORD UNDER SEBI GUIDELIN ES. THEREFORE, THE PURCHASES EARLIER WERE MADE USING THE BROKERS CODE , AND IT WAS FOR THIS REASON THAT THE BROKER HAD USED THE SELF CODE. S INCE THE SHARES WERE SOLD AFTER 1.4.2005, THE TRANSACTIONS WERE NOT UNDE R THE BROKERS CODE. AS REGARDS SERVICE TAX AND STAMP CHARGES THE CONTRACT NOTE OF THE BROKER CLEARLY MENTIONED THAT THE BROKERAGE WAS INCLUSIVE OF SERVICE TAX ETC. IN THE CASE OF THE SELLING BROKER THE SERVICE TAX SECU RITIES TRANSACTION TAX AND EDUCATION CESS WERE SEPARATELY MENTIONED. AS REGAR DS THE POINT RAISED BY THE ASSESSING OFFICER THAT THERE WAS ABSENCE OF BROKER-CLIENT AGREEMENT, THE TRIBUNAL ACCEPTED THE SUBMISSION OF THE ASSESSEE THAT THE GENUINENESS OF THE TRANSACTIONS WAS ALREADY PROVED BY THE CONTRACT NOTES FOR SALE AND PURCHASE, THE BANK STATEMENT OF THE BR OKER, THE DEMAT ACCOUNT SHOWING TRANSFER IN AND OUT OF SHARES, AS A LSO ABSTRACT OF TRANSACTIONS FURNISHED BY THE CSE. THE TRIBUNAL, A FTER APPRECIATING THE EVIDENCE ON RECORD, CONCURRED WITH THE FINDINGS REC ORDED BY THE COMMISSIONER (APPEALS) THAT THE ASSESSEE HAD FURNIS HED COMPLETE DETAILS WHICH WERE NOT FOUND FALSE OR BOGUS BY THE ASSESSIN G OFFICER AND THAT IT WAS ONLY ON SUSPICION THAT THE ASSESSING OFFICER HA D TREATED THE CAPITAL GAIN DECLARED BY THE ASSESSEE AS UNEXPLAINED CASH C REDIT UNDER SECTION 68 OF THE ACT. IN THE LIGHT OF THE AFORESAID FINDI NGS OF FACT RECORDED BY IT, THE TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE. 5. IN THE LIGHT OF THE ABOVE FINDINGS OF FACT RECOR DED BY THE TRIBUNAL, IT IS NOT POSSIBLE TO STATE THAT THE VIEW ADOPTED BY THE TRIBUNAL IS, IN ANY MANNER, UNREASONABLE OR PERVERSE. BESIDES, THE LEA RNED COUNSEL FOR THE APPELLANT IS NOT IN A POSITION TO SHOW THAT THE TRI BUNAL HAS PLACED RELIANCE UPON ANY IRRELEVANT MATERIAL OR THAT ANY RELEVANT M ATERIAL HAS BEEN IGNORED, NOR IS HE ABLE TO POINT OUT ANY MATERIAL T O THE CONTRARY SO AS TO DISLODGE THE CONCURRENT FINDINGS OF FACT RECORDED B Y THE TRIBUNAL. UNDER THE CIRCUMSTANCES, THE IMPUGNED ORDER BEING BASED U PON CONCURRENT FINDINGS OF FACT RECORDED BY THE TRIBUNAL UPON APPR ECIATION OF THE EVIDENCE OF RECORD, DOES NOT GIVE RISE TO ANY QUESTION OF LA W, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW SO AS TO WARRANT INTERF ERENCE. THE APPEAL IS, ACCORDINGLY, DISMISSED. 11. NOW IN ORDER TO APPRECIATE AND EXAMINE THE FACT S IN THE LIGHT OF ABOVE JUDGMENT, WE FIND THAT THE ASSESSEE PLACED FO LLOWING DOCUMENTS BEFORE THE LOWER AUTHORITIES; 1.CONTRACT NOTE CUM BILL OF BROKER FROM WH OM SHARES WERE PURCHASED; ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 11 2. CONFIRMATION OF ACCOUNTS FROM THE SAME BROKER 3. COPY OF LEDGER ACCOUNTS OF BROKER 4. COPY OF BANK ACCOUNT OF THE ASSESSEE 5. COPY OF D-MAT ACCOUNT OF THE ASSESSEE 6. COPY OF STATEMENT OF AFFAIRS OF THE ASS ESSEE 7. COPY OF CONTRACT NOTE CUM BILL FOR SALE OF SHARES 12. NOW ABOVE REFERRED DETAILS EXCEPT FOR THE GENU INENESS OF PURCHASE, THE LD.A.O HAS NOT CHALLENGED THE GENUINE NESS OF OTHER DETAILS MOST IMPORTANTLY THE SALE OF SHARES WHICH H AVE BEEN EFFECTED BY THE ASSESSEE THROUGH BOMBAY STOCK EXCHANGE PORTA L AND SOLD THROUGH ANGEL CAPITAL & DEBT MARKET LTD. THE RELEV ANT DOCUMENTS IN THE PAPER BOOK FROM PAGE 23 TO 30 PROVE BEYOND D OUBT THE GENUINENESS OF SALE OF EQUITY SHARES. IT IS ALSO N OT DISPUTED THAT THE SHARE OF IFCI LTD WERE DEMATIZED AFTER THE PURCHASE AND THEY HAVE BEEN DEBITED FROM THIS ACCOUNT AT THE TIME OF SALE. AS FAR AS PURCHASE IS CONCERNED THE SHARES HAVE BEEN PURCHASE D THROUGH A REGISTERED BROKER WHO IS A MEMBER OF STOCK EXCHANGE , BOMBAY HAVING SEBI REGISTRATION NO.INB010005219. FOR THE O NLY REASON THAT THE PAYMENT OF PURCHASE HAS BEEN MADE AFTER A LAPSE OF 9 MONTHS CANNOT RENDER THE PURCHASE AS NON GENUINE UN LESS AND OTHERWISE ANY MATERIAL IS BROUGHT ON RECORD WHICH C OULD NEGATE THIS FACT. 13. FURTHER WE FIND THAT THE ADDITION HAS BEEN MAD E FOR THE UNEXPLAINED CREDIT OF RS.7,64,346/- BUT NOWHERE RIG HT FROM THE ASSESSMENT PROCEEDINGS AND TILL THE PROCEEDINGS BEF ORE THE APPELLATE AUTHORITY, REVENUE AUTHORITIES HAVE EVER DOUBTED THE ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 12 SOURCE OF AMOUNT OF SALE CONSIDERATION OF RS.7,64,3 46/- WHICH THE ASSESSEE RECEIVED THROUGH BANKING CHANNEL FROM SALE OF SHARES HELD IN DMAT ACCOUNT THROUGH THE RECOGNIZED STOCK EXCHAN GE WHICH IS VERIFIABLE FROM THE CONTRACT NOTE. 14. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTAN CES OF THE CASE ARE OF THE CONSIDERED OPINION THAT BOTH THE LOWER A UTHORITIES ERRED IN TREATING THE ALLEGED TRANSACTION OF SALE OF EQUI TY SHARES AS A SHAM TRANSACTION. WE ACCORDINGLY SET ASIDE THE FINDINGS OF BOTH THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE AN D FURTHER HOLD THAT THE ASSESSEE HAS RIGHTLY SHOWN THE SHORT TERM CAPITAL AMOUNTING TO RS.6,44,816/- FROM SALE OF EQUITY SHAR ES OF IFCI LTD. IN THE RESULT GROUND NO. 1 TO 6 OF THE ASSESSEES A PPEAL ARE ALLOWED. 15. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.01.201 8. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 19 JANUARY, 2018 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE ITA NO.968/IND/2016, A.Y. 2008-09 OMPRAKASH PHATANDAS PANJWANI 13 1. DATE OF DICTATION : 16/01/2018 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : 17/01/2018 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR.P.S./P .S: 18.1.2018 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT: 18.1.2018 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.:19.1.18 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISSTANT R EGISTRAR FOR SIGNATURE OF THE ORDER. 9. DATE OF DESPATCH OF THE ORDER: