SUDHA CHANDAK, Ajmer V. ITO, Ajmer

ITA 983/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5215 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 17-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Sham transactions
• Section: 234B; 115JB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 983/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SMT. SUDHA CHANDAK CHANDAK NIWAS BANGALI GALI, KUTCHERY ROAD, AJMER CUKE VS. THE ITO WARD- 2(1) AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAEPM 2594 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 984/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SHRI LAXMI NIWAS CHANDAK CHANDAK NIWAS BANGALI GALI, KUTCHERY ROAD, AJMER CUKE VS. THE ITO WARD- 2(1) AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AIWPC 9391 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 985/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SHRI LAXMI NIWAS CHANDAK (HUF ) CHANDAK NIWAS BANGALI GALI, KUTCHERY ROAD, AJMER CUKE VS. THE ITO WARD- 2(1) AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABHL 6466 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 986/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SHRI VINEET CHANDAK CHANDAK NIWAS BANGALI GALI, KUTCHERY ROAD, AJMER CUKE VS. THE ITO WARD- 2(1) AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AARPC 9762 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 983 TO 986/JP/2015 SMT. SUDHA CHANDAK & OTHERS VS. ITO, WARD- 2(1), AJ MER 2 FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY:SHRI RAVHUVIR SINGH DUGAR,ADDL. CIT- DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27/05/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13 /06/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THESE APPEALS HAVE BEEN FILED BY THE ABOVE ASSESSEE 'S AGAINST FOUR SEPARATE ORDERS OF THE LD. CIT(A), AJMER DATED 10 -09-2015 FOR THE ASSESSMENT YEAR 2006-07. 2.1 THE GROUND NO. 1 IN ALL THE APPEALS IS COMMON A ND IS NOT PRESSED BY THE LD. AR OF THE ASSESSEE. HENCE, THE SAME ARE DISMISSED 3.1 THE GROUND NO. 3 IN ALL THE APPEALS IS RELATING TO CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT WHICH IS CONS EQUENTIAL IN NATURE. 4.1 NOW THE SOLITARY GROUND OF THE ISSUE IN ALL THE APPEALS ARE THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE FOLLOWING AD DITION MADE BY THE AO AS INCOME FROM OTHER SOURCES AS AGAINST LONG TER M CAPITAL GAIN CLAIMED BY THE ASSESSEE. (I) RS. 1,94,343/- IN THE CASE OF SMT. SUDHA CHAND AK (II) RS. 1,94,158/- IN THE CASE OF SHRI LAXMI NIWA S CHANDAK. (III) RS. 1,93,973/- IN THE CASE OF SHRI LAXMI NIWA S CHANDAK (HUF) ITA NO. 983 TO 986/JP/2015 SMT. SUDHA CHANDAK & OTHERS VS. ITO, WARD- 2(1), AJ MER 3 (IV) RS. 1,94,048/- IN THE CASE OF SHRI VINEET CHA NDAK. 5.1 FIRST OF ALL, WE TAKE UP THE SOLITARY GROUND OF THE ASSESSEE (ITA NO. 983/JP/2015- SMT. SUDHA CHANDAK) AS DELETION OF ADD ITION OF RS. 1,94,343/-. BRIEF FACTS OF THE CASE ARE THE ASSESSE E HAS SHOWN LONG TERM CAPITAL GAIN OF RS. 1,94,343/- FROM SALE OF M/S. TA LENT INFOWAY LTD. THE AO HELD THAT THE TRANSACTIONS OF PURCHASES SHARES E NTERED INTO BY THE ASSESSEE WERE SHAM TRANSACTIONS. ACCORDING TO THE A O, THE ASSESSEE HAD NOT EARNED ANY LONG TERM CAPITAL GAIN AND THE ASSES SEE HAD INTRODUCED HIS OWN UNDISCLOSED INCOME IN THE FORM OF LONG TERM CAP ITAL GAIN. THE AO CAME TO THE CONCLUSION THAT THE LONG TERM CAPITAL G AIN SHOWN BY THE ASSESSEE IS NOT A GENUINE LONG TERM CAPITAL GAIN ON THE BASIS OF THE INFORMATION RECEIVED FROM DDIT (INV.) II, UDAIPUR AND STATEMENT OF SHRI MUKESH K CHOKSI, OPERATOR OF ALLIANCE INTERMEDIARIT ES & NETWORK (P) LTD., THE SHARE BROKER THOROUGH WHOM THE ASSESSEE W AS CLAIMED TO HAVE CARRIED OUT THE TRANSACTIONS OF PURCHASE AND SALE O F SHARES OF M/S. TALENT INFOWAY LTD. THE AO CONSIDERING ALL THESE FACTS OF THE CASE, CIRCUMSTANCES AND SUBMISSIONS OF THE VIDE PAGE 1 TO 7 OF THE ASSESSMENT ORDER CAME TO CONCLUSION THAT THE LONG TERM CAPITAL GAIN OF RS. 1,94,343/- SHOWN BY THE ASSESSEE'S WAS NOT GENUINE AND TREATED THIS AMOUNT AS ITA NO. 983 TO 986/JP/2015 SMT. SUDHA CHANDAK & OTHERS VS. ITO, WARD- 2(1), AJ MER 4 INCOME FROM OTHER SOURCES AND THUS ADDED THE SAME T O THE INCOME OF THE ASSESSEE. 5.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE AO BY OBSERV ING AS UNDER:- 4.2 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STA TEMENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSION CAR EFULLY. IT IS SEEN THAT THE ASSESSING OFFICER HAD DISCUSSED IN DETAIL IN THE ASSESSMENT ORDER THE FACTS AND CIRCUMSTANCES ON THE BASIS OF WHICH HE HAS COME TO THE CONCLUSION THAT THE LON G TERM CAPITAL GAIN OF RS. 1,94,343/- SOWN BY THE APPELLAN T IS NOT A GENUINE CAPITAL GAIN. THESE FACTS AND CIRCUMSTANCES ARE NOT BEING REPEATED IN THE ORDER. THE APPELLANT COULD NO T CONTRADICT THE STATEMENT GIVEN BY SHRI MUKESH M CHO KSI, OPERATOR OF ALLIANCE INTERMEDIATERIES & NETWORK (P) LTD. THE ASSESSEE COULD NOT EXPLAIN SATISFACTORILY WHY T HE SHARES WERE PURCHASED IN CASH, IN PHYSICAL FORM, WHEN SHE WAS HAVING BANK ACCOUNT AND DEMAT ACCOUNT. FURTHER, BOT H THE STOCK EXCHANGE I.E. BSE AND NSE HAVE INFORMED THE A O THAT M/S. ALLIANCE INTERMEDIATERIES & NETWORK (P) LTD., THE SUB- BROKER THROUGH WHOM THE APPELLANT HAS CLAIMED TO HA VE CARRIED OUT THE SALE AND PURCHASE TRANSACTIONS OF H IS SHARES, WAS NOT A REGISTERED SUB-BROKER. THE SHARE TRANSACT IONS HAVE NOT TAKEN PLACE THROUGH ANY OF THE RECOGNIZED STOCK EXCHANGE. AFTER TAKING INTO ACCOUNT ALL THE FACTS O F THE CASE AND CIRCUMSTANCES, SPECIFICALLY THE STATEMENT OF SH RI MUKESH K CHOKSI, OPERATOR OF ALLIANCE INTERMEDIATERIES & N ETWORK ITA NO. 983 TO 986/JP/2015 SMT. SUDHA CHANDAK & OTHERS VS. ITO, WARD- 2(1), AJ MER 5 (P) LTD., THE BROKER THROUGH WHICH THE APPELLANT IS CLAIMED TO HAVE CARRIED OUT THE TRANSACTION, I AM OF THE CONSI DERED VIEW THAT THE AO WAS FULLY JUSTIFIED IN COMING TO THE CO NCLUSION THAT THE CAPITAL GAIN OF RS. 1,94,343/- SHOWN BY TH E APPELLANT WAS NOT A GENUINE LONG TERM CAPITAL GAIN. THE DECIS ION RELIED UPON BY THE APPELLANT HAVE BEEN GIVEN ON DIF FERENT SET OF AND ARE NOT APPLICABLE TO THE CASE UNDER CONSIDE RATION. HENCE, THE ADDITION MADE BY THE AO ON THIS GROUND IS HEREBY CONFIRMED. 5.3 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS OBSERVED THAT THE REVENU E HAS TREATED THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS INCOM E FROM OTHER SOURCES. THE AO HAS HELD THE TRANSACTIONS I.E. PURCHASE AND SALE OF SHARES AS SHAM TRANSACTIONS AND THE ASSESSEE HAS NOT EARNED ANY LO NG TERM CAPITAL GAIN. THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IS NOT GENUINE. THE CONCLUSION IN THIS REGARD WAS ALSO BASED ON THE INF ORMATION RECEIVED FROM DDIT (INV.) II,UDAIPUR. THE LD. AR OF THE ASSESSEE CLAIMED THAT THE SHARES WERE PURCHASED IN PHYSICAL FORM BUT LATER ON THESE SHARES WERE DEMAT ON 15-05-2003 WITH ICICI BANK, AJMER AND SUB SEQUENTLY THESE SHARES HAD BEEN SOLD. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT FOR CLAIMING DEDUCTION U/S 10(38) OF THE ACT, THESE TRA NSACTIONS ARE SUBJECT TO CHARGE OF SECURITY TRANSACTION TAX (FOR SHORT STT ) AND THERE IS NO ITA NO. 983 TO 986/JP/2015 SMT. SUDHA CHANDAK & OTHERS VS. ITO, WARD- 2(1), AJ MER 6 EVIDENCE WHETHER THE STT HAS BEEN PAID ON THE SALE OF THESE SHARES. FOR THE SAKE OF CONVENIENCE, SECTION 10(38) IS REPRODUC ED AS UNDER:- (38) ANY INCOME ARISING FROM THE TRANSFER OF A LONG -TERM CAPITAL ASSET, BEING AN EQUITY SHARE IN A COMPANY OR A UNIT OF AN EQUITY OR IENTED FUND WHERE (A) THE TRANSACTION OF SALE OF SUCH EQUITY SHARE O R UNIT IS ENTERED INTO ON OR AFTER THE DATE ON WHICH CHAPTER VII OF THE FINANCE (NO. 2) ACT, 2004 COMES INTO FORCE; AND (B) SUCH TRANSACTION IS CHARGEABLE TO SECURITIES T RANSACTION TAX UNDER THAT CHAPTER : 60 [ PROVIDED THAT THE INCOME BY WAY OF LONG-TERM CAPITAL GAIN O F A COMPANY SHALL BE TAKEN INTO ACCOUNT IN COMPUTING THE BOOK P ROFIT AND INCOME-TAX PAYABLE UNDER SECTION 115JB .] EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, EQ UITY ORIENTED FUND MEANS A FUND (I) WHERE THE INVESTIBLE FUNDS ARE INVESTED BY WAY OF EQUITY SHARES IN DOMESTIC COMPANIES TO THE EXTENT OF MORE THAN 61 [SIXTY-FIVE] PER CENT OF THE TOTAL PROCEEDS OF SUCH FUND; AND (II) WHICH HAS BEEN SET UP UNDER A SCHEME OF A MUT UAL FUND SPECIFIED UNDER CLAUSE (23D) : PROVIDED THAT THE PERCENTAGE OF EQUITY SHAREHOLDING OF THE FUND SHALL BE COMPUTED WITH REFERENCE TO THE ANNUAL AVERAGE OF TH E MONTHLY AVERAGES OF THE OPENING AND CLOSING FIGURES;] THE LD. AR OF THE ASSESSEE WAS NOT ABLE TO REPLY TH IS QUERY AND HE REQUESTED THE MATTER MAY BE RESTORED BACK TO THE FI LE OF THE AO FOR SUCH VERIFICATION. HE ALSO PLEADED THAT THE ASSESSEE HAS NOT BEEN ABLE TO CROSS EXAMINE SHRI MUKESH K CHOKSI WHOSE STATEMENT HAS BE EN RELIED ON BY THE REVENUE AUTHORITIES. HENCE, IN VIEW OF THE FACT S AND CIRCUMSTANCES OF THE CASE, THE ISSUE IS RESTORED TO THE FILE OF THE AO TO DECIDE IT AFRESH AS INDICATED ABOVE AND ALSO BY PROVIDING THE OPPORTUNI TY OF HEARD TO THE ITA NO. 983 TO 986/JP/2015 SMT. SUDHA CHANDAK & OTHERS VS. ITO, WARD- 2(1), AJ MER 7 ASSESSEE. ACCORDINGLY, THE OTHER APPEALS OF THE ASS ESSEES (SUPRA) HAVING SIMILAR ISSUE ARE RESTORED TO THE FILE OF THE AO. T HUS ALL THE APPEALS OF THE ABOVE ASSESSEE'S ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6.0 IN THE RESULT, THE APPEALS OF THE ASSESSEES AR E PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13/06/20 16 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13/06/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- (I) SMT. SUDHA CHANDAK (II) SHRI LAXMI NIWAS CHANDAK (III) SHRI LAXMI NIWAS CHANDAK (HUF) , & (IV) VINEER CHANDAK, AJMER 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 2 (1), AJMER 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 983 TO 986/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR