The DCIT, Central Circle-1(3), Ahmedabad V. Shri Munishkumar Amrutlal Bansal, Bhavnagar

ITSSA 231/AHD/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4989 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 10-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: A L THAKKAR
• Keywords: Capital asset; Business income; Search and seizure; Document seized; Wrong claim; Documents seized; Set aside; Capital Gains
• Section: 143(3); 153A; 139(1); 54EC; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER IT(SS)A. NO: 231/AHD/2016 (ASSESSMENT YEAR: 2010-11) DCIT, CENTRAL CIRCLE-1(3), AHMEDABAD V/S SHRI MUNISHKUMAR AMRITLAL BANSAL PLOT NO. 1497-B, OPP. THEOSOPHICAL LODGE, RUPANI CIRCLE, BHAVNAGAR (APPELLANT) (RESPONDENT) PAN: AUSPB 3624P APPELLANT BY : SHRI L.P. JAIN, SR. D.R. RESPONDENT BY : SHRI A.L. THAKKAR, A.R. ( )/ ORDER DATE OF HEARING : 10-06-2019 DATE OF PRONOUNCEMENT : 16-07-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-13, AHMEDABAD DATED 06.05.2016 PERTAINING TO A.Y. 2010-11 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: IT(SS)A NO. 231/AHD/2016 . A.Y. 2010-1 1 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING THE PENALT Y U/S 271(L)(C) OF THE ACT OF RS.61,19,860/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT 2. A SEARCH U/S 132 OF THE INCOME TAX ACT, 1961 WAS CA RRIED OUT IN THE CASE OF SHIP, BREAKERS GROUP OF BHAVANGAR ON 17/02/2012. DU RING THE COURSE OF SEARCH AND SEIZURE ACTION U/S 132 OF THE I.T. ACT, 1961, CARRIED OUT AT THE BUSINESS PREMISES OF SHRI RAJKUMAR K. BANSAI AT 149 7/B, 'GURUKRIPA', OPP. THEOSOPHICAL LODGE, RUPANI CIRCLE, BHAVNAGAR, CERTA IN DOCUMENTS INDICATING PURCHASE AND SALE OF A SCRIPT NAMED 'KGN ENTERPRISE LIMITED' WERE FOUND QNDJEIZED. FROM THE ABOVE DOCUMENTS IT WAS FOUND TH AT THE FAMILY MEMBERS OF SHRI RAJKUMAR KAKARAM BANSAL HAD RECEIVED HUGE AMO UNTS ON ACCOUNT OF TRADING IN THE SCRIPT 'KGN ENTERPRISE LIMITED'. FRO M THE SEIZED DOCUMENTS IT WAS FOUND THAT THE FAMILY MEMBERS PURCHASED THE SHA RES OF THE SCRIPT AT A VERY MEAGER PRICE, SAY AT PAISA 32 OR PAISA 40 PER SHARE . THE ABOVE SHARES OF KGN ENTERPRISE LIMITED WERE SOLD BY THE FAMILY MEMBERS WITH HUGE MARGINS. THE DIFFERENTIAL AMOUNT WAS SHOWN AS LONG TERM CAPITAL GAIN WHICH WAS CLAIMED AS EXEMPT FROM TAX. THE DETAIL OF SHARE TRANSACTION S DONE BY THE ASSESSEE IS TABLED BELOW:- PURCHASE SR. NO. NAME DATE OF PURCHASE NO. OF SHARES RATE PER SHARE (RS.) TOTAL AMOUNT (RS.) 1 SHRI MUNISH A BANSAI 1 6.4.2009 75000 0.53 39,999 SALE: SR. NAME DATE OF SALE NO. OF SHARES RATE PER SHARE (RS.) TOTAL AMOUNT (RS.) IT(SS)A NO. 231/AHD/2016 . A.Y. 2010-1 1 3 NO. 1 SHRI MUNISH A BANSAI JANUARY, 2012 30000 597-800 2,03,48,572.58 3. THE ASSESSEE FILED RETURN OF INCOME U/S. 139(1) OF THE ACT ON 30/07/2010 DECLARING TOTAL INCOME AT RS.4,50,660/-. PURSUANT T O THE SEARCH ACTION U/S. 132 OF THE ACT, NOTICE U/S.153C OF THE ACT WAS ISSUED O N 24/12/2013, IN RESPONSE TO WHICH, THE ASSESSEE FILED RETURN OF INCOME ON 15 /01/2014 DECLARING TOTAL INCOME AT RS. 4,50,660/-. THE ASSESSMENT PROCEEDING S WERE FINALIZED BY ORDER U/S. 143(3) R.W.S. 153A DATED 19/03/2014 DETERMININ G TOTAL INCOME AT RS. 2,02,72,470/-. 4. THEREAFTER ASSESSEE PREFERRED FIRST STATUTORY APPEA L BEFORE THE LD. CIT(A) WHO GRANTED RELIEF TO THE ASSESSEE. 5. IN SUPPORT OF ITS CONTENTION, LD. A.R. CITED AN ORD ER OF ITAT IN THE MATTER OF ITO VS. RAM KRISHNA GHOSH (2013) 33 TAXMANN.COM 145 (KOLKATA-TRIB.): SECTION 54EC OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS - NOT TO BE CHARGED ON INVESTMENT IN CERTAIN BONDS [TRANSFER OF SHARES TO DEMAT ACCOUNT] - ASSESSMENT YEAR 2005-06 - ASSESSEE PURCH ASED CERTAIN SHARES ON 9-1-2003 THROUGH SHARE BROKER - AT THAT TIME ASS ESSEE WAS NOT HAVING DEMAT ACCOUNT WHICH WAS OPENED ON 5-3-2004 AND AFOR ESAID SHARES WERE TRANSFERRED FROM BROKER'S DEMAT ACCOUNT TO ASSESSEE 'S DEMAT ACCOUNT - SAID SHARES WERE SOLD ON 23-4-2004 RESULTING IN CER TAIN CAPITAL GAIN WHICH WAS INVESTED IN SPECIFIED BONDS - WHETHER WHEN ASSE SSING OFFICER DID NOT DISPUTE DATE OF PURCHASES, MERELY BECAUSE DATE OF T RANSFER OF SHARES TO ASSESSEE'S DEMAT ACCOUNT WAS A LATER DATE, DATE OF TRANSFER TO DEMAT ACCOUNT COULD NOT BE TAKEN AS DATE OF PURCHASE -HEL D, YES - WHETHER CAPITAL GAIN ON SALE OF AFORESAID SHARES WOULD BE TREATED A S LONG-TERM CAPITAL GAIN IT(SS)A NO. 231/AHD/2016 . A.Y. 2010-1 1 4 AND ASSESSEE WOULD BE ENTITLED TO BENEFIT UNDER SEC TION 54EC - HELD, YES [PARAS 5 & 6] [IN FAVOUR OF ASSESSEE] 6. AND ALSO CITED A JUDGMENT OF HONBLE DELHI HIGH COU RT IN THE MATTER OF CIT VS. ANANT OVERSEAS (P.) LTD. (2015) 54 TAXMANN.COM 211 (DELHI): SECTION 271(1)(C), READ WITH SECTION 45, OF THE INC OME-TAX ACT, 1961 - PENALTY FOR CONCEALMENT OF INCOME (DISALLOWANCE O F CLAIM, EFFECT OF) - ASSESSMENT YEAR 2001-02 -ASSESSEE WAS ENGAGED IN IN VESTMENT OF SHARES AND SECURITIES CUM BUSINESS OF SHARES AND SECURITIE S - IT DECLARED CERTAIN SHORT-TERM CAPITAL GAINS ON SALE OF SHARES - ASSESS ING OFFICER HELD THAT TRANSACTION RELATED TO TRADING OF SHARES AND TREATE D SAME AS BUSINESS INCOME. HE ALSO LEVIED PENALTY UNDER SECTION 271(1) (C) FOR FAILURE TO DISCLOSE NECESSARY PARTICULARS - WHETHER WHEN ALL P ARTICULARS RELATING TO CAPITAL GAINS WERE DULY DISCLOSED IN RETURN AS WELL AS IN BALANCE SHEET WHICH INDICATED THAT ASSESSEE WAS MAINTAINING A CLE AR DEMARCATION BETWEEN SHARES TREATED AS INVESTMENTS AND SHARES HE LD AS STOCK-IN-TRADE FOR BUSINESS, LEVY OF PENALTY UNDER SECTION 271(1)( C) ON ASSESSEE WAS UNJUSTIFIED - HELD YES[PARAS 5 TO 9] [IN FAVOUR OF ASSESSEE] 7. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IN THIS CASE, ASSESSEE HAD FURNISHED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION U/S. 139 OF THE ACT ON 30.07.2010 DECLARING INCOME OF RS. 4,50,660/-. IN VIEW OF A GROUP SEARCH HAVING BEEN CARRIED OUT AT THE PR EMISES OF HIS RELATIVES, THE ASSESSEE WAS ALSO SERVED UPON WITH THE NOTICES U/S. 153C IN RESPECT OF EARLIER SIX YEARS, INCLUDING THE YEAR FOR WHICH THE PRESENT APPEAL IS FILED. IN RESPONSE TO THE NOTICE FOR THE YEAR UNDER CONSIDERATION SO RECE IVED, THE ASSESSEE ONCE AGAIN FURNISHED THE RETURN DECLARING IDENTICAL INCOME IN DUE COURSE OF TIME. THE ASSESSEE WAS IN RECEIPT OF LONG TERM CAPITAL GAIN A MOUNTING TO RS. 1,97,21,809/- IN RESPECT OF THE SECURITY TRANSACTION TAX PAID TR ANSFER TO CERTAIN SHARES OF M/S. IT(SS)A NO. 231/AHD/2016 . A.Y. 2010-1 1 5 WELL PACK PAPERS & CONTAINERS LTD., WHICH WERE BEIN G HELD AS LONG TERM CAPITAL ASSET BY HIM AND THEREAFTER CLAIMED EXEMPTI ON. 8. IN THE CONSEQUENTIAL SCRUTINY ASSESSMENT PROCEEDING S THAT THE A.O. WAS OF THE VIEW THAT SHARES OF ABOVE REFERRED COMPANY BEING A CAPITAL ASSET HAVING BEEN HELD FOR MORE THAN 360 DAYS BUT IN THE DEMAT ACCOUN T OF THE ASSESSEE, SHARES WERE HELD FOR LESS THAN 360 DAYS. THEREFORE, A.O. D ISALLOWED CLAIM OF THE ASSESSEE AND HELD THAT THE SALE OF SHARES WAS ELIGI BLE FOR SHORT TERM CAPITAL GAIN AND INITIATED PENALTY PROCEEDINGS. 9. IT IS CASE OF WRONG CLAIM BY THE ASSESSEE BUT ASSES SEE HAS FURNISHED ALL THE PARTICULARS BEFORE THE ASSESSING OFFICER. IT IS UND ISPUTED FACT THAT ASSESSEE EFFECTED SALE OF SHARES WHICH WERE DULY REFLECTED I N HIS BOOKS OF ACCOUNT AND HE HAD RECEIVED THE PROCEEDS OF THE SAME THROUGH PROPE R BANKING CHANNELS. AND MADE PROPER DISCLOSURE IN RELATION TO THE INCOME GE NERATED FROM THE SALE OF THE TRANSACTION. 10. IN VIEW OF THE ABOVE SAID DISCUSSION AND RESPECTFUL LY FOLLOWING THE AFORESAID JUDGMENT, WE ARE NOT INCLINED TO INTERFERE IN THE O RDER PASSED BY THE LD. CIT(A). 11. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 07- 2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 16/07/2019 RAJESH