Shri Sharadkumar Shantilal Shah, Ahmedabad V. The Dy.CIT.,Cent.Circle-1(1), Ahmedabad

ITSSA 826/AHD/2010

• Counselvise Citation: [2014] 121 COUNSELVISE.COM (IT) 9973 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 16-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Business income; Loose papers; Document seized; Onus to prove; Documents seized
• Section: 43(5); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEM BER 1.SHRI SHARADKUMAR SHANTILAL SHAH PAN: AEAPS0928K 2.SHRI SHARADKUMAR SHANTILAL SHAH, HUF PAN: AADHS1211E (APPELLANT) VS VS DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD (RESPONDENT) DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD (RESPONDENT) REVENUE BY: SRI O.P. VAISHNAV, CIT-D.R . ASSESSEE BY: SRI VIJAY RANJAN, A.R. DATE OF HEARING : 07-01-2014 DATE OF PRONOUNCEMENT : 24-01-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- BOTH THE APPEALS ARE FILED BY THE ASSESSEE IN THE CAPACITY OF INDIVIDUAL AND HUF AGAINST THE SEPARATE ORDER OF LD. CIT(A)-I DATED 14-10-2010. IT(SS)A NOS. 826 & 827/AHD/2010 ASSESSMENT YEAR 2005-06 I.T.(SS)A NO 826 &827/AHD/2010 A.Y. 2005-06 PAGE NO SHARADKUMAR SHANTILAL SHAH VS. DCIT & SHARADKUMAR S HANTILAL SHAH, HUF VS. DCIT 2 2. SINCE FACTS IN BOTH THE APPEALS ARE SAME, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORD ER BY TAKING THE FACTS OF IT(SS)A NO. 827/AHD/2010. 3. THE ASSESSEE HAS TAKEN FOLLOWING EFFECTIVE GROUN D OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD. CIT(A) ERRED IN CONFIRMING THE FINDING OF THE ASSESSING OF FICER THAT THE INCOME BY WAY OF SHORT TERM CAPITAL GAIN OF RS. 2,2 6,231/- SHOWN BY THE APPELLANT IS ACTUALLY IN THE NATURE OF UNEXPLAI NED INCOME. 4. BRIEF FACTS OF THE CASE ARE THAT SEARCH OPERATIO N U/S. 132 WAS CONDUCTED IN THE CASE OF SAVVY GROUP ON 14/02/2007. A SEARCH WAS ALSO CONDUCTED AT THE RESIDENTIAL PREMISE OF THE ASSESSE E AND CERTAIN LOOSE PAPERS WERE FOUND AND SEIZED. IT WAS NOTED THAT PAGE NO. 2 TO 4, 38 TO 66,67 TO 78 AND PAGE NO. 172-240 OF THE LOOSE PAPER FILE AS ANN EXURE A-8 WERE RELATED TO TRANSACTION OF SHARES. PAGES 2 TO 4 WERE DECLARATI ON OF S. JAGANNATH TIBREWALL, SHARES AND STOCK BROKER BASED AT MUMBAI REGARDING SALE/PURCHASE OF SHARES IN THE NAME OF SHARDKUMAR SHANTILAL INDIV IDUAL AND SHARDKUMAR SHANTILAL HUF AND BHARTIBEN SHARADKUMAR SHAH. AS PER THIS DECLARATION SHARES NEVER CAME TO THE DEMAT ACCOUNT OF THE ABOVE PERSONS AND WERE PURCHASED AND SOLD ON BEHALF OF THESE PERSONS. AS SESSEE SHOWED SHORT TERM CAPITAL GAIN OF RS. 2,26,231/- ON THE BASIS OF THES E SEIZED DOCUMENTS IN THE FOLLOWING MANNER. SL. NAME DATE SCRIPT PURCH. QTY PUR VAL SAL QTY. SALE VALUE 1.SHARAD S.25.10.2004 WYETH LEDER 2500 1242037 SHAH HUF 01.11.2004 ABOTT INDIA 2650 1629040 28.10.2004 ABOTT INDIA 2650 1469715 I.T.(SS)A NO 826 &827/AHD/2010 A.Y. 2005-06 PAGE NO SHARADKUMAR SHANTILAL SHAH VS. DCIT & SHARADKUMAR S HANTILAL SHAH, HUF VS. DCIT 3 28.10.2004 WYETH LEDER 2500 1311943 AO HOWEVER TREATED THESE TRANSACTIONS AS NON-GENUIN E AND INCOME OF RS. 2,26,231/- SHOWN BY THE ASSESSEE WAS CONSIDERED AS UNEXPLAINED INSTEAD OF SHORT TERM CAPITAL GAIN. WHILE DOING SO, AO GAVE F OLLOWING REASONS:- DURING THE COURSE OF SEARCH, THE STATEMENT OF SHRI SHARADKUMAR S. SHAH, KARTA OF HUF WAS RECORDED WHERE IT WAS ADMITT ED THAT THEY WERE NOT KNOWING THE BROKER S. JAGANNATH TIBREWALA. > NO CHEQUES WERE PAID TO THE BROKER AS MAR GIN MONEY NOR WERE ANY PAYMENT MADE FOR THE PURCHASE OF SHARES. > EXCEPT THIS TRANSACTION WHICH HAS RESULTE D IN TO THE SHORT TERM CAPITAL GAIN, NO OTHER DEALING HAS BEEN MADE WITH T HE SAID BROKER > THE APPELLANT COULD NOT PRODUCE THE BROKER TO ESTABLISH THE GENUINENESS OF THE TRANSACTION > FURTHER, IT WAS NOTICED THAT THE SHARE PU RCHASE HAVE NOT CAME INTO THE ACCOUNT OF THE APPELLANT BUT WAS CLAIMED T O LYING IN THE COMMON DEMAT ACCOUNT OF THE BROKER ON BEHALF OF THE APPELLANT. 5. BEFORE LD. CIT(A) ASSESSEE RELIED ON THE FOLLOWI NG SUBMISSION:- 'IT IS FURTHER PERTINENT TO NOTE THAT THESE TRANSAC TIONS ARE CARRIED OUT THROUGH REGISTERED BROKER AT MUMBAI. MOREOVER, IN E XHAUSTIVE SUBMISSION THE ASSESSEE HAS BROUGHT NECESSARY REASO NS AND CIRCUMSTANCES UNDER WHICH THOSE TRANSACTIONS HEVE B EEN CARRIED OUT. THE LD AO FURTHER ERRED IN CONCLUDING THAT THESE TR ANSACTIONS ARE SHAM AND UNEXPLAINED AS THE ASSESSEE FAILED TO PROV E GENUINENESS OF THIS TRANSACTION. RATHER , FROM THE RELEVANT EXTRACT OF ASSESSEE'S EXPLANATION REPRODUCED IN THE ORDER, IT CLEARLY SHO WS THAT THE ASSESSEE HAS NOT ONLY ELABORATED THE CIRCUMSTANCES/REASONS F OR EXECUTING TRANSACTIONS WITH THE SAID BROKER, BUT HAS ALSO BRO UGHT NECESSARY EVIDENCES LIKE COPY OF LEDGER ACCOUNT, BANK STATEME NTS, CONFIRMATION OF SAID BROKER, ETC. TO PROVE THE GENUINENESS OF TH ESE TRANSACTIONS. MORE SO, THE ASSESSEE HAS ALSO PROVIDED SEBI REGIST RATION NUMBER AS WELL AS BROKER ID NUMBER, WHICH ARE EVIDENT ON THE CONTRACT BILLS, ETC SEIZED DURING THE COURSE OF SEARCH. THE ASSESSEE HA S ACCORDINGLY DISCHARGED ALL THE ONUS CAST UPON HIM WHICH THE LD. AO HAS FAILED TO CONSIDER. ON THE CONTRARY THE AO HAS NOT BROUGHT OU T ANY ERRORS IN I.T.(SS)A NO 826 &827/AHD/2010 A.Y. 2005-06 PAGE NO SHARADKUMAR SHANTILAL SHAH VS. DCIT & SHARADKUMAR S HANTILAL SHAH, HUF VS. DCIT 4 SHE SUBMISSION OF THE ASSESSEE. THUS, THE ID AO HAS ERRED IN CONCLUDING THAT THE ASSESSEE DID NOT PROVIDE ENOUGH EXPLANATION WITHOUT EVEN STATING AS TO WHAT FURTHER EVIDENCE HE WANTED AND HENCE THE CONTENTION OF THE LD AO IS BASED ON ASSUMPTIONS AND WITHOUT APPRECIATING THE FACTS OF THE CASE. EVEN THE ASSESSING OFFICER HAS FAILED TO APPRECIATE THAT THESE PAPERS/EVIDENCE LIKE CONFIRMATION OF BROKER, BILLS, CONTRACT NOTES ETC., ARE PART OF SEIZED PAPERS ONLY BASED ON WHICH HE PR OCEEDED TO ASSESS THE INCOME OF THE ASSESSEE. IT IS EVIDENT FROM THE ORDER THAT HE HIMSELF APPRECIATED THAT THE ASSESSES HAS CARRIED OUT ISOLA TED TRANSACTION WITH SUCH BROKER AT MUMBAI AND AFTER THE ENTIRE SET OF T RANSACTIONS TOOK PLACE, THE ASSESSEE RECEIVED THE CHEQUES FROM S JAG ANNATH TIBREWALA IN THE MONTH OF NOVEMBER & DECEMBER, 2004. HENCE, T HESE TRANSACTIONS ARE NEITHER PAPER ARRANGEMENT NOR UNEX PLAINED. THE LD. AO INSTEAD OF BRINGING OUT ANY DEFAULT IN THOSE PAP ERS/EVIDENCES, SIMPLY CONCLUDED THAT THE TRANSACTIONS ARE PAPER TR ANSACTION IS NOT ACCEPTABLE IN LIGHT OF THE ABOVE FACT. IN SPITE OF THE FACT THAT THE ASSESSEE HAS DISCHARGED THE ONUS TO PROVE THE GENUI NENESS OF THESE TRANSACTIONS, THE ASSESSEE WAS NEITHER AWARDED WITH ANOTHER OPPORTUNITY OR THE REASONS/REQUIREMENTS OF THE AO A ND HENCE THE CONTENTION OF THE LD AO IS BASED WITHOUT PROVIDING PROPER OPPORTUNITY TO THE ASSESSEE. IT IS FURTHER OBSERVED FROM THE PARA 4.5 OF THE ORD ER, THE LD AO HIMSELF WAS CONFUSED WHETHER THESE TRANSACTIONS ARE UNEXPLA INED OR SPECULATIVE. HE FURTHER POINTED OUT THAT AS THE SHA RES NEVER CAME INTO THE DEMAT ACCOUNT OF THE ASSESSEE, REMAINED IN POOL ACCOUNT OF THE BROKER, AND SETTLED THERE FROM, ARE LIABLE TO BE TR EATED AND TAXED AS PER THE PROVISION OF SECTION 43(5) OF THE ACT AS SP ECULATIVE IN NATURE. THE LD. AO ADDITIONALLY BROUGHT OUT SEBI REQUIREMEN TS WHICH HAVE NOT BEEN FULFILLED BY THAT BROKER AND ON THAT BASIS COME TO CONCLUSION THAT THESE TRANSACTIONS ARE SPECULATIVE IN NATURE AND ARE LIABLE TO BE TREATED AND TAXED AS PER THE PROVISION OF SECTION 4 3(5) OF THE ACT AS SPECULATIVE IN NATURE. ON THE OTHER HAND, THE LD AO VIDE PARA 4.4, DEALING WITH SAID ISSUE, CONCLUDED THAT THESE TRANS ACTION ARE PAPER ARRANGEMENT ONLY. THAT THE ASSESSEE FAILED TO PROVE THE GENIUSES OF SAME AND ACCORDINGLY CONCLUDED THAT THESE ARE UNEXP LAINED TRANSACTION. THUS, THE ID AO WAS NOT SURE ABOUT HIS VIEW AND THUS HAS I.T.(SS)A NO 826 &827/AHD/2010 A.Y. 2005-06 PAGE NO SHARADKUMAR SHANTILAL SHAH VS. DCIT & SHARADKUMAR S HANTILAL SHAH, HUF VS. DCIT 5 ENDED UP BY SAYING THAT THESE ARE UNEXPLAINED TRANS ACTION AND SHOULD BE TAXED AS BUSINESS INCOME. HENCE THE CONTENTION T O TREAT THE SAME AS UNEXPLAINED IS BASED ON ASSUMPTION AND PRESUMPTI ON ONLY '. 6. LD. CIT(A) HOWEVER CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER:- 4.4 I HAVE CONSIDERED THE ASSESSMENT ORDER AND SUB MISSION OF THE APPELLANT. THE APPELLANT HAS CLAIMED THAT IS HAS CA RRIED OUT TRANSACTION WITH UNKNOWN BROKER AT MUMBAI WITHOUT G IVING ANY MARGIN MONEY. THE APPELLANT HAS ALSO NOT RECEIVED SHARES IN DEMAT ACCOUNT. THE BROKER WAS NOT PRODUCED FOR CONFIRMIN G THE TRANSACTION NOR ANY EVIDENCES WERE SUBMITTED IN SUPPORT OF CONF IRMATION AND COPIES OF BILLS FOR JUSTIFYING THE TRANSACTION. AGA INST THESE FINDINGS, THE APPELLANT HAS FORWARDED ONLY GENERAL ARGUMENTS WITH OUT PROVIDING ANY CONCRETE PROOF OF ACTUAL INCURRENCE OF TRANSACT ION. THUS, THE RECEIPT OF RS.2,26,231/- SHOWN BY THE APPELLANT AS SHORT TERM CAPITAL GAIN IS RIGHTLY CONSIDERED AS INCOME FROM OTHER SOU RCES INSTEAD OF SHORT TERM CAPITAL GAIN IN THE ASSESSMENT ORDER. IN THE RESULT, THIS GROUND OF APPELLANT IS DISMISSED. 7. BEFORE US LEARNED COUNSEL OF THE ASSESSEE REITER ATED THE SUBMISSION MADE BEFORE THE LOWER AUTHORITIES. LD. DR HOWEVER RELIED ON THE ORDER OF LOWER AUTHORITIES. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT SHORT TERM CAPITAL GAIN OF RS. 2,26,231/- HAS BEEN SHOWN BY THE ASSESSEE ON THE BA SIS OF SEIZED DOCUMENTS FOUND AT THE TIME OF SEARCH AT HIS RESIDENTIAL PREM ISE WHICH INCLUDED CONFIRMATION OF TRANSACTION OF SHARE BROKER, BILLS AND CONTRACT NOTES ETC. THE PAYMENTS AGAINST THESE TRANSACTIONS WERE RECEIVED B Y THE ASSESSEE FROM S. JAGANNATH TIBREWALL BY CHEQUE. THE AO WITHOUT BRI NGING ANY MATERIAL ON I.T.(SS)A NO 826 &827/AHD/2010 A.Y. 2005-06 PAGE NO SHARADKUMAR SHANTILAL SHAH VS. DCIT & SHARADKUMAR S HANTILAL SHAH, HUF VS. DCIT 6 RECORD TO THE CONTRARY HAS HELD THESE TRANSACTIONS TO BE NON-GENUINE WHICH ACCORDING TO US WAS NOT JUSTIFIED. AS PER THE PROV ISION OF SECTION 132(4A) OF THE ACT, THE PRESUMPTION IS THAT DOCUMENTS FOUND AT THE TIME OF SEARCH BELONG TO ASSESSEE AND CONTENTS OF THOSE DOCUMENTS ARE TRUE. THEREFORE AO IS DIRECTED TO ACCEPT THE SHORT TERM CAPITAL GAIN O F RS. 2,26,231/- SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME. 9. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (T.R. MEENA) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 24/01/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,