ITO,Wd. 1(1), Jalgaon V. Smt. Surekha Bhagvatiprasad Mundada, Jalgaon

MA 52/PUN/2011

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0078 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 14-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Bogus purchase; Income from undisclosed sources; Question of law; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER M.A. NO.52/PN/2011 (ARISING OUT OF ITA NO. 1332 & 1384/PN/2008) (ASSESSMENT YEAR 2005-06) INCOME TAX OFFICER, WARD 1(1), JALGAON. .. APPLICANT VS. SMT. SUREKHA BHAGVATIPRASAD MUNDADA, PROP. MUNDARA AGRO AGENCIES, JANKYA KUTI, VISHANJI NAGAR, JALGAON .. RESPONDENT PAN NO. AEMPM 0871K M.A. NO.53/PN/2011 (ARISING OUT OF ITA NO. 1397/PN/2008) (ASSESSMENT YEAR 2005-06) DY. CIT, CIRCLE-I, JALGAON. .. APPLICANT VS. SHRI BHAGWATIPRASAD BHAVARLAL MUNDADA, V.V. MARKET, (GOLANI MARKET) JALGAON. .. RESPONDE NT PAN NO.AAUPM 2675J M.A. NO.29/PN/2011 (ARISING OUT OF ITA NO. 1328/PN/2008) (ASSESSMENT YEAR 2005-06) INCOME TAX OFFICER, WARD 2(1), JALGAON. .. APPLICANT VS. GITESH PIPES PVT. LTD., V-12, MIDC, JALGAON .. RESPONDENT PAN NO. AABCG 5011H M.A. NO.03/PN/2012 (ARISING OUT OF ITA NO. 1350 & 1331/PN/2008) (ASSESSMENT YEAR 2005-06) INCOME TAX OFFICER, WARD 1(3), JALGAON. .. APPLICANT VS. SHRI GITESH GIRISHKUMAR MUNDADA, PLOT NO. M-38, MIDC AREA, JALGAON. .. RESPONDEN T PAN NO. ADWPM 0815E M.A. NO.04/PN/2012 (ARISING OUT OF ITA NO. 1351 & 1333/PN/2008) (ASSESSMENT YEAR 2005-06) INCOME TAX OFFICER, WARD 1(3), JALGAON. .. APPLICANT VS. SHRI PRAKASH G. MUNDADA, PLOT NO. M-45, MIDC AREA, JALGAON. .. RESPONDEN T PAN NO. AFDPM 7266G 2 M.A. NO.05/PN/2012 (ARISING OUT OF ITA NO. 1349 & 1335/PN/2008) (ASSESSMENT YEAR 2005-06) INCOME TAX OFFICER, WARD 1(3), JALGAON. .. APPLICANT VS. SHRI ANJANIKUMAR B. MUNDADA, PLOT NO. WA-53, MIDC AREA, JALGAON. .. RESPONDEN T PAN NO. AAUPM 2729A ASSESSEE BY : SMT. DEEPA KHARE DEPARTMENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 08-03-2013 DATE OF PRONOUNCEMENT : 12 -03-2013 ORDER PER R.K.PANDA, AM : ALL THESE MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF THE TRIBUNAL DATE D 16-06-2010. SINCE IDENTICAL ISSUE HAS BEEN TAKEN BY THE REVENUE IN AL L THESE MISCELLANEOUS APPLICATIONS EXCEPT FOR FIGURES, THEREFORE, ALL TH ESE WERE HEARD TOGETHER AND ARE BEING DISPOSED BY THIS COMMON ORDER. 2. FIRST WE TAKE UP THE MISCELLANEOUS APPLICATION F ILED BY THE REVENUE IN THE CASE OF SMT. SUREKHA BHAGVATIPRASAD MUNDADA, JA LGAON- M.A.NO.52/PN/2011 FOR A.Y. 2005-06. THE CONTENTS O F THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE READ AS UNDER : 2. IN THIS CASE ASSESSMENT WAS COMPLETED U/S.143 (3) R.W.S 147 OF THE ACT 1961 ON 31/12/2007 DETERMINING TOTAL INCOME AT RS.28,42,850 /-. IN THE ASSESSMENT PROCEEDINGS ASSESSEE'S CLAIM OF LONG TERM CAPITAL G AIN OF RS 27,28,005/- WAS DISALLOWED AND ADDED TO THE TOTAL INCOME TREATING T HE SAME AS INCOME FROM OTHER SOURCES. IN ADDITION TO THIS THERE WAS ALSO THE ADD ITION OF RS.1,36,100/- ON ACCOUNT OF COMMISSION PAID FOR ARRANGING SHARE TRANSACTIONS , RS.38,358/- ON ACCOUNT OF GP, RS.2,028/- ON ACCOUNT OF DISALLOWANCE OUT OF TE LEPHONE EXPENSES. 3. BEING AGGRIEVED WITH THE AFORESAID ORDER, ASSE SSEE WAS IN APPEAL BEFORE THE HON. CIT (A)-II, NASHIK. THE HON. CIT (A)-II, NASHI K VIDE HIS ORDER DTD. 25.07.2008 DIRECTED TO WORK OUT THE CAPITAL GAINS O R LOSS ADOPTING THE DATE OF ACQUISITION AS THE DATE OF TRANSFER INTO THE DEMAT ACCOUNT AND THE COST OF ACQUISITION AS PER THE BOOKS OF ACCOUNTS AND ASSESS ACCORDINGLY. THE OTHER ADDITION OF RS.1,36,100/-, MADE ON ACCOUNT OF ESTIMATION OF COMMISSION MIGHT HAVE BEEN PAID TO BROKER SHRI SHAH, ARE DELETED. 3 4. AGAINST THE DECISION OF HON. CIT (A)-II, NASHI K REGARDING TREATMENT OF LONG TERM CAPITAL GAIN AS SHORT TERM CAPITAL GAIN, THE D EPARTMENT AS WELL AS ASSESSEE FILED APPEALS BEFORE THE HON. ITAT. THE HON. ITAT, PUNE BENCH, PUNE IN APPEAL NO. ITA 1332/PN/2008 & 1384/PN/2008 FOR A.Y. 2005-0 6, VIDE THEIR ORDER DTD. 16.06.2010 AFTER DETAILED DISCUSSION, HAS DECIDED T HE ISSUE. 5. IT IS SUBMITTED THAT THE HON'BLE ITAT WHIL E DECIDING THE ISSUES HAVE NOT CONSIDERED THE GROUNDS RAISED ON THE FOLLOWING POIN T. 'THE HON'BLE ITAT WHILE ARRIVING AT THE CONCLUSION HAS IGNORED THE AO'S CONCLUSION THAT ONCE THE PURCHASE OF SHARES HA S BEEN FOUND TO BE NOT GENUINE, THE LOGICAL CONCLUSION IS THAT THE SALES O F SHARES IS ALSO NOT GENUINE AND THAT THE ENTIRE TRANSACTION WAS A SHAM TRANSACT ION CALCULATED TO INTRODUCE UNACCOUNTED INCOME OF THE ASSESSEE IN THE FORM OF C APITAL GAINS. WITHOUT PREJUDICE TO THE ABOVE POINT, IT IS SUBMITTED THAT EVEN IF IT IS ACCEPTED THAT ASSESSEE HAS EARNED CAPITAL GAIN, THE COST OF ACQUI SITION OF THE SHARES SHOULD BE ADOPTED AT THE RATE THAT EXISTED ON THE DATE ON WHI CH THE CIT (A) HIMSELF HAS CONSIDERED THE DATE OF ACQUISITION OF THE SHARES AN D NOT THAT CLAIMED BY ASSESSEE IN THE FABRICATED/BOGUS PURCHASE CONTRACT NOTE. THE CAPITAL GAIN SHOULD ACCORDINGLY BE RE-WORKED. THE HON'BLE ITAT HAS NOT DECIDED ON THIS POINT WHICH WAS RAISED BY THE DEPARTMENT IN THE GROUNDS O F APPEAL. TO CONCLUDE, IF THE CAPITAL GAIN IS ACTUALLY REWORKED AS ABOVE, ASS ESSEE WILL NOT HAVE ANY GAINS TAXABLE UNDER THE HEAD CAPITAL GAIN AS THE FIGURE W OULD BE A NEGATIVE FIGURE, I.E. CAPITAL LOSS. THUS, THE SURPLUS INTRODUCED BY THE A SSESSEE IN THE GUISE OF CAPITAL GAIN WILL HAVE TO BE TAXED UNDER THE HEAD INCOME FR OM OTHER SOURCES, WHICH HAS BEEN RIGHTLY DONE BY THE A.O. WHILE FINALIZING THE ASSESSMENT. THIS POINT HAS ALSO BEEN CONSIDERED WHILE FILING APPEAL TO THE HON . HIGH COURT.' 3. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESS EE MRS. DEEPA KHARE FILED A COPY OF THE ORDER OF THE HONBLE JURISDICTI ONAL HIGH COURT AND SUBMITTED THAT THE REVENUE HAS FILED AN APPEAL BEFO RE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL AND THE HONBLE H IGH COURT HAS ADMITTED THE APPEALS ON SUBSTANTIAL QUESTION OF LAW. 3.1 REFERRING TO THE DECISION OF THE PUNE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI DNYANESHWAR N. MULIK VIDE M.A.NO.125 T O 127/PN/2005 ORDER DATED 26-03-2010 SHE SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL DISMISSED THE MISCELLANEOUS APPLICATIO N FILED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS FILED AN APPEAL BE FORE THE HONBLE HIGH COURT AND WHICH HAS BEEN ADMITTED BY THE HIGH COURT . ON MERITS SHE SUBMITTED THAT THE TRIBUNAL HAS ELABORATELY CONSIDE RED ALL THE GROUNDS RAISED 4 BY THE REVENUE AND THEREFORE THE MISCELLANEOUS APPL ICATION FILED BY THE REVENUE BEING DEVOID OF MERITS HAS TO BE DISMISSED OUT RIGHT. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND SUPPORTED THE MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE . 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES. WE FIND AGAINST THE ORDER OF THE TRIBUNAL THE REVENUE HAS FILED AN APPEAL BEFORE THE HONBLE HIGH COURT AND THE HIGH COURT HAS ADMIT TED THE TWO SUBSTANTIAL QUESTIONS OF LAW FOR ADJUDICATION. THE RELEVANT DE TAILS ARE AS UNDER : IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD TAX APPEAL NO.67 OF 2010 THE COMMISSIONER OF INCOME TAX-II, NASHIK APPELLAN T VERSUS M/S GITESH PIPES PVT. LTD. (NOW KNOWN AS G.B.EXTRUSIONS PVT.LTD.) RESPONDENT MR. D.V.SOMAN, STAND COUNSEL FOR THE APPELLANT. M MR. A.P.KOLTE, ADVOCATE FOR RESPONDENT. WITH TAX APPEAL NO.7 OF 2011 M/S GITESH PIPES PVT. LTD. (PRESENTLY KNOWN AS G.B.EXTRUSIONS PVT.LTD.) APPELL ANT VERSUS THE INCOME TAX OFFICER, WARD 2(1), B.J.MARKET, JALGAON. RESPONDENT MR. A.P.KOLTE, ADVOCATE FOR THE APPELLANT. MR. D.V.SOMAN, STANDING COUNSEL FOR THE RESPONDENT. WITH TAX APPEAL NO.68 OF 2010 THE COMMISSIONER OF INCOME TAX-II, NASHIK APPELLAN T VERSUS BHAGWATIPRASAD BHAWARLAL MUNDADA RESPO NDENT MR. D.V.SOMAN, STAND COUNSEL FOR THE APPELLANT. MR. A.P.KOLTE, ADVOCATE FOR RESPONDENT. WITH TAX APPEAL NO.69 OF 2010 5 THE COMMISSIONER OF INCOME TAX-II, NASHIK APPELLANT VERSUS SMT.SUREKHA BHAGWATIPRASAD MUNDADA RESPOND ENT MR. D.V.SOMAN, STAND COUNSEL FOR THE APPELLANT. MR. A.P.KOLTE, ADVOCATE FOR RESPONDENT. WITH TAX APPEAL NO. 5 OF 2011 PRAKASH S/O GIRISHKUMAR MUNDADA APPELLANT VERSUS THE INCOME LAX OFFICER, WARD 1(3), JALGAON RESPONDENT MR. A.P.KOLTE, ADVOCATE FOR THE APPELLANT. MR. D.V.SOMAN, STANDING COUNSEL FOR THE RESPONDEN T. WITH TAX APPEAL NO.6 OF 2011 MRS. SUREKHA BHAGWATIPRASAD MUNDADA APPELLANT VERSUS THE INCOME TAX OFFICER, WARD1(1),JALGAON RESPONDENT WITH TAX APPEAL NO. 8 OF 2011 GITESH GIRISH MUNDADA APPELLANT VERSUS THE INCOME TAX OFFICER, WARD1(3), JALGAON RESPONDE NT MR. A.P.KOLTE, ADVOCATE FOR THE APPELLANT. MR. D.V.SOMAN, STANDING COUNSEL FOR THE RESPONDEN T. WITH TAX APPEAL NO. 9 OF 2011 BHAGWATIPRASAD BHAWARLAL MUNDADA APPE LLANT VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE, JALG AON RESPONDENT MR. A.P.KOLTE, ADVOCATE FOR THE APPELLANT. MR. D.V.SOMAN, STANDING COUNSEL FOR THE RESPONDEN T. WITH TAX APPEAL NO. 10 OF 2011 ANJANIKUMAR BHAVARLAL MUNDADA APPELLANT VERSUS THE INCOME LAX OFFICER, WARD 1(3), JALGAON RESPONDENT MR. A.P.KOLTE, ADVOCATE FOR THE APPELLANT. MR. D.V.SOMAN, STANDING COUNSEL FOR THE RESPONDEN T. CORAM: D.B.BHOSALE AND R.M.BORDE, JJ. DATE :08 TH FEBRUARY, 2011 PER COURT: 1. ALL THESE APPEALS ARE ARISING FROM THE JUDGMENT AND ORDER DATED 16.06.2010, PASSED BY THE TRIBUNAL IN A GROUP OF IN COME TAX APPEALS. 2. ALL THE APPEALS ARE ADMITTED ON THE FOLLOWING QU ESTIONS OF LAW: (A) WHETHER ITAT ERRED BY IGNORING THE GROUND RAISE D BY THE DEPARTMENT THAT CIT(A) ERRED BY ACCEPTING COST OF P URCHASE/ACQUISITION OF SHARES AS STATED BY THE ASSESSEE CONTRADICTING CONT RADICTING HIS OWN FINDING IN APPELLATE ORDER THAT THE PURCHASE CONTRACT NOTES ARE NOT GENUINE AND THAT THE SHARES WERE NOT PURCHASED BY THE ASSESSEE IN FINANCIAL YEAR 2003- 04? (B) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS CORRECT TO HOLD THAT, THE GAINS EARNED BY THE APPELLANT ARE TREATED AS SHORT TERM CAPITAL GAIN BY ADOPTING DATE OF PURCHASE AND PURCHASE PRICE IN TWO DIFFERENT FINANCIAL YEARS INS TEAD OF LONG TERM CAPITAL GAINS AS CLAIMED BY THE APPELLANT. 6. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CA SE OF SHRI DNYANESHWAR N. MULIK, UNDER IDENTICAL FACTS HAS DIS MISSED THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE ON THE GROUND THAT AN APPEAL HAS BEEN FILED AGAINST THE ORDER OF THE TRIBUNAL BE FORE THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT HAS ADMITTED THE A PPEAL ON SUBSTANTIAL QUESTION OF LAW AND THEREFORE THE TRIBUNAL HAS LOST THE JURISDICTION TO RECTIFY OR MODIFY THE JUDGMENT WHEN THE HONBLE HIGH COURT IS SEIZED WITH THE MATTER. THE RELEVANT OBSERVATION OF THE ORDER OF T HE TRIBUNAL AT PARA 4 AND 5 ARE AS UNDER : 4. DURING THE COURSE OF HEARING OF THESE MIS CELLANEOUS PETITIONS, A PARTICULAR QUESTION WAS RAISED FROM THE BENCH THAT UNDER THE C IRCUMSTANCES WHEN DURING THE PENDENCY OF IMPUGNED MISCELLANEOUS PETITIONS, THE A PPEALS HAVE BEEN FILED BY THE PETITIONER BEFORE THE HON'BLE HIGH COURT AND THOSE HAVE ALREADY BEEN ADMITTED AS IS EVIDENT FROM THE JUDGMENT REPRODUCED SUPRA THEN WHETHER IT IS PERMISSIBLE UNDER THE LAW TO DEAL WITH THOSE VERY ISSUES BY THI S TRIBUNAL DIRECTLY OR INDIRECTLY RAISED THROUGH THESE MISCELLANEOUS PETITIONS. PA RTIES APPEARING BEFORE US HAVE ADMITTED THAT THE CONVENTION OF MERGER OF THE ORDER OF THE TRIBUNAL APPLIES THEREFORE, APPARENTLY THESE, MISCELLANEOUS APPLICAT IONS ARE BEYOND THE SCOPE OF THE ADJUDICATION OF THE TRIBUNAL. CONSIDERING ALL T HESE DEVELOPMENTS AND THE POSITION OF LAW, WE ARE OF THE CONSCIENTIOUS VIEW T HAT IT WILL NOT BE PROPER AS WELL AS JUSTIFIABLE TO TINKER IN ANY MANNER THE LEGAL OR THE FACTUAL ASPECT OF THIS CASE, WHICH ARE PRESENTLY UNDER CONSIDERATION AND SUB-JUD ICE BEFORE HON'BLE JURISDICTIONAL HIGH COURT. WE HAVE THEREFORE, NO CHOICE BUT TO DISMISS THESE 7 MISCELLANEOUS PETITIONS IN LIMINE WITHOUT GIVING AN OPINION ON THE MERITS. WE HAVE ADOPTED THIS RECOURSE PRIMARILY TO AVOID THE M ULTIPLICITY OF PROCEEDINGS. THE MATTER BEING CARRIED TO THE HON'BLE HIGH COURT THEN IT IS NOT JUSTIFIABLE TO PROCEED WITH THESE VERY ISSUES. WE DRAW SUPPORT FROM THE DE CISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SURENDRA GULABCHA ND MODI (1983) 140 ITR 517. WE ALSO DRAW SUPPORT FROM A THIRD MEMBER DEC ISION OF JODHPUR BENCH IN THE CASE OF BHAWAN VA PATH NIRMAN (BOHRA) AND CO. V S. ACIT (2006) 284 (AT) 130 (JODHPUR) WHEREIN THE HON'BLE THIRD MEMBER HAS DISCUSSED THE THEORY OF MERGER OF THE ORDER OF THE TRIBUNAL WITH THE ORDER OF THE HIGH COURT. ON ACCOUNT OF THE SAID THEORY, THE EFFECTIVE AND ENFORCEABLE O RDER HAS TO BE THE ORDER OF THE HIGH COURT AND THE ONLY HIGH COURT HAS POWER TO CON SIDER AND STRAIGHTEN THE FACTS OF THE CASE SIMULTANEOUSLY THE TRIBUNAL HAS L OST THE JURISDICTION TO RECTIFY OR MODIFY THE IMPUGNED JUDGMENT. 5. IN THE RESULT, THE MISCELLANEOUS PETITIONS ARE D ISMISSED. PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF MARCH 2010. 7. SINCE IN THE INSTANT CASE ADMITTEDLY THE REVENUE HAS FILED AN APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL DATED 16-06- 2010 AND SINCE THE HONBLE HIGH COURT HAS ADMITTED THE APPEALS FOR ADJUDICATION ON TWO SUBSTANTIAL QUESTIONS OF LAW, T HEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL WE HOLD THAT THE TRIBUNAL HAS LOST THE JURISDICTION TO RECTIFY O R MODIFY THE ORDER PASSED BY IT ON 16-06-2010. WE ACCORDINGLY DISMISS THE MISCE LLANEOUS APPLICATION FILED BY THE REVENUE. 8. SINCE THE MISCELLANEOUS APPLICATIONS FILED BY TH E REVENUE IN THE CASE OF OTHER ASSESSEES ARE IDENTICAL TO M.A.NO.52/PN/20 13, THEREFORE, FOLLOWING THE SAME RATIO THE OTHER MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE ARE ALSO DISMISSED. 9. IN THE RESULT, ALL THE MISCELLANEOUS APPLICATION S FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 12 TH DAY OF MARCH 2013. SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTA NT MEMBER PUNE DATED: THE 12 TH MARCH 2013 SATISH 8 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, NASHIK 4. CIT-II, NASHIK 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHE S, PUNE