Income Tax Appellate Tribunal - Mumbai
Nikunjk J Shah, Mumbai vs Assessee on 31 July, 2015
आयकर अपील य अ
धकरण, मंब
ु ई
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES 'B' MUMBAI
सव ी जी.एस. प न,ू लेखा सद य एवं ी संजय गग , या यक सद य
BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND
SHRI SANJAY GARG, JUDICIAL MEMBER
आयकर अपील सं. / ITA No.6545/MUM/2011
नधा रण वष /Assessment Year 2005-06
Nikunj J. Shah, बनाम/ The ITO 10(3) (2),
1683/16-A, Kinjalk Room No.259, 4th Floor,
Vs.
Apartment, Dr. Ambedkar Aaykar Bhavan,
Road, Mulund (W), Mumbai 400 020
Mumbai - 80
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAVPS 0118E
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Appellant by Dr. K.Shivram / Ms.Neelm C.
Jadhav
Respondent by Dr. Yogesh Kamat
सनु वाई क" तार$ख / Da te o f Hearing : 2/06/2015
घोषणा क" तार$ख /Date of Pronouncement : 31/07/2015
आदे श / O R D E R
PER G.S.PANNU, A.M:
The present appeal is preferred by the assessee and is directed against the impugned appellate order dated 16/08/2011 passed by Ld. CIT(A)-22, Mumbai pertaining to the assessment year 2005-06, with reference to the assessment order dated 28/12/2007 passed in terms of section 143(3) of the Income Tax Act, 1961(the Act).
2. In this appeal although assessee has raised multiple grounds of appeal but the solitary grievance is with respect to the action of the income tax authorities in treating the income declared by the assessee on sale and 2 आयकर अपील सं. / ITA No.6545/MUM/2011 नधा रण वष /Assessment Year 2005-06 purchase of shares of Robinson Worldwide Trade Ltd.[formerly known as Robinson Impex (India) Ltd.] as an income assessable under the head 'income from other sources' as against assessee's stand of the same being assessable as long term capital gain.
3. In brief, the relevant facts are that the appellant is an individual, who filed his return of income for A.Y 2005-06 on 24/3/2006 declaring total income of Rs.4,68,678/- which, inter-alia, included incomes by way of salaries, capital gain and income from other sources. In the course of assessment proceedings, the AO noticed that assessee had made investment in NABARD bonds to the tune of Rs.12.00 lacs and claimed exemption under section 54EC of the Act in respect of long term capital gain earned in respect of the sale of shares of Robinson Worldwide Trade Ltd. The AO noticed that assessee had purchased 11,500 shares of Robinson Worldwide Trade Ltd. @ 1.30 per share for a total consideration of Rs.15,191.99 and had sold the same for a consideration of Rs..11,29,475/-. The AO carried out a verification exercise and concluded that the purported purchase of 11500 shares of Robinson Worldwide Trade Ltd. was nothing but a sham transaction. Accordingly, the AO treated the consideration received on the sale of 11500 shares of Robinson Impex Ltd. of Rs.11,29,475/- as income from undisclosed sources. This resulted in assessment of Rs.11,29,475/- as an income under the head income from other sources and consequently the exemption claimed under section 54 EC of the Act with respect to the investments in NABARD bonds was disallowed as the assessee did not have any income under the head capital gains. The aforesaid stand of the AO has since been affirmed by Ld. CIT(A). In this background, the assessee is in further appeal before us.
4. At the time of hearing, the Ld. Representative of the assessee pointed out that an identical controversy in the case of Jagdish H. Shah has been considered by the Tribunal vide order in ITA No.6557/Mum/2011 dated 3 आयकर अपील सं. / ITA No.6545/MUM/2011 नधा रण वष /Assessment Year 2005-06 5/9/2012 for assessment year 2005-06, whereby the income earned on sale of the shares of Robinson Impex Ltd. has been accepted as an income assessable under the head long term capital gain. Ld. AR also filed a tabulation showing similarity of facts between the case of the assessee and that of Jagdish H. Shah(supra). The tabulation furnished by the assessee depicts the similarity in scrip involved, assessment year involved, the broker involved, enquiries by AO from BSE, etc. Apart therefrom, it has also been pointed out that the same AO as well as the same CIT(A) have rendered the decisions on the same dates in the case of Jagdish H. Shah (supra) as well as the assessee. Under these circumstances, it has been pointed out that the impugned orders of the lower authorities are unsustainable and that income from sale of the shares of Robinson Impex Ltd. be accepted as long term capital gain as returned by the assessee.
5. The Ld. DR appearing for the Revenue has not controverted the factual matrix brought out by Ld. Representative of the assessee.
6. Having perused the orders of the authorities below as well as the submissions put forth before us, it is evident that similar controversy has been considered by our Co-ordinate Bench in the case of Jagdish H. Shah (supra). The Ld. Representative of the assessee has also placed on record copies of the assessment order as well as order of CIT(A) in the case of Jagdish H. Shah(supra) which reveal that the discussion contained therein is almost similar to the discussion in the impugned orders before us. The enquiries made by the AO in case of Jadish H. Shah (supra) are on similar lines to those made in the case before us. In the case of the assessee as well as in the case of Jagdish H. Shah(supra) the shares were purchased from the same broker namely DPS Shares and Securities Pvt. Ltd. It is also emerging that the AO carried out a verification exercise which involved recording of statement of one Shri Raj Kumar Masalia, Principal Officer of DPS Shares & Securities Ltd.;
4 आयकर अपील सं. / ITA No.6545/MUM/2011 नधा रण वष /Assessment Year 2005-06 similar action was taken in the case of Jagdish H. Shah (supra) also. Be that as it may, it is quite clear that the stand of the Revenue as well as the assessee in the present case is on similar footing to their respective stands in the case of Jagdish H. Shah (supra). Having regard to the aforesaid similarities, which are not controverted by the Revenue, we deem it fit and proper to rely upon the reasoning taken by the Co-ordinate Bench in the case of Jagdish H. Shah(supra) and hold that the income tax authorities have erred in treating the sale consideration on the sale of shares of Robinson Worldwide Trade Ltd. as an income from undisclosed sources. Nevertheless in order to impart completeness to this order, we deem it fit and proper to reproduce hereafter the relevant portion of the order of the Tribunal in the case of Jagdish H. Shah(supra), which is as under:
"11. We have heard the rival contentions and perused the orders of the Authorities and also the Paper Book submitted by the assessee. It is not in dispute that the shares were purchased in physical form in off market transaction. It is also not in dispute that the shares were subsequently de- matted and the sales have taken place out of the DMAT A/c. The only dispute relates to the genuineness of the purchases' as doubted by the Lower Authorities. We find that the purchases. are supported by purchase bills issued by M/ s. DPS Shares ~ Securities Pvt. Ltd., exhibited at Pages 28 to 32 of the Paper Book. We also find that the shares so purchased were transferred to DMAT A/c with HDFC Bank. Cop,!! of which is exhibited at Page No. 34 of the Paper Book. We have also considered the letter of the Director of M/s. DPS Shares & Securities Pvt. Ltd., addressed to the AO by which the. Director has confianed 'the off-market transaction in physical mode of shares of the 11,500 shares of M/s.Robinson Impex (India) Ltd (Robinson Worldwide Trade Ltd.,). We have also considered the retraction letter of Shri Rajkumar Masalia addressed to the AO by which he accepted that he. was not aware of the transaction and he has stated wrong facts during the course of his statement recorded by the A.O.
12. We find that during the course of the appellate proceedings, the CIT(A) has called for a Remand Report from the AO relating to the purchase of 11500 shares of M/s. Robinson Worldwide Trade Ltd., (formerly known as robinson Impex (India) Ltd.]. We have perused the Remand Report of ITO 10(3)(2) Mumbai dt.
11.4.2011. In his Remand Report, the AO states that an opportunity of cross- examination of Shri Rajkumar Masalia was given to the assessee on 18-02-2009, 29-04-2009 and 09-11-2009. However, despite of giving aforesaid opportunities, Shri Rajkumar Masalia did not attend though assessee's representative attended on all of above dates and whose attendance was duly recorded on the attendance Sheet. In his Remand Report, the AO further states that the said shares of M/s. Robinson Worldwise Trade Ltd. (formerly known as Robinson Impex (India) Ltd.] were purchased on 05-04-2003 for a consideration of 5 आयकर अपील सं. / ITA No.6545/MUM/2011 नधा रण वष /Assessment Year 2005-06 Rs.15191.99 from M/s. DPS Shares and Securities Pvt. Ltd. As per record of the said company, the shares were endorsed in favour of the assessee on 30-04- 2003 in physical format only. The AO further states that as per investigation made, these shares were sent for dematerialization to HDFC Bank on 03-05-2004 and were converted into De-mat form on 22-05-2004. In his Remand Report, the AO has further confirmed the sale transaction made through broker, M/s. Ajmeera Associates Pvt. Ltd.
13. After considering all the above stated facts in totality, we do not find any reason or logic in treating the purchase of 11,500 shares as bogus. The Lower Authorities could have directly verified the transaction from the company itself, whose shares were questioned to be bogus but both the Lower Authorities did not do this exercise. The Remand Report of the AO itself show that the transactions have been treated as genuine subsequently by the AO himself while sending the Remand Report to the CIT(A). We find that the sale transaction of 11,500 shares of M/s.Robinson Impex (India) Ltd. (Robinson Worldwide Trade Ltd.) has been doubted or question by the Lower authorities. A simple logical question arises if the shares were never purchased, how can they be sold subsequently?
14. After considering all the facts and submissions, we find that both the Lower Authorities have grossly erred in treating the sale consideration as 'Income from undisclosed sources.'
15. We, therefore, reverse ht finding of Lower Authorities and direct the AO to accept the Long Term Capital Gains as returned by the assessee."
6.1 Following the aforesaid precedent we hereby allow the appeal of the assessee, and direct the AO to accept the long term capital gain as returned by the assessee.
7. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 31/7/2015 आदे श क" घोषणा खुले यायालय म+ ,दनांकः 31/07/2015 को क" गई ।
Sd/- Sd/-
( संजय गग / SANJAY GARG) (जी.एस. प नू / G.S.PANNU)
या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मुंबई Mumbai; ,दनांक Dated 31/07/2015
6 आयकर अपील सं. / ITA No.6545/MUM/2011
नधा रण वष /Assessment Year 2005-06
आदे श क त ल प अ!े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु0त(अपील) / The CIT(A)-
4. आयकर आयु0त / CIT
5. 1वभागीय त न3ध, आयकर अपील$य अ3धकरण, मुंबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER,
स या1पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ
धकरण, मुंबई / ITAT, Mumbai
व. न.स./Vm, Sr. PS