Income Tax Appellate Tribunal - Mumbai
Manish Kumar S. Mehta Huf, Mumbai vs Assessee on 26 March, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH 'B' BENCH
BEFORE SHRI D.MANMOHAN (VICE PRESIDENT) AND
SHRI REJENDRA (ACCOUNTANT MEMBER)
ITA No.1850 /Mum/2009
Assessment Year: 2005-06
Manish Kumar S.Mehta, ITO 24(2)(4),
B-11, Siddharth Appt., 3rd floor, Mumbai.
Manchhubhai Road, Malad (East),
Mumbai-400 097 Vs.
PA No.AAEPM 2096 G
(Appellant) (Respondent)
ITA No.1851 /Mum/2009
Assessment Year: 2005-06
Manish Kumar S.Mehta,HUF ITO 24(2)(4),
rd
B-11, Siddharth Appt., 3 floor, Mumbai.
Manchhubhai Road, Malad (East),
Mumbai-400 097 Vs.
PA No.AABHM 5594 E
(Appellant) (Respondent)
Appellant by : Mr Bhupendra Shah
Respondent by: P.C.Maurya
Date of hearing: 26.3.2012
Date of pronouncement: 4 . 4.2012
ORDER
Per Rajendra, AM:
Both the appeals are filed by the assessee against common order dated 30.1.2009 of the CIT(A)-XXIV, Mumbai for the assessment year 2005-06. Since common grounds are raised in both the appeals, they were heard together and are being decided by a common order for the sake of convenience.
2. Common grounds raised by the assessee are as under:
"1. In the facts and circumstances of the case and in law, the AO erred in treating LTCG of Rs.12,43,540 as STCG in the case of individual and LTCG 2 ITA No.1850 /Mum/2009 ITA No.1851 /Mum/2009 Rs.12,45,629 as STCG in the case of HUF by disregarding several proof and resorting to assumptions.
2. In the facts and circumstances of the case and in law, the O erred in rejecting the claim of exemption u/s.54EC of Rs.1250000/- in the case of individual as well as HUF even though the proof of reinvestment is submitted to the AO.
3. The ld CIT(A) also erred in confirming all additions without any cogent reasons.
4. The AO wrongly initiated penalty u/s.271(1)(c) and charged interest u/s.234."
3. Facts in brief are that during the course of assessment proceedings, the Assessing Officer noticed that the assessee had claimed long term capital gain on sale of shares of Fast Track Entertainment Ltd (FTEL). The sale proceeds were claimed to have been invested in Nabard Capital Gain Bond. The Assessing Officer rejected the claim of exemption made u/s. 54EC of the I.T.Act, 1961 by the assessee. The AO gave five reasons on page Nos. 2-3 of the assessment order to justify the disallowance. Finally, he arrived at following conclusions in both the cases:
"In view of the fact that the assessee has not been able to prove the purchase or the date of purchase beyond doubt and also the fact that the said transaction is not documented by any authority. In this case Bombay Stock Exchange, the assessee's claim of long term capital gain is rejected. But as there has been a sale of the said shares gain arising out of the said transaction, Rs.12,43,540 (individual) and Rs.12,45,629 (HUF) is treated as short term capital gain and taxed accordingly."
4. Aggrieved, the assessee preferred appeals before the CIT(A) against the stand taken by the Assessing Officer. The CIT(A) held that the assessee had completely failed to prove that they had purchased the said shares on 3.4.2003. The CIT(A) further observed that "he failed to prove that he held the shares for more than a year. The appellant also failed to prove the genuineness of the transaction claimed to have been made by him in the shares of M/s. CMC Ltd with any document. So the facts of the case clearly demonstrate that the appellant made the untrue claim of purchase and sale of shares of M/s. CMC Ltd as on 1.4.2003 and of purchase of shares of M/s. Fast Track Entertainment Ltd as on 3.4.2003 with an intention to avoid the payment of tax on the sale of the shares of M/s. Fast Track Entertainment ltd. The AO was fully justified in assessing the gain on the sale of the aforesaid shares as short term capital gain. I, 3 ITA No.1850 /Mum/2009 ITA No.1851 /Mum/2009 therefore, confirm the assessment of gain of Rs.12,43,540 (individual) Rs. Rs.12,45,629(HUF) as short term capital gain. Consequently, the appellant cannot be entitled to deduction u/s. 54EC." Aggrieved, the assessee is in further appeal before us.
5. The learned A.R. appearing on behalf of the assessee submitted that the assessee had produced necessary evidence before the AO to support the claim, that broker had admitted that the assessee had purchased the shares of FTEL, that shares were reflected in Demat account of the assessee.
6. The assessee had claimed that they had purchased 28000 shares of FTEL on 7.4.2003 and the same were sold on 12.4.2004, 13.4.2004 and 15.4.2004. The AO held that shares were not purchased on 7.4.2003 that the sale of shares resulted in short term capital gain and not in LTCG as claimed by the assessee. The assessee had claimed that profit arising from speculative sale of shares of CMC Ltd was utilized in purchasing the shares of FTEL.
7. Arguing the matter, learned Departmental Representative submitted that no advance was made to the broker for speculative transactions nor was any contract entered into. He further submitted that the AO and the CIT(A) had rightly held that transaction in question had resulted in short term capital gain.
8. We have heard both the sides and perused the documents submitted by the assessee. The certificate forwarding the paper book was found to be in contravention of Rule 18 of the I.T.Rules, 1962. Instead of certifying before which authority which papers were filed the assessee had certified the paper book as under:
"No new evidence is produced except P-32".
The AR did not request to the Bench to admit the said additional evidence. Ld D.R. also did not raise any objection regarding the new evidence furnished by the assessee. We find that it is a very crucial evidence to decide the issue regarding purchase of shares on a particular date. Only the assessee knows the reasons as to why the letter (page 32 of the PB) of Fast Track dated 23.4.2003 intimating the assessee about transfer of shares 4 ITA No.1850 /Mum/2009 ITA No.1851 /Mum/2009 was not submitted before the lower authorities. As per the letter "we are enclosing below mentioned share certificates duly transferred in your name". We are of the opinion that if the assessee can prove the genuineness of the above letter, the matter argued before us can easily be decided. As the AO and the CIT(A) had no occasion to verify the veracity of the letter, so we remit the matter back to the file of the AO to decide the issue of LTCG/STCG taking into consideration the letter of Fast Track and the Jumbo certificates issued by FTEL.
9. In the result, appeals filed by the assessee are allowed for statistical purposes.
Pronounced in the open court on 4th April , 2012
Sd/- sd/-
(D.MANMOHAN) (RAJENDRA)
Vice President Accountant Member
Mumbai, Dated 4th April, 2012
Parida
Copy to:
1. The appellant
2. The respondent
3. Commissioner of Income Tax (Appeals),XXIV, Mumbai
4. Commissioner of Income Tax, 24 , Mumbai
5. Departmental Representative, Bench 'B' Mumbai //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI