DIMPLE A RUIA, MUMBAI v. DCIT 14(3), MUMBAI

ITA 2270/MUM/2010 | 2006-2007
Pronouncement Date: 30-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 227019914 RSA 2010
Assessee PAN ACZPR3950K
Bench Mumbai
Appeal Number ITA 2270/MUM/2010
Duration Of Justice 1 year(s) 8 month(s) 8 day(s)
Appellant DIMPLE A RUIA, MUMBAI
Respondent DCIT 14(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 30-11-2011
Date Of Final Hearing 22-11-2011
Next Hearing Date 22-11-2011
Assessment Year 2006-2007
Appeal Filed On 22-03-2010
Judgment Text
1 ITA NO. 2270/MUM/2010 MS. DIMP LE A. RUIA IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH MUMBAI BENCHES MUMBAI BEFORE SHRI R K PANDA AM AND SHRI VIJAY PAL RAO J.M. ITA NO. 2270/MUM/2010 (ASST YEAR 2006-07) MS. DIMPLE ASHISH RUIA 74 GYAN BUILDING 25 RAMWADI KALBADEVI MUMBAI 400002. VS DCIT 14(3) AAYAKAR BHAWAN MAHARSHI KARVE MARG MUMBAI. 20 (APPELLANT) (RESPONDENT) PAN NO. ACZPR3950K APPELLANT BY S HRI HIRO RAI RESPONDENT BY SHRI O.A. MAO DATE OF HEARING 22.11.2011 DATE OF PRONOUNCEMENT 30.11.2011 ORDER PER R K PANDA AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 5.2.2010 OF THE COMMISSIONER OF INCOME TAX (A)- 25 MUMBAI RELATING TO ASSESSMENT YEAR 2006-07. 2. IN GROUNDS OF APPEAL NO. 1 TO 3 THE ASSESSEE HA S CHALLENGED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 1 67 83 121/- MADE BY THE A.O. AS INCOME FROM OTHER SOURCES. 3. FACTS OF THE CASE IN BRIEF ARE THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTED THAT THE ASSESSEE HAS DE CLARED SHORT TERM CAPITAL GAINS OF RS. 59 35 777/- WHICH HAS BEEN TAXED @ 10% . THE A.O. ASKED THE ASSESSEE TO FURNISH THE FOLLOWING DETAILS:- 2 ITA NO. 2270/MUM/2010 MS. DIMP LE A. RUIA (I) DETAILS OF SHORT TERM CAPITAL GAINS WORKING ALO NG WITH BROKERS NOTE FOR PURCHASE AND SALE OF SHARES. (II) COPY OF DEMAT ACCOUNT (III) WHETHER ANY DEPOSIT/ADVANCE WAS KEPT WITH BROKER I F SO THE DETAILS AND SOURCE OF SAID DEPOSIT. (IV) COPY OF LEDGER ACCOUNT MAINTAINED BY THE BROKER IN THEIR BOOKS. (V) COPY OF BANK STATEMENT. 3.1 THE ASSESSEE SUBMITTED DETAILS OF SHORT TERM CA PITAL GAINS BROKERS NOTES FOR PURCHASE AND SALE OF SHARES COPY OF LEDG ER ACCOUNT IN THE BOOKS OF BROKER SUNCHAN SECURITIES LTD. FOR THE PERIOD 01.04 .2005 TO 31.3.2006. FROM THE COPY OF DEMAT ACCOUNT THE A.O. NOTED THE DATE OF PURCHASE AND SALE OF SHARES AS SHOWN IN THE STATEMENT OF SHORT T ERM CAPITAL GAINS ARE NOT AT ALL REFLECTING IN THE TRANSACTION STATEMENT. FR OM THE COPY OF BROKER NOTES SUBMITTED BY THE ASSESSEE THE A.O. NOTED THAT THE TRANSACTIONS WERE STATED TO BE ROUTED THROUGH BOMBAY STOCK EXCHANGE. TO VER IFY THE GENUINENESS OF THE TRANSACTIONS THE A.O. ISSUED NOTICE U/S 133(6) TO BOMBAY STOCK EXCHANGE (BSE) ON 19.12.2008 CALLING FOR SOME DETAI LS. FROM THE REPLY FROM THE BSE VIDE THEIR LETTER DTD. 26.12.2008 THE A.O. NOTED THAT THE TRANSACTION STATEMENT SHOWS THAT SUNCHAN SECURITIES LTD. HAD EN TERED TRADES FOR THE CLIENT CODE ONLY IN THE SCRIP MICRO TECHNOLOGIES IN DIA LTD. ON 27.12.2005 AND 28.12.2005. THE BROKER M/S SUNCHAN SECURITIES LTD. WAS ADMITTED AS TRADING MEMBER ON 6.6.2005 AND WAS ALLOWED TO COMME NCE ITS BUSINESS W.E.F. 03.02.2006. IT WAS INFORMED THAT THE DATES APPEARING ON THE CONTRACT NOTES PURPORTED TO BE ISSUED BY SUNCHAN SECURITIES LTD. TO THE ASSESSEE ARE FOR A PERIOD PRIOR TO 03.02.2006 I.E. DATE OF COMME NCEMENT OF BUSINESS BY THE BROKER. THE A.O. THEREFORE ISSUED SUMMONS U/ S 131 TO THE BROKER SUNCHAN SECURITIES LTD. ON 19.12.2008 TO ATTEND HIS OFFICE ALONG WITH THE DETAILS OF PURCHASE AND SALE OF SCRIPS TRANSACTED T HROUGH IT. IN THE LETTER THE A.O. ASKED THE BROKER TO FURNISH VARIOUS OTHER DETA ILS AS PER PARA 4.10 OF THE ASSESSMENT ORDER. HOWEVER THE BROKER DID NOT ATTEND BEFORE THE A.O. 3 ITA NO. 2270/MUM/2010 MS. DIMP LE A. RUIA THE ASSESSEE ALSO DID NOT ATTEND BEFORE THE A.O. DE SPITE ISSUE OF SUMMONS. HOWEVER A LETTER DTD. 30.12.2008 WAS FILED BEFORE THE A.O. STATING AS UNDER: (I) OUR ABOVE NAME CLIENTS ARE INVESTORS IN SHARES AND SECURITIES. THE SHARES BEING CAPITAL ASSET HAVE BEEN SHOWN AS I NVESTMENTS AT THE TIME OF PURCHASE. (II) A SUM OF RS. 59 35 777/- HAS BEEN SHOWN AS CAPITAL GAINS ARISING ON TRANSFER OF CAPITAL ASSET IN THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. (III) DELIVERY OF SHARES HAS BEEN RECEIVED ON PURCHASE AN D GIVEN ON SALE IN RESPECT OF COMPANIES IN RESPECT OF WHICH CA PITAL GAINS/LOSS HAS BEEN SHOWN IN THE RETURN OF INCOME. A CERTIFICATE FROM SUNCHAN SECURITIES IN THIS REGARD IS ENCLOSED. 3.2 SINCE NEITHER THE BROKER NOR THE ASSESSEE ATTEN DED THE OFFICE OF A.O. DESPITE ISSUE OF SUMMONS AND OBSERVING FROM THE DET AILS FILED THAT PURCHASES AND SALES SHOWN BY THE ASSESSEE AND THE D ATES IN THE TRANSACTION STATEMENT ARE ENTIRELY DIFFERENT THE A.O. DOUBTED T HE GENUINENESS OF THE SHORT TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE. H E OBSERVED THAT THE SHORT TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE ON THE SA LE PROCEEDS IS NOTHING BUT A BOGUS/FAKE ENTRY TAKEN UNDER GARB OF SHORT TE RM CAPITAL GAIN. FURTHER THE TRANSACTIONS ARE NOT ROUTED THROUGH TH E STOCK EXCHANGE AND THE STT PAYMENT SHOWN IN THE BROKERS BILLS IS ALSO A BOGUS ENTRY. HE FURTHER NOTED THAT THE ASSESSEE HAS NEITHER MADE AN Y PAYMENT FOR THE PURCHASE OF SHARES NOR GIVEN ANY ADVANCE/DEPOSIT TO THE BROKER. FROM THE BANK ACCOUNT MAINTAINED WITH CITI BANK THE A.O. NO TED THAT THE ENTIRE SHORT TERM CAPITAL GAIN ON SALE PROCEEDS WERE IMMED IATELY TRANSFERRED FROM ASSESSEES BANK ACCOUNT TO THE BANK ACCOUNTS OF THE FAMILY CONCERNS NAMELY M/S POOJASHREE AND M/S RUIA CREATIONS MAINTA INED WITH CITI BANK. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MCDOWELL AND CO. LTD. REPORTED IN 154 ITR 148 THE A.O. CONS IDERED THE ENTIRE SALE CONSIDERATION OF RS. 1 67 83 121/- AS INCOME FROM O THER SOURCES. 4 ITA NO. 2270/MUM/2010 MS. DIMP LE A. RUIA 3.3 BEFORE THE LD. CIT(A) THE ASSESSEE REMAINED UNS UCCESSFUL. EVEN THE ALTERNATE CLAIM OF TAXING THE DIFFERENCE BETWEEN TH E PURCHASE AND SALE OF SHARES AMOUNTING TO RS. 59 35 777/- WAS ALSO REJECT ED BY THE LD. CIT(A). AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS DECLARED SALE OF SHARES AT RS. 1 67 83 121.17 AND P URCHASE OF SHARES AT RS. 1 08 47 343.74 AND HAD DECLARED SHORT TERM CAPITAL GAIN OF RS. 59 35 777.46. ADMITTEDLY THE ASSESSEE HAS NOT MAD E ANY PAYMENT FOR THE PURCHASE OF SHARES. SIMILARLY THE ASSESSEE HAS NO T RECEIVED THE ENTIRE SALE CONSIDERATIONS. IT HAS RECEIVED ONLY PROFIT AMOUNT ING TO RS. 59 35 777/-. THEREFORE THE A.O. AT BEST COULD HAVE MADE ADDITION OF RS. 59 35 777/- ONLY. HOWEVER THE LD. CIT(A) ALSO CONFIRMED THE ACTION O F THE A.O. HE SUBMITTED THAT THE ENTIRE SALE PROCEEDS CANNOT BE ADDED TO TH E INCOME OF THE ASSESSEE AS INCOME FROM OTHER SOURCES AND ONLY THE DIFFERENC E BETWEEN SALE AND PURCHASE AT BEST CAN BE ADDED. 5. THE LD. D.R. ON THE OTHER HAND WHILE SUPPORTIN G THE ORDER OF THE A.O. AND THE LD. CIT(A) SUBMITTED THAT THE ENTIRE TRANSA CTIONS SHOWN BY THE ASSESSEE ARE BOGUS. THEREFORE IN ABSENCE OF THE GE NUINENESS OF THE PURCHASE AND SALE OF SHARES SHOWN BY THE ASSESSEE THE LOWER AUTHORITIES WERE JUSTIFIED IN TREATING THE SAME PROCEEDS AS INC OME FROM OTHER SOURCES. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES PURSUED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO D ISPUTE TO THE FACT THAT THE ASSESSEE IN THE INSTANT CASE FAILED TO PROVE WITH E VIDENCE TO THE SATISFACTION OF THE A.O. REGARDING THE GENUINENESS OF THE SALE A ND PURCHASE OF SHARES MADE THROUGH M/S SUNCHAN SECURITIES LTD. IT IS ALSO OBSERVED FROM THE 5 ITA NO. 2270/MUM/2010 MS. DIMP LE A. RUIA ORDER OF THE A.O. AS WELL AS LD. CIT(A) THAT THE AS SESSEE HAS NEITHER PAID ANY AMOUNT FOR THE PURCHASE OF THE SHARES NOR RECEIVED THE ENTIRE SALE PROCEEDS. IT HAS ONLY RECEIVED THE PROFIT ELEMENT OF RS. 59 3 5 777/- WHICH IS ALSO AS PER THE FINDING GIVEN BY THE A.O. UNDER THESE CIRC UMSTANCES WHILE THE REVENUE AUTHORITIES WERE JUSTIFIED IN TREATING THE INCOME AS INCOME FROM OTHER SOURCES AS AGAINST SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE HOWEVER THE ENTIRE SALE PROCEEDS IN OUR OPINION CANNOT BE TREATED AS INCOME OF THE ASSESSEE. IF THE SALES WERE BOGUS TH EN THE PURCHASES WERE ALSO BOGUS. THEREFORE ONLY THE DIFFERENCE BETWEEN THE SALE AND PURCHASE IE. RS. 59 35 777/- COULD HAVE BEEN ADDED. WE THEREFO RE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE A.O. TO TREAT ONLY THE AMOUNT OF RS. 59 35 777/- AS INCOME FROM OTHER SOURCES AS AGAIN ST THE ENTIRE SALE PROCEEDS OF RS. 1 67 83 121/- TAKEN BY HIM. THE GR OUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 7. IN GROUNDS OF APPEAL NO. 4 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE LD. CIT(A) IN NOT CONSIDERING GROUNDS OF APPEAL NO. 4 & 5 TAKEN BEFORE HIM. 7.1 AFTER HEARING BOTH THE SIDES WE FIND THE ASSESS EE HAS TAKEN GROUNDS BEFORE THE LD. CIT(A) THAT THE A.O. HAS NOT APPLIED THE TAX RATE APPLICABLE TO WOMEN ASSESSEE AND THAT THE A.O. HAS ERRED IN CHARG ING INTEREST U/S 234B & 234C. THE LD. COUNSEL FOR THE ASSESSEE AT THE O UTSET SUBMITTED THAT THESE TWO ISSUES CAN BE DECIDED IN THE RECTIFICATIO N PETITION AND THEREFORE HE IS NOT PRESSING THESE GROUNDS. THE LD. D.R. HAS NO OBJECTION. WE ACCORDINGLY DISMISS GROUND OF APPEAL NO. 4 AS NOT PRESSED. 8. GROUNDS OF APPEAL NO. 5 & 6 ARE GENERAL IN NATUR E HENCE DISMISSED. 6 ITA NO. 2270/MUM/2010 MS. DIMP LE A. RUIA 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 30.11.2011. SD/- ( VIJAY PAL RAO ) JUDICIAL MEMBER SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 30.11.2011. RK COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT - 14 MUMBAI 4 CIT(A) - 25 MUMBAI 5 DR BENCH D 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI