RAKESH L. ROHIRA (HUF), MUMBAI v. ITO WD 3(2), MUMBAI

ITA 5298/MUM/2010 | 2004-2005
Pronouncement Date: 22-10-2013 | Result: Allowed

Appeal Details

RSA Number 529819914 RSA 2010
Assessee PAN TYEAR2000W
Bench Mumbai
Appeal Number ITA 5298/MUM/2010
Duration Of Justice 3 year(s) 3 month(s) 24 day(s)
Appellant RAKESH L. ROHIRA (HUF), MUMBAI
Respondent ITO WD 3(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted J
Tribunal Order Date 22-10-2013
Date Of Final Hearing 22-10-2013
Next Hearing Date 22-10-2013
Assessment Year 2004-2005
Appeal Filed On 28-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH MUMBAI BEFORE SHRI H.L.KARWA PRESIDENT & SHRI N.K.BILLAIYA AM ITA N O. 5298 / MUM/ 20 1 0 ( ASSESSMENT YEAR : 20 0 4 - 20 0 5 ) RAKESH L. ROHIRA (HUF) 1601/D TIVOLI HIRANANDANI GARDENS POWAI MUMBAI. VS. ITO WD 3(2) THANE (WEST) PAN/GIR NO. : A AHR 9342 H ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : M R. SUBODH RATNAPARKHI /REVENUE BY : MR. R.K.SAHU DATE OF HEARING : 22 ND DATE OF PRONOUNCEMENT : 22 ND OCTOBER 2013 O R D E R PER N.K.BILLAIYA AM : THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) - I THANE DATED 26 - 02 - 2010 PERTAINING TO ASSESSMENT YEAR 20 0 4 - 200 5 . 2 . THE ASSESSEE H AS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. GR OUND NO.1 RELATES TO ADDITION OF RS. 15 91 260/ - AS INCOME UNDER SECTION 68 OF THE ACT AND GROUND NO. 2 RELATES TO ADDITION OF RS. 1 59 126/ - UNDER SECTION 69C OF THE ACT. ITA NO. 5298 /1 0 2 3 . THE FACTS ARE THAT DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS ON SALE OF SHARES OF M/S HIGHLAND INDUSTRIES LTD.. THE AO OBSERVED THAT THE ASSESSEE HAS PURCHASED 22 000 NO. OF SHARES OF HIGHLAND INDUSTRIES LTD. FOR A SUM OF RS. 26 180/ - THROUGH M/S T.H VAKIL SHARES & SECURITIES PVT. LTD. ON 27 - 5 - 2002 AT THE RATE OF RS. 1.20 PER SHARE. THE AO FURTHER NOTICED THAT THESE SHARES WERE PURCHASED IN CASH. THE AO FURTHER OBSERVED THAT THE SHARES WERE SOLD THROUGH M/S VIJAY BHAGWANDAS & CO. ON 5 - 12 - 2003 FOR A TOTAL CON SIDERATION OF RS. 15 91 260/ - @ RS.72.23 PER SHARE. THIS TRANSACTION HAS RESULTED INTO LONG TERM CAPITAL GAINS AT RS. 15 64 190/ - . THE AO WENT ON TO VERIFY THE GENUINENESS OF THESE TRANSACTIONS AND ASKED THE ASSESSEE TO SUBMIT ITS DEMAT ACCOUNT. THE ASSESSEE CONTENDED THAT HE HAS PURCHASED AND SOLD SHARES IN PHYSICAL FORM. THE AO FURTHER PROCEEDED TO VERIFY THE TRANSACTION THROUGH BOMBAY STOCK EXCHANGE AND WROTE A LETTER TO THE CONCERNED AUTHORITY ON 8 - 12 - 2006. THE STOCK EXCHANGE REPLIED THAT NO SUCH TRANSACT ION/TRADE WAS EXECUTED. THIS WAS BROUGHT TO THE NOTICE OF THE ASSESSEE WHO WAS ASKED TO SUBMIT HIS EXPLANATION. LEARNED COUNSEL FOR THE ASSESSEE ATTENDED THE PROCEEDINGS ON 22 - 12 - 2006 AND SHOW ED HIS INABILITY TO OFFER ANY EXPLANATION. THE AO FURTHER OBSER VED THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO SUBSTANTIATE HIS CLAIM NOR THE ASSESSEE COULD FILE THE COPY OF THE SHARES HELD IN PHYSICAL FORM. THE AO WAS OF THE FIRM ITA NO. 5298 /1 0 3 BELIEF THAT THE SHARE TRANSACTION AND THE CLAIM OF LONG TERM CAPITAL GAINS IS NO THING BUT AN ARRANGEMENT TO LAUNDER ASSESSEES UNEXPLAINED UNACCOUNTED MONEY AND TO PLOUGH IT BACK BY GIVING IT A COLOUR OF REGULAR SHARE TRANSACTIONS AND TO CLAIM EXEMPTION U/S. 54F OF THE ACT ON ALLEGED LONG TERM CAPITAL GAIN ON THE SAME. THE AO WENT ON TO TREAT THE SUM OF RS. 15 91 260/ - AS UNEXPLAINED CREDIT AND TREATED THE SAME AS INCOME OF THE ASSESSEE. THE AO FURTHER WENT ON TO ADD 10% OF THE SALE CONSIDERATION AS EXPENDITURE INCURRED FOR ARRANGING SUCH BOGUS LONG TERM CAPITAL GAINS AND MADE AN ADDIT ION OF RS. 1 59 126 / - . 4 . THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. BE FORE THE CIT(A ) THE ASSESSEE FILE D SUPPORTING EVIDENCE TO SUBSTANTIATE THE GENUINENESS OF HIS CLAIM. THE DETAILS OF THE DOCUMENTS SUBMITTED BEFORE THE CIT(A) ARE EXHIBITED AT PAGE 5 OF THE CIT(A)S ORDER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND IN THE LIGHT OF THE FACTS OF THE CASE THE CIT(A) WAS CONVINCED THAT NEITHER THE PURCHASE IS DOCUMENTED NOR IT IS SUPPORTED BY ANY KIND OF EVIDENCE NOR EVEN COPY OF SHARE CERTIFICATE IS PRODUCED. PAYMENT FOR PURCHASE MADE BY CASH AND SALE PROCEEDS ARE RECEIVED BY CASH. THE CIT(A) FURTHER OBSERVED THAT THE TRANSACTIONS HAVE NOT BEEN DONE THROUGH PROPER BANKING CHANNELS NOR THROUGH DEMAT ACCOUNT. THER E BEING NO CREDIBLE EVIDENCE FOR THE SALE THE CIT(A) CONFIRMED THE FINDINGS OF THE AO. AGGRIEVED THEREBY THE ASSESSEE IS IN APPEAL HERE BEFORE US. ITA NO. 5298 /1 0 4 5 . LEARNED COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. LEARNED COUNSEL VEHEMENTLY ARGUED THAT THE SHARES WERE PURCHASED THROUGH REGISTERED BROKERS AND THE ASSESSEE NEVER CLAIMED TO HAVE TRANSACTED THROUGH DEMAT ACCOUNT. LEARNED COUNSEL FURTHER ARGUED THAT PURCHASES AND SALE OF SHARES ARE SUPPORTED BY THE CONTRACT NOTE S AND THE BILLS OF THE BROKERS. IT IS THE SAY OF THE LEARNED COUNSEL THAT THE CIT(A) HAS GROSSLY ERRED IN STATING THAT THE ASSESSEE HAS RECEIVED SALE CONSIDERATION IN CASH WHEREAS THE ASSESSEE HAS RECEIVED THE SALE CONSIDERATION BY A PAY ORDER OF ABN - AMRO BANK. THE COUNSEL FURTHER SUBMITTED THAT THE SHARES OF HIGHLAND INDUSTRIES LIMITED WERE VERY MUCH REFLECTED IN THE BALANCE SHEET OF PRECEDING FINANCIAL YEAR I.E. F.Y.2002 - 03 WHICH CLEARLY SHOWS THAT THE ASSESSEE WAS IN POSSESSION OF 22 000 SHARES OF M/S H IGHLAND INDUSTRIES LTD. LEARNED COUNSEL DREW OUR ATTENTION TO A CERTIFICATE ISSUED BY THE COMPANY CERTIFYING THAT THE ASSESSEE WAS A SHAREHOLDER OF THE COMPANY HOLDING 22000 EQUITY SHARES DURING THE PERIOD AGUST 2002 TO DECEMBER 2003. THE COUNSEL CONCLUDE D THAT THE ASSESSEE HAS FILED ALL THE NECESSARY DETAILS IN SUPPORT OF HIS CLAIM AND THE REVENUE AUTHORITIES HAVE GROSSLY ERRED IN IGNORING THE DOCUMENTARY EVIDENCE. 6 . LEARNED DR STRONGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. LEARNED DR ALSO BR OUGHT TO OUR NOTICE THAT FRAUDULENT ITA NO. 5298 /1 0 5 TRANSACTIONS HAVE BEEN DONE BY A CERTAIN SECTION OF THE BROKER S DETAILS OF WHICH WERE AVAILABLE AT THE WEBSITE I.E. WWW.WATCHOUTINVESTOR.COM . COPY OF THE SAME WAS ALSO PLA CED BEFORE US. IT IS THE SAY OF THE LEARNED DR THAT THE BROKER THROUGH WHOM THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED AND SOLD SHARES HAVE BEEN BLACKLISTED BY THIS WEBSITE BEING ENGAGED IN FRAUDULENT TRANSACTIONS IN SHARES AND SECURITIES. 7 . WE HAVE CAREFULLY PERUSED THE ORDER S OF THE AUTHORITIES BELOW AND MATERIAL EVIDENCE BROUGHT ON RECORD . IT IS NOT IN DISPUTE THAT THE PURCHASE AND SALE OF SHARES WERE DONE THROUGH OFF MARKET TRANSACTIONS MEANING THEREBY THAT THE SHARES WERE NOT ROUTED THROUGH DEMA T ACCOUNT NOR THROUGH BOLT . THE ASSESSEE HAS ADMITTED THIS FACT. IT IS NOT UNDERSTANDABLE THAT POST YEAR 2000 WHEN THE SEBI HAS MADE IT MANDATORY TO TRANSACT THROUGH DEMAT ACCOUNT THEREBY COMPLETELY BANNING THE PHYSICAL TRANSACTIONS OF THE SHARES THROUGH BOLT T HE ASSESSEE IS STILL TRANSACTING IN PHYSICAL SHARES OFFLINE. BE THAT AS IT MAY THE CIT(A) ALLEGES THAT THE SALE CONSIDERATION HAS BEEN RECEIVED IN CASH WHEREAS COPY OF THE PAY ORDER OF ABN - AMRO BANK BROUGHT ON RECORD AT PAGE 14 OF THE PAPER BOOK SHOWS THAT THE SALE CONSIDERATION WAS RECEIVED BY THE ASSESSEE THROUGH PAY ORDER. IN OUR CONSIDERED VIEW THE GENUINENESS OF THE TRANSACTION NEEDS FURTHER VERIFICATION AT THE ASSESSMENT STAGE. WE ACCORDINGLY RESTORE THIS ISSUE BACK TO THE FILE S OF THE AO . THE AO IS DIRECTED TO VERIFY THE TRANSACTION THROUGH BROKERS. THE AO IS ALSO DIRECTED TO VERIFY THE ITA NO. 5298 /1 0 6 GENUINENESS OF THE TRANSACTION IN THE LIGHT OF THE REPORT GIVEN IN THE WEBSITE I.E. WWW.WATCHOUTINVESTOR.CO M IN RESPECT OF THE BROKERS INVOLVED IN THE PRESENT TRANSACTION. THE AO IS ALSO DIRECTED TO VERIFY THE CERTIFICATE OF THE COMPANY PLACED BEFORE US AT PAGE 18 OF THE PAPER BOOK. THE ASSESSEE IS DIRECTED TO SUBSTANTIATE ITS CLAIM BY BRINGING COGENT MATERIAL EVIDENCE ON RECORD KEEPING IN MIND THAT SECTION 68 NOT ONLY REQUIRES TO EXPLAIN THE SOURCE OF MONEY BUT ALSO THE NATURE AND SOURCE. THE AO IS EXPECTED TO GIVE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE AFRESH. 8 . R ESULTANTLY THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 /10/ 2013 . SD/ - ( ) ( H.L.KARWA ) SD/ - ( ) ( N.K.BILLAIYA ) / PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED : 2 2 /10 /2013 /PKM PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. GUARD FILE. ITA NO. 5298 /1 0 7 //TRUE COPY// / BY ORDER ( ASSTT. REGISTRAR) / ITAT MUMBAI