ACIT, Circle - 42, Kolkata, Kolkata v. Shri Tapan Kumar Bardhan, Kolkata

ITA 542/KOL/2011 | 2006-2007
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 54223514 RSA 2011
Assessee PAN AHEPB6801F
Bench Kolkata
Appeal Number ITA 542/KOL/2011
Duration Of Justice 7 month(s) 19 day(s)
Appellant ACIT, Circle - 42, Kolkata, Kolkata
Respondent Shri Tapan Kumar Bardhan, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-11-2011
Assessment Year 2006-2007
Appeal Filed On 06-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [ . . . . . . ! !! ! . ] [BEFORE SHRI N. VIJAYA KUMARAN J. M. & SHRI C. D. RAO A.M.] $ $ $ $ / I.T.A NO.542/KOL/2011 / // / ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME TAX -VS.- SRI TAPAN KUMAR BARDHAN CIRCLE-42 KOLKATA. KOLKATA [PAN : AHEPB 6801 F]. [ + + + + /APPELLANT ] ]] ] [ -.+ -.+ -.+ -.+/ // / RESPONDENT ] ]] ] + + + + / FOR THE APPELLANT : SHRI S. K. ROY -.+ -.+ -.+ -.+ / FOR THE RESPONDENT : SHRI NIRMAL KAUSHIK 0 ! 0 ! 0 ! 0 ! /DATE OF HEARING : 15.11.2011 0 ! 0 ! 0 ! 0 ! /DATE OF PRONOUNCEMENT : 25.11.2011 /ORDER . . . . PER N. VIJAYA KUMARAN J. M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST ORDER OF LD. CIT(A)-XII KOLKATA DATED 20.01.2011 FOR ASSESSMENT YEAR 2006-07. 2. THE GROUND URGED BY THE DEPARTMENT IS AS UNDER : - THAT ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.61 71 166/- ON ACCOUNT OF DIFFERENCE IN PROFIT FROM SHARE TRANSACTION AND DERIVATIVES AND RS.2 5 0 000/- AS BUSINESS EXPENDITURE WITHOUT REBUTTING THE ARGUMENTS OF THE A.O. TAKEN IN THE ASSESSMENT ORDER WHICH ALSO HAD NOT BEEN CONTRADICTED BY THE A.O. IN HIS REMAND REPORT THAT HAD MERELY LISTED OUT THE VOLUMES OF VARIOUS TRANS ACTIONS. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS O F DEALING IN SHARES. HE IS MEMBER OF CALCUTTA STOCK BROKER TO CARRY ON THE ACTIVITIES BY BUYING SELLIN G AND DEALING IN SECURITIES AND CARRYING ON SUCH OTHER ACTIVITIES AS PERMITTED BY THE STOCK BROKER. FOR THIS RELEVANT ASSESSMENT YEAR ASSESSEE FILED RETURN OF INCOME ON 30.10.2006 ADMITTING TOTAL INCO ME OF RS.13 10 010/-. TAX AUDIT REPORT WAS ALSO [ ITA NO.542/KOL/2011] 2 FILED. ASSESSING OFFICER WAS OF THE VIEW THAT THE C ORRECTNESS AND COMPLETENESS OF THE ASSESSEE IS NOT SATISFIED AND HE REJECTED THE BOOKS BY INVOKING PRO VISIONS OF SECTION 145(3) OF THE ACT. ACCORDING TO THE ASSESSING OFFICER ASSESSEE WAS HAVING 53.25 CR ORE AS SHARE TRANSACTION OUT OF WHICH RS.49.74 CRORES HAVE BEEN SETTLED OTHERWISE THAN DELIVERY. T HE TOTAL DEPOSITS AND WITHDRAWALS IN BOTH THE BANK ACCOUNTS ARE APPROXIMATELY RS.6.2 CRORES ONLY. THER EFORE MARGIN OF 1.44% OF THE ENTIRE TRANSACTION OF THE ASSESSEE I.E. 53.25 CRORES SHARE TRANSACTION FIGURE OF SHARE ADJUSTMENT AS APPEARING IN THE LEDGER WHICH THE ASSESSING OFFICER TREATED AS ORIGI NAL PROFIT DERIVED OUT AS SHARE TRANSACTION AND DERIVATIVE FUTURES ALSO. ASSESSING OFFICER DOUBTED THE BOOK RESULT. FURTHER ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPT INCOME WHICH RESULTE D IN THE ADDITION. ON APPEAL TO THE LD. CIT(A) IT IS SUBMITTED THAT THE TRANSACTIONS WERE ENTERED ON BEHALF OF THE CLIENT AND THE ASSESSEE IN ADDITIO N TO ACTING ON BEHALF OF SUCH CLAIMS IS ALSO MAKING P URCHASE AND SALES OF EQUITY SHARES ON HIS OWN ACCOUNT. ASSESSEE IS PAYING SECURITY TRANSACTION TA X FOR THE SHARE TRANSACTION. THE LD. CIT(A) AFTER PERUSAL OF THE MATERIAL AVAILABLE AND ON THE CONSID ERATION OF THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE FOUND THAT ASSESSING OFFICER WAS NOT J USTIFIED IN ESTIMATING THE G.P. AND MAKING THIS ADDITION. LD. CIT(A) CALLED FOR REMAND REPORT AND T HE SYSTEM OF RECORDING THE TRANSACTION BY THE ASSESSEE AND IN THE REMAND REPORT ASSESSING OFFICER HAS SPECIFICALLY MENTIONED THAT ALL THE DETAIL EXPLANATIONS AND BOOKS OF ACCOUNTS WERE PRODUCED BY THE ASSESSEE AND THAT HE CHECKED THE DETAILS AND THE BOOKS OF ACCOUNTS OF THE ASSESSEE ON TEST C HECK BASIS THAT BEING THE CASE. LD. CIT(A) OPINED THAT IT IS NOT JUSTIFIED FOR THE ASSESSING OFFICER IN REJECTING THE AUDITED BOOKS OF ACCOUNTS OF THE ASSESSEE AND CONSEQUENTLY NOT JUSTIFIED IN ESTIMATI NG THE G.P. ULTIMATELY HE DELETED THE ADDITION. ON ACCOUNT OF THIS ADDITION OF RS.61 71 166/- DELETED BY THE LD. CIT(A) WHICH ACCORDING TO OUR VIEW IS QUITE JUSTIFIED AS THE LD. CIT(A) CONSIDERED THE MA TERIAL IN PROPER PERSPECTIVE. HE HAS TAKEN NOTE OF THAT THE ASSESSEE HAS PAID STT ON THE SHARE TRANSAC TION AND ASSESSEE HAS METICULOUSLY MAINTAINED THE DETAILS OF ALL TRANSACTIONS CARRIED OUT THROUGH THE PRINCIPLES AND ALL THE TRANSACTIONS WERE DULY SUPPORTED BY CONTRACT NOTES. THESE OBSERVATIONS OF THE LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. HENCE WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF LD. CIT(A) WHO RIGHTLY DELETED THE ADDITION. 4. COMING TO THE SECOND ISSUE REGARDING DI SALLOWANCE OF RS.2 50 000/- WHICH THE LD. CIT(A) DELETED ON THE GROUND THAT IT IS AN ALLOWABLE EXPEN DITURE UNDER SECTION 37(1) OF THE ACT. THE NATURE OF PAYMENT IS THAT RS.2 50 000/- WAS FORFEITED/ADJU STED BY THE CALCUTTA STOCK EXCHANGE. ACCORDING [ ITA NO.542/KOL/2011] 3 TO ASSESSING OFFICER IT IS PENAL IN NATURE. HOWEVE R LD. CIT(A) WAS OF THE VIEW THAT THE ABOVE ADJUSTMENT WAS NOT PENAL IN NATURE BUT IN FACT AD JUSTED BY THE STOCK EXCHANGE OUT OF THE DEPOSITS MADE BY THE ASSESSEE IN PURSUANCE TO THE SETTLEMENT GUARANTEE FUND BYE LAWS. THE SAID AMOUNT WAS UTILIZED IN FULL BY THE CALCUTTA STOCK EXCHANGE FOR THE PAYMENT CRISIS IN 2001. THIS CLEARLY SHOWS THAT THIS ADJUSTMENT IS NOT PENAL IN NATURE B UT BY WAY OF COMPENSATORY AS IT IS INCURRED FOR THE PURPOSE OF BUSINESS WHICH IS PAID AS PER CALCUTTA S TOCK EXCHANGE IN PURSUANCE TO SETTLEMENT GUARANTEE FUND BYE LAWS. HENCE IT IS AN ALLOWABLE EXPENDITURE WHICH THE LD. CIT(A) AS PER LAW ADJUDICATED AND WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF LD. CIT(A) WHO RIGHTLY DELETED THE DISALLOWANCE. 5. IN THE RESULT REVENUE APPEAL IS DISMISSED ON BO TH THE GROUNDS. 3 3 3 3 ! ! ! ! ORDER PRONOUNCED IN THE COURT ON 25.11.2011. SD/- SD/- [ . . . . . .. .8 8 8 8 ] [ . . . . ] [ C. D. RAO ] [ N. VIJAYAKUMARAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER D ATED : 25TH NOVEMBER 2011. 0 - 9/ COPY OF THE ORDER FORWARDED TO: 1. + /APPELLANT : ASSTT. COMMISSIONER OF INCOME TAX CI RCLE-42 18 RABINDRA SARANI PODDAR C OURT 4 TH FLOOR KOLKATA-700 001. 2 . -.+ / RESPONDENT : SRI TAPAN KUMAR BARDHAN 35P RAJA NABA KRISHNA STREET KOLKATA-700005. 3. - / CIT 4. ()/ CIT(A) KOLKATA. 5. -/ DR KOLKATA BENCHES KOLKATA [. -/ TRUE COPY] / BY ORDER /ASSTT. REGISTRAR [KKC BC D /SR.PS]