DCIT, Agra v. Shri Anil Kumar Gupta, Agra

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.648/AGR/2008 ASST. YEAR: 1999-2000 DY. C.I.T. CENTRAL CIRCLE VS. SHRI ANIL KUMA R GUPTA AGRA. 7 DEV NAGAR AGRA. (PAN : ADKPG 6943 M) C.O. NO.92/AGR/2008 (IN ITA NOS.648/AGR/2008) ASST. YEAR: 1999-2000 SHRI ANIL KUMAR GUPTA VS. DY. C.I.T. CENTRAL CIRCLE 7 DEV NAGAR AGRA. AGRA (PAN : ADKPG 6943 M) (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI S.K. MISHRA SR. D.R. ASSESSEE BY : SHRI RAKESH JAIN C.A. ORDER PER P.K. BANSAL A.M.: THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF THE CIT(A) DATED 11.08.2008. 2. IN THE CROSS OBJECTION (C.O.) THE ASSESSEE HAS T AKEN THE LEGAL GROUND WHICH READS AS UNDER :- THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ACCEPTIN G THE ASSUMPTION OF 2 JURISDICTION U/S 153A BY THE LD. A.O. & CONSEQUENTL Y VALIDATING THE IMPUGNED ASSESSMENT ORDER. 3. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE HAS SUBMITTED ORIGINAL RETURN OF INCOME ALONGWITH COPY OF THE CAPITAL ACCOUNT AND BALANCE SHEET. THE FULL PARTICULARS PERTAINING TO LONG TERM CAPITAL GAIN (LTCG) AND THE TRANSFER OF THE SHARES WERE REFLECTED IN THE CAPITAL ACCOUNT. ALL INVESTMENTS IN IMMOVABLE PROP ERTY BUILDING WERE ALSO REFLECTED IN THE BALANCE SHEET. INCOME FROM LTCG WAS DULY SHOWN IN THE RETURN OF INCOME. THE RETURNS WERE DULY ACCEPTED UNDER SECTION 143(1). THERE HAD BEEN SEARCH IN THE PREMISES OF THE ASSESSEE ON 16.09.2004. SEVERAL DOCUMENTS AND THE LOCKER OF TH E ASSESSEE WERE SEIZED. ASSESSMENT PROCEEDINGS UNDER SECTION 153A WERE INITIATED BUT N O INCOME WAS ASSESSED BASED ON THE BASIS OF THE DOCUMENTS OR MATERIAL FOUND DURING THE COURSE O F SEARCH. THE ASSESSMENT FOR THE ASSESSMENT YEAR WAS COMPLETED BY THE A.O. UNDER SECTION 143(3) READ WITH SECTION 153A. THE ADDITION WAS MADE IN RESPECT OF THE SUM OF RS.10 35 204/- UNDER THE HEAD INCOME FROM OTHER SOURCES TREATING THE LTCG SHOWN BY THE ASSESSEE IN THE ORIGINAL RETU RN TO BE THE BOGUS TRANSACTION. WHEN THE MATTER WENT BEFORE THE CIT(A) IN EACH OF THE A.Y. THE CIT(A) DELETED THE ADDITION ON MERIT. 4. BEFORE US THE LD. A.R. VEHEMENTLY CONTENDED THA T NOTHING INCRIMINATING WAS FOUND DURING THE COURSE OF SEARCH ON THE BASIS OF WHICH T HE ADDITION HAS BEEN MADE. THE JURISDICTION UNDER SECTION 153A RELATES ONLY TO THE ADDITION MAD E TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH. SECTION 153A DOES NOT AUTHORIZE THE A.O. T O MAKE A DENOVO ASSESSMENT. IT IS ONLY THE PENDING ASSESSMENT WHICH CAN BE ABATED AND NOT THE ASSESSMENT WHICH HAS ALREADY BEEN COMPLETED. THEREFORE THE A.O. WAS NOT HAVING ANY JURISDICTION TO MAKE THESE ADDITIONS. RELIANCE WAS PLACED IN THIS REGARD ON THE FOLLOWING DECISIONS :- 3 A) LMJ INTERNATIONAL LTD. VS. DCIT KOLKATA E BEN CH 119 TTJ (KOL) 214 B) MUMBAI TRIBUNAL IN ITA NOS.2855 TO 2860 IN THE C ASE OF ANIL P. KHIMANI VS. DCIT. 5. LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER S OF THE AUTHORITIES BELOW AND CONTENDED THAT BASIS OF THE ASSESSMENT UNDER SECTION 153A IS DIFFERENT FROM THE BASIS OF THE ASSESSMENT UNDER SECTION 158BC. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDERS AS RELIED BEFO RE US. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES WE NOTED THAT THE MUMBAI BENCH I N THE CASE OF ANIL P. KHIMANI IN RESPECT OF THE SCOPE OF ASSESSMENT UNDER SECTION 153A HAS HEL D AS UNDER :- A PERUSAL OF THE ASSESSMENT ORDERS IN ALL THESE CA SES CLEARLY DEMONSTRATE THAT THE SOLE ADDITION IN QUESTION IS ON ACCOUNT OF LOW WITHDRAWALS. THIS HAD NOT BEEN MADE BASED ON ANY MATERIAL FOUND EITHER DURIN G THE COURSE OF SEARCH OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. UNDER THE CIRCUMSTANCES WE EXAMINE THE LEGAL POSITION. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ANIL KUMAR BHATIA VS. ACIT HELD AS FOLLOWS : S.153A PROVIDES THAT WHERE A SEARCH IS INITIATED U /S 132 THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREV IOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE. THE FI RST PROVISO STATES THAT THE A.O. SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS WHILE THE SECOND PROVISO STATE THAT THE ASSESSMENT OR REASSES SMENT RELATING TO THE SAID SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 SHALL ABATE. IN THE ASSESSEES CASE SEARCH ACTION WAS INITIATED AND ASSESSMENTS UNDER S.153A WERE FRA MED FOR SIX ASSESSMENT YEARS MAKING VARIOUS ADDITIONS. THE ASS ESSEE CLAIMED THAT THE ADDITIONS WERE NOT TENABLE AS REGULAR RETURNS HAD B EEN FILED WHERE THE PARTICULARS RELATING TO THE ADDITIONS HAD BEEN DISC LOSED AND THE SAME HAD BEEN ACCEPTED U/S 143(1) AND ALSO THAT NO MATERIAL HAD BEEN FOUND DURING THE SEARCH TO JUSTIFY THE ADDITIONS. THE REVENUE C LAIMED THAT THE EFFECT OF THE PROVISOS TO S.153A WAS THAT ALL ASSESSMENTS ABA TE AND THERE HAD TO BE 4 A DE NOVO ASSESSMENT IN WHICH THE A.O. WAS NOT CONF INED TO THE MATERIAL FOUND DURING THE SEARCH. HELD REJECTING THE CLAIM OF THE REVENUE. (I) S.153A DOES NOT AUTHORIZE THE MAKING OF A DE NOVO A SSESSMENT. WHILE UNDER THE 1 ST PROVISO THE AO IS EMPOWERED TO FRAME ASSESSMENT F OR SIX YEARS UNDER THE 2 ND PROVISO ONLY THE ASSESSMENTS WHICH ARE PENDING ON THE DATE OF INITIATION OF SEARCH ABATE. THE EFFECT IS THAT COMPLETE ASSESSMENTS DO NOT ABAT E . THERE CAN BE TWO ASSESSMENTS FOR THE SAME ASSESSMEN T YEAR. ASSESSMENTS WHICH ARE NOT PENDING BEFORE THE A.O. ON THE DATE OF SEAR CH BUT ARE PENDING BEFORE AN APPELLATE AUTHORITY WILL SURVIVE. (II) AN ASSESSMENT CAN BE SAID TO BE PENDING ONLY IF THE AO IS STATUTORILY REQUIRED TO DO SOMETHING FURTHER. IF A S.143(2) NO TICE HAS BEEN ISSUED THE ASSESSMENT IS PENDING. HOWEVER THE ASSESSMENT IN RESPECT OF A RETURN PROCESSED U/S 143(1) IS NOT PENDING BECAUSE THE AO IS NOT R EQUIRED TO DO ANYTHING FURTHER ABOUT SUCH A RETURN. (III) THE POWER GIVEN BY THE PROVISO TO ASSESS IN COME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DISCLOSED IN THE ORI GINAL ASSESSMENT PROCEEDINGS . (IV) ON FACTS AS THE RETURNS HAD BEEN PROCESSED U/ S 143(1) THE ASSESSMENTS WERE NOT PENDING AND AS NO MATERIAL WAS FOUND DUR ING THE SEARCH THE ADDITIONS COULD NOT BE SUSTAINED. RESPECTFULLY FOLLOWING THE SAME WE DELETE ALL THE ADDITIONS MADE AND ALLOW THE APPEALS OF THE ASSESSEE. 7. IN THE CASE BEFORE US THE PROFITS ON THE SALES OF SHARES MADE BY THE ASSESSEE WERE DULY SHOWN IN THE RESPECTIVE A.YS. THE RETURNS WERE PRO CESSED UNDER SECTION 143(1). THUS THE ASSESSMENTS WERE NOT PENDING WHICH COULD HAVE BEEN ABATED AS PER SECOND PROVISO TO SECTION 153A. ASSESSMENT FOR THE A.Y. I.E. 1999-2000 HAS B EEN COMPLETED BEFORE THE DATE OF SEARCH. THUS THE ASSESSMENT WAS NOT ABATED. WE THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE MUMBAI BENCH HOLD THAT NO ADDITION UNDER SECTION 15 3A COULD BE MADE BY THE A.O. IN THE ASSESSMENT YEAR. 5 8. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS SHOWN SALES OF THE SHARES AT RS.10 35 204/- AND TREATED THE SAID INCOME AS INCOM E FROM LTCG. THE ASSESSEE ALSO CLAIMED EXEMPTION UNDER SECTION 54EA. THE A.O. TREATED THE SAID INCOME TO BE THE INCOME FROM UNDISCLOSED SOURCES. THE ASSESSEE HAD NOT SUBSTANT IATED HIS CLAIM AND IN OTHER CASES ALSO SHARE TRANSACTIONS THROUGH M/S YADAV & COMPANY WERE HELD TO BE BOGUS AND THE LETTER SENT TO THE BROKER WAS RETURNED UN-SERVED. THE A.O. FURTHER AD DED THE COMMISSION OF RS.20 704/- AS UNDISCLOSED INCOME. THE ASSESSEE WENT IN APPEAL BE FORE THE CIT(A) AND CONTENDED THAT THE SHARES WERE PURCHASED IN THE EARLIER A.Y. WHICH WER E DULY REFLECTED IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME FOR THE A.Y. 1998-9 9 AND STANDS ACCEPTED IN THAT A.Y. THE PAYMENT OF CONSIDERATION WAS RECEIVED THROUGH BANKI NG CHANNEL. THE EVIDENCES FOR THE PURCHASE AND SALE OF SHARES WERE DULY FILED. THE CIT(A) DEL ETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE GONE THROUGH THE RIVAL SUBMISSIONS AND DOCU MENTS AVAILABLE ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDING S THE FOLLOWING EVIDENCES WERE BROUGHT ON RECORD :- A) EVIDENCE FOR PURCHASE IN THE FORM OF PURCHASE CO NTRACT AND COPY OF ACCOUNT OF BROKER. B) COPY OF SALE CONTRACT. C) COPY OF SALE BILL. D) COPY OF ACCOUNT OF THE BROKER YADAV & CO. E) COPY OF BALANCE SHEET AS ON 31-03-98 FILED ALONG WITH RETURN OF INCOME TO SHOW THE OWNERSHIP OF SHARES. THE AFORESAID EVIDENCES WERE NEITHER CONTROVERTED N OR ANY CONTRARY EVIDENCES BROUGHT ON RECORD AND CONFRONTED WITH THE APPELLANT. HENCE THE ASSERTIONS OF THE A.O. DO NOT HAVE ANY SUBSTANTIVE VALUE. IT IS SETTLED POSITION OF LAW BY THE DECISIONS REPO RTED IN 26 ITR 776 (SC) 37 ITR 288 (SC) 63 ITR 449 (SC) AND 1 SOT 90 (MUM) (SUPRA) THAT SUSPICION HOW SO EVER STRONG CAN NOT TAKE PLACE OF THE CHARAC TER OF EVIDENCE. IN THIS CASE IT IS SEEN THAT APPELLANT BROUGHT ON RECORD ALL POSSIB LE EVIDENCES AS IS EXPECTED IN THESE TRANSACTIONS HOWEVER THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DISPROVE THE EVIDENCES AS ADDUCED BY THE APPELLANT. THE HONBLE SUPREME COURT 6 IN THE CASE SREELEKHA BANERJEE AND OTHERS VS. CIT 4 9 ITR 112 HAS HELD BEFORE THE DEPARTMENT REJECTS SUCH EVIDENCE IT MUST EITHE R SHOW AN INHERENT WEAKNESS IN THE EXPLANATION OR REBUT IT BY PUTTING TO THE ASSES SEE SOME INFORMATION OR EVIDENCE WHICH IT HAS IN ITS POSSESSION. THE DEPAR TMENT CAN NOT BY MERELY REJECTING UNREASONABLY A GOOD EXPLANATION CONVERT GOOD PROOF INTO NO PROOF. THE AO HAS BASED HIS CONCLUSION ON UNFOUNDED PRESUM PTION AND SURMISES. THIS ALSO CANNOT BE APPROVED. RELIANCE IS PLACED TO THE HONBLE SUPREME COURT DECISION IN THE CASE OF UMACHARAN SHAW & BROS. VS. CIT 37 ITR 271. THUS IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE IT IS FAIRLY ESTABLISHED BY THE APPELLANT THAT THE SHARE TRANSAC TION WAS VALID AND THE APPELLANT HAS SUFFICIENTLY DISCHARGED THE ONUS CAST UPON HIM. AOS ACTION IS NOT WELL FOUNDED IN POSITION OF LAW IN ADDING THE AMOUN T OF SALE OF SHARES AS INCOME FROM UNDISCLOSED SOURCES. THE ADDITION OF RS.10 55 908/- MADE ON ACCOUNT OF BOGUS ACCOMMODATION ENTRY IS THEREFORE DIRECTED TO BE DELETED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONGWITH THE MATERIAL EVIDENCE ON RECORD. WE FIND THAT THE CIT( A) HAS GIVEN A FINDING OF FACT ON THE BASIS OF THE MATERIAL/EVIDENCES SUBMITTED BY THE ASSESSEE. NEITHER ANY CONTRARY MATERIAL WAS PRODUCED BEFORE US NOR ANY COGENT MATERIAL WAS BROUGHT TO OU R KNOWLEDGE BY THE LD. D.R. WHICH MAY COMPEL US TO TAKE A DIFFERENT VIEW. UNDER THESE FA CTS AND CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE CIT(A). WE THEREFORE CONFIRM THE ACTION OF THE CIT(A) IN DELETING THE ADDITION ON ACCOUNT OF THE SHARE TR ANSACTION MADE IN THE A.Y. 1999-2000. 10. IN THE RESULT APPEAL FILED BY THE REVENUE IS D ISMISSED WHILE THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED TO THE EXTENT AS STATED ABO VE. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.05.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH MAY 2010. 7 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY