ITO WD 1(3) Nashik, Nashik v. Lalinirman Business Develoment P. Ltd,, Nashik

ITA 840/PUN/2012 | 2009-2010
Pronouncement Date: 29-04-2015 | Result: Allowed

Appeal Details

RSA Number 84024514 RSA 2012
Assessee PAN AAACN8249F
Bench Pune
Appeal Number ITA 840/PUN/2012
Duration Of Justice 2 year(s) 11 month(s) 29 day(s)
Appellant ITO WD 1(3) Nashik, Nashik
Respondent Lalinirman Business Develoment P. Ltd,, Nashik
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-04-2015
Date Of Final Hearing 20-04-2015
Next Hearing Date 20-04-2015
Assessment Year 2009-2010
Appeal Filed On 30-04-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE M S SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 840 /PN/201 2 ASSESSMENT YEAR: 200 9 - 1 0 THE INCOME TAX OFFICER WARD 1(3) NASHIK . APPELLANT VS. LAL ITNIRMAN BUSINESS DEVELOPMENT PVT. LTD. PODDAR HOUSE PATIL LANE NO.3 COLLEGE ROAD NASHIK . RESPONDENT COLLEGE ROAD NASHIK . RESPONDENT PAN: AAAC N8249F CO NO. 3 5/PN/201 3 ASSESSMENT YEAR: 200 9 - 1 0 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD. PODDAR HOUSE PATIL LANE NO.3 COLLEGE R OAD NASHIK . CROSS OBJECTOR PAN: AAACN8249F PAN: AAACN8249F VS. THE INCOME TAX OFFICER WARD 1(3) NASHIK . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI RAJESH DAMOR DATE OF HEARING : 2 0 - 0 4 - 201 5 DATE OF PRONOUNCEMENT : 29 - 0 4 - 201 5 ORDER PER SUSHMA CHOWLA J M : THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - I NASHIK DATED 23 . 02 .201 2 RELATING TO ASSESSMENT YEAR 20 0 9 - 1 0 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961. THE ASS ESSEE HAS ALSO FILED CROSS OBJECTION AGAINST THE APPEAL FILED BY THE REVENUE. CROSS OBJECTION AGAINST THE APPEAL FILED BY THE REVENUE. ITA NO . 840 /PN/20 1 2 CO NO. 3 5/PN/201 3 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD . 2 2. BOTH THE APPEAL OF REVENUE AND CROSS OBJECTION RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVEN IENCE. 3 . THE REVENUE IN ITA NO. 840 /PN/201 2 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE HONORABLE CIT(A) - I NAS H IK ER RED IN DIRECTING THE ASSESSING OFFICER TO CONSIDER THE INCOME OF RS.65 51 352/ - UNDER THE HEAD 'INCOME FROM BUSINESS AND NOT UNDER THE HEAD 'INCOME FROM OTHER SOURCES' . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE HONORABLE CIT(A) - L NASIK WHILE DIRECTING THE ASSESSING OFFICER TO TREAT THE INCOME OF RS 65 51 352/ - AS BUSINE SS INCOME IGNORED THE FACT THAT ASSESSEE HAS NOT ESTABLISHED WITH DOCUMENTARY EVIDENCE THAT THE TRANSACTIONS OF PURCHASE AND SALE OF THE EQUITY SHARES ARE GENUINE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE HONORABLE C I T(A) - L NASIK FAILED TO APPRECIATE THE FACT THAT THE BOMBAY STOC K EXCHANGE HAS CONFIRMED THAT NO TRANSACTIONS AS MENTIONED IN THE CONTRACT NOTES HAVE BEEN EXECUTED ON THE STOCK EXCHANGE AND THAT ASSESSEE IS NOT A REGISTERED CLIENT OF THE SHARE BROKER. THAT ASSESSEE IS NOT A REGISTERED CLIENT OF THE SHARE BROKER. 4. ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE THE HONORABLE C I T(A) - L NASIK WHILE GRANTING RELIEF TO ASSESSEE ERRED IN RELYING ON DECISIONS FACTS OF WHICH ARE DIFFERENT FROM THAT OF ASSESSEE . 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE HONORABLE C I T(A) - L FAILE D TO APPRECIATE THE FACT THAT EVEN DURING THE APPELLATE PROCEEDING ASSESSEE HAS NOT FILED/PRODUCED ANY EVIDENCE TO COUNTER THE FINDING OF THE ASSESSING OFFICER THAT THE SHARE TRANSACTIONS ARE NOT GENUINE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IT IS THEREFORE REQUESTED TO CANCEL THE ORDER OF THE HONORABLE CIT(A) - I NASIK AND RESTO RE THE ORDER OF THE ASSESSING OFFICER. 7. THE APPELLANT CRAVES LEAVE TO ADD AMEND MODIFY THE GROUNDS OF APPEAL IF CONSIDERED NECESSARY SUBSEQUENTLY. 4 . THE ASSESSEE IN CO NO. 3 5/PN/201 3 HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTION: - 1. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN TREATING ADVANCE OF RS.25 LACS FOR PURCHASING INDUSTRIAL PLOT FORFEITED BY THE SELLER BY TREATING THE SAME AS CAPITAL EXPENDITURE AS AGAINST REVENUE EXPENDITURE CLAIMED BY THE ASSESSEE. ITA NO . 840 /PN/20 1 2 CO NO. 3 5/PN/201 3 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD . 3 2. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE BUSINESS OF THE APPELLANT IS THAT OF LAND DEVELOPMENT INCLUDING TRADING IN LAND . 5 . THE MATTER WAS BEING ADJOU RNED FROM DAY - TO - DAY AT THE REQUEST OF THE COUNSEL OF THE ASSESSEE WHO ON 10.09.2014 WITHDREW HIS POWER OF ATTORNEY VIDE LETTER DATED 12.06.2014. THEREAFTER THE NOTICE WAS ISSUED TO THE PARTIES TO APPEA R ON 01.01.2015 . NONE APPEARED ON BEHALF OF THE AS SESSEE ON 01.01.2015 AND THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE WAS DIRECTED TO SERVE THE NOTICE FOR HEARING ON 20.04.2015. THE SAID NOTICE WAS SERVED UPON THE ASSESSEE . HOWEVER NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE APPOINTED D ATE OF HEARING NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. HENCE WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 6. THE GRIEVANCE OF THE REVENUE IN THE APPEAL FILED IS AGAINST THE ORDER O F CIT(A) IN ASSESSING THE INCOME ON ACCOUNT OF PURCHASE AND SALE OF SHARES AS CIT(A) IN ASSESSING THE INCOME ON ACCOUNT OF PURCHASE AND SALE OF SHARES AS INCOME FROM BUSINESS AS AGAINST THE ORDER OF ASSESSING OFFICER IN ASSESSING THE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE GRIEVANCE OF THE REVENUE IN THIS REGARD WAS THAT THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS WITH DOCUMENTARY EVIDENCE AND ALSO WHERE THE BOMBAY STOCK EXCHANGE HAD CONFIRMED THAT NO TRANSACTION AS MENTIONED IN THE CONTRACT NOTES HAD BEEN EXECUTED ON THE STOCK EXCHANGE AN D WHERE THE ASSESSEE WAS NOT REGISTERED CLIENT OF THE SHARE BROKER THERE WAS NO MERIT IN ACCEPTING THE TRANSACTION AS GENUINE. 7. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD DECLARED INCOME FROM SHORT TER M CAPITAL GAINS OF RS. 65 51 355/ - ON SALE OF EQUITY SHARES. THE ASSESSEE IN THE SUBMISSIONS DATED 19.07.2011 HAD STATED THAT TRADING IN SHARES WAS DONE THROUGH M/S. MAHESH KOTHARI SHARE & STOCK BROKERS (PVT.) LTD. THE ASSESSEE FURNISHED THE LEDGER ACCOUN T OF THE SAID SHARE BROKER BUT DID NOT FILED THE DETAILS REGARDING DEMAT ITA NO . 840 /PN/20 1 2 CO NO. 3 5/PN/201 3 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD . 4 ACCOUNT BEFORE THE ASSESSING OFFICER. IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTIONS THE ASSESSEE WAS ASKED TO FURNISH THE DETAILED ADDRESS OF THE SHARE BROKER FROM WHOM TH E TRANSACTIONS WERE EXECUTED AND ALSO TO PROVIDE THE COPIES OF SALE AND CONTRACT NOTES AND FURNISH THE DETAILS OF DEMAT ACCOUNT AND ALSO INFORM HOW THE DELIVERY OF SHARES WERE TAKEN. ON 24.10.2011 THE ASSESSEE FURNISHED THE COPIES OF CONTRACT NOTES BUT F AILED TO FURNISH ANY OTHER DETAILS. THE ASSESSING OFFICER MADE CERTAIN ENQUIRIES AND IT WAS CONFRONTED TO THE ASSESSEE THAT THE SAID SHARE BROKER WAS NOT OPERATING FROM THE ADDRESS PROVIDED BY THE ASSESSEE AND IT WAS ALSO INFORMED TO THE ASSESSEE THAT THE SHARE BROKER WAS NOT ACTIVE AS PER INFORMATION AVAILABLE WITH BOMBAY STOCK EXCHANGE. FURTHER THE STOCK EXCHANGE VIDE LETTER DATED 05.12.2011 INFORMED THAT THE ASSESSEE WAS NOT A REG ISTERED CLIENT OF M/S. MAHESH KOTHARI SHARE & STOCK BROKERS (PVT.) LTD. THE ASSESSEE WAS CONFRONTED WITH ALL THE SAID EVIDENCES COLLECTED BY THE ASSESSING OFFICER AND AFTER CONSIDERING THE REPLIES OF THE ASSESSEE THE ASSESSING OFFICER HELD THAT THE INCOME CLAIMED TO BE EARNED FROM SALE OF SHARES WAS NOT GENUINE HELD THAT THE INCOME CLAIMED TO BE EARNED FROM SALE OF SHARES WAS NOT GENUINE FOR THE FOLLO WING REASONS: - 1. TH E CONTRACT NO T ES PRODUCED IN SUPPORT OF THE SHARE TRANSACTIONS ARE UNSIGNED. 2. ASSESSEE HAS NOT INTIMATED DETAILS OF D'MAT ACCOUNT HELD BY IT. 3. ASSESSEE HAS NOT TAKEN DELIVERY OF ANY SHARE . ALL THE PURCHASE AND SALE TRANSACTIONS ARE ON LY BOOK ENTRIES. ASSESSEE HAS NOT PAID/INVESTED A SINGLE PENNY TO EARN THE INCOME OF RS.65 51 352/ - . 4. THE BROKER THROUGH WHOM THE SHARES ARE CLAIMED TO BE TRANSACTED IS A TAINTED BROKER WHO HAS BEEN SUSPENDED BY THE BSE FOR PRICE RIGGING AND OTHER MISCONDU CTS. 5. THE BOMBAY STOCK EXCHANGE HAS CONFIRMED THAT ASSESSEE IS NOT A REGISTERED CLIENT OF M AHESH KOTHARI SHARES AND STOCK BROKERS (P) LTD . 6. THE INSPECTOR OF THIS WARD HAD VISITED THE BOMBAY STOCK EXCHANGE TO VERIFY WHETHER THE TRANSACTIONS MENTIONED IN THE CONTRACT NOTES ARE GENUINE. THE EXCHANGE OFFICIAL STATED THAT THE CLIENT IS NOT REGISTERED WITH THE BROKER ITSELF INDICATE THAT THE TRANSACTION IS NOT GENUINE. 7. IT IS NOTICED THAT ASSESSEE HAD UNABSOR B ED LOSS UNDER THE HEAD SHORT - TERM CAPITAL LOSS IN R ESPECT OF A.Y. 2001 - 02. SINCE THE LOSS COULD NOT BE CARRIED FORWARD ANY FURTHER ASSESSEE HAS CREATED FICTITIOUS INCOME UNDER THE HEAD SHORT - TERM CAPITAL GAINS BY COLLUDING WITH THE BROKER ITA NO . 840 /PN/20 1 2 CO NO. 3 5/PN/201 3 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD . 5 WHO HAS BEEN SUSPENDED BY THE STOCK EXCHANGE FOR INDULGING IN SUC H MALPRACTICES. 8. TO GIVE COLOUR OF LEGITIMACY TO THE TRANSACTION THE BROKER HAS PAID AS S ESSEE BY CHEQUE. HOWEVER AS GENUINE NE SS OF THE TRANSACTION ITSELF HAS NOT BEEN ESTABLISHED BY THE ASSESSEE RECEIPT OF THE PAYMENT BY CHEQUE FROM THE BROKER IS OF NO H ELP. 9. LAST BUT NOT THE LEAST THE MODUS OPERANDI OF THE PERSONS INDULGING IN SUCH ACCOMMODATIVE ENTRIES IS TO RECEIVE THE AMOUNT IN CASH FROM THE PARTIES WHO WANTS THE ACCOMMODATIVE ENTRY AND ISSUE CHEQUES TO THEM. THE PURCHASE AND SALE TRANSACTIONS OF SHA RE OF THE ASSESSEE IS ONLY ON PAPER AND NOT THROUGH THE STOCK EXCHANGE. THE BROKER HAS ISSUED BOGUS CONTRACT NOTES AND CREATED FICTITIOUS INCOME ON PAPER AND ISSUED CHEQUE TO ASSESSEE TO GIVE COLOUR OF LEGITIMACY TO THE TRANSACTION. 10. ASSESSEE HAS NOT INVES TED ANY AMOUNT TO BUY SHARES NOR HAS RECEIVED DELIVERY OF ANY SHARES THOUGH T HE TRANSACTION ARE STATED TO HAVE BEEN EXECUTED FROM 1/10/08 . THE PERSONS INVOLVED IN TAX PLANNING OF THE ASSESSEE WERE WELL AWARE THAT THE FICTITIOUS INCOME SHOWN IS IN FACT NO T INCOME UNDER THE HEAD SHORT - TERM CAPITAL GAINS AS THERE IS NO DELIVERY OF SHARES. 8. IN VIEW THEREOF THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD INTRODUCED ITS UNACCOUNTED / UNDISCLOSED INCOME TO THE TUNE OF RS. 65 51 352/ - IN THE GUISE OF SHORT T ERM CAPITAL GAINS ON SALE OF SHARES AND THE SAME WAS TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. 9. BEFORE THE CIT(A) THE PLEA OF THE ASSESSEE WAS THAT THE BROKER WAS A COMPANY WHICH WAS DULY REGISTERED UNDER THE COMPANIES ACT AND ALSO REGISTERED W ITH BOMBAY STOCK EXCHANGE AND THE ALLEGATIONS OF THE ASSESSING OFFICER WERE WITHOUT ANY EVIDENCE. IT WAS FURTHER STATED BY THE ASSESSEE BEFORE THE CIT(A) THAT THE TRANSACTIONS WERE SUPPORTED WITH DETAILED CONTRACT NOTES AND THE AMOUNTS WERE RECEIVED THROU GH BANKING CHANNELS AND THERE WAS NO JUSTIFICATION IN TREATING THE SHARE TRANSACTIONS AS NON - GENUINE. THE CIT(A) NOTED THE ALTERNATE PLEA OF THE ASSESSEE MADE BEFORE THE ASSESSING OFFICER AS TO WHY THE SAID INCOME SHOULD NOT BE TREATED AS INCOME FROM BUSI NESS. THE CIT(A) REFERRED TO THE CONTRACT NOTES ISSUED BY THE SHARE BROKER AND FOUND THAT SOME OF THEM WERE SIGNED AND OTHERS WERE UNSIGNED. HOWEVER AFTER CONSIDERING THE PLEA OF THE ASSESSEE VIS - - VIS MAGNITUDE OF THE TRANSACTIONS AND THE FACT THAT THE ITA NO . 840 /PN/20 1 2 CO NO. 3 5/PN/201 3 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD . 6 ASSESSEE HAD NOT MADE ANY INVESTMENT IN THE SHARES SINCE THE SHARES WERE SOLD WITHIN VERY FEW DAYS AFTER PURCHASE THE SURPLUS WAS TREATED AS BUSINESS INCOME. 10. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 11. THE LEARNED DEPARTMENTAL REPRE SENTATIVE FOR THE REVENUE POINTED OUT THAT FROM THE ORDER OF CIT(A) IT IS APPARENT THAT THE ASSESSEE HAD NOT MADE ANY INVESTMENT IN THE SAID SHARES AND THE SAID SHARES WERE NOT EVEN DELIVERED TO THE ASSESSEE AND THE TRANSACTION WAS A SPECULATIVE TRANSACTI ON AND WAS NOT OF F MARKET TRANSACTION AS CLAIMED BY THE ASSESSEE BEFORE AUTHORITIES BELOW. OUR ATTENTION WAS DRAWN TO THE EXHIBIT A TO THE ASSESSMENT ORDER UNDER WHICH IT WAS POINTED OUT THAT NO DELIVERY OF THE SHARES W AS TAKEN BY THE ASSESSEE. 12. ON P ERUSAL OF THE RECORD WE FIND THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED THAT IT HAD PURCHASED AND SOLD CERTAIN SHARES ON WHICH IT HAD EARNED SHORT TERM CAPITAL GAIN OF RS. 65 50 757/ - . THE DATE - WISE TABULATED DETAILS OF THE QUANTIT Y PURCHASED SCRIP - WISE AND ALLEGED SALE OF THE SAID SHARES IS FURNISHED IN EXHIBIT A ATTACHED TO THE ASSESSMENT ORDER. THE PERUSAL OF THE SAID DETAILS REFLECT THAT THE ASSESSEE TO HAVE PURCHASED AND SOLD THE SHARES WITHIN A GAP OF 1 - 3 DAYS . THE ASSESSIN G OFFICER MADE CERTAIN ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME ARE BEING REFERRED TO IN THE STATEMENT OF FACTS FILED BY THE ASSESSING OFFICER WHICH WERE AS UNDER: - 3. IN ORDER TO ASCERTAIN THE GEN UINE NESS OF THE CONTRACT NOTES LETTER WAS WRITTEN TO MAHESH KOTHARI SHARE AND STOCK BROKERS (PVT ) LTD ON THE ADDRESS PROVIDED BY ASSESSEE . THIS LETTER WAS RECEIVED BACK UNDELIVERED. VIDE LETTER DATED 24/11/11 ASSESSEE WAS INFORMED THAT THE SHARE BROKER IS NOT OPERATING FROM THE PREMISE S MENTIONED IN THE CONTRACT NOTE AND ALSO THAT THE SHARE BROKER IS NOT ACTIVE AS PER INFORMATION AVAILABLE WITH THE BOMBAY STOCK EXCHANGE . ASSESSEE WAS THEREFORE REQUESTED TO PROVIDE CORRECT ADDRESS OF THE BROKER AND ALSO PRODUCE OTHER EVIDENCE IF ANY T O PROVE THE GENUINE NE SS OF THE SHARE TRANSACTIONS AS MOST OF THE CONTRACT NOTES WERE UNSIGNED. A WRITTEN SUBMISSION WAS FILED ON 8/12/11 WHEREIN INTER AHA IT WAS MENTIONED THAT THEY HAVE CALLED FOR THE REQUIRED INFORMATION FROM BROKER BUT TILL THAT DA TE IT IS NOT RECEIVED AS SOON AS IT IS RECEIVED THE SAME WILL BE SUBMITTED. ITA NO . 840 /PN/20 1 2 CO NO. 3 5/PN/201 3 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD . 7 MEANWHILE COPIES OF THE CONTRACT NOTES WERE FORWARDED TO THE BOMBAY STOCK EXCHANGE TO VERIFY THE GENUINE NE SS OF THE TRANSACTIONS MENTIONED IN THE CONTRACT NOTES . THE STOCK EXCHA NGE UNDER ITS LETTER DATED 5/12/11 INFORMED THAT ASSESSEE IS N O T A REGISTERED CLIENT OF MAHESH KOTHAR I SHARES AND STOCK BROKERS (P) LTD. (COPY OF THE SAID LETTER IS ANNEXED TO THE SOF AS EXHIBIT 'C'). COPY OF THE LETTER OF BSE WAS PROVIDED TO ASSESSEE VI DE THIS OFFICE LETTER DATED 12/12/11 AND GIVEN OPPORTUNITY TO PRODUCE EVIDENCE TO PROVE THAT THE SHARE TRANSACTIONS ARE GENUINE . VIDE LETTER DATED 26/12/1 ASSESSEE STATED THA T THEY HAVE ALREADY SUBMITTED THE INFORMATION AVAILABLE WITH THEM. REQUIRED INFO RMATION IS CALLED FROM THE BROKER BUT TILL DATE IT IS NOT MADE AVAILABLE BY THE BROKER. AS SOON AS INFORMATION AND REQUIRED DOCUMENTS WILL BE AVAILABLE FROM THEM I T WILL BE SUBMITTED . THE BOMBAY STOCK EXCHANGE VIDE LETTER DATED 30/12/11 RECEIVED IN THIS OFFICE ON 4/1/12 COMMUNICATED THAT ON SCRUTINIZING THE TRADES ON THE BASIS OF TRADE NO. TRADE TIME TRADE DATE SCRIP NAME CLIENT CODE AND ORDER NUMBER AS MENTIONED ON THE CONTRACT NOTES IT IS OBSERVED THAT NO TRADES HAVE BEEN EXECUTED BY THE TRADING M EMBER MAHESH KOTHARI SHARE AND STOCK BROKERS (PVT) LTD (CLG. NO.461) ON BEHALF OF THE ENTITY LALIT NIRMAN BUSINESS DEVELOPMENT PVT. LTD. ON THE DATES MENTIONED ON THE CONTRACT NOTES. (COPY OF THIS LETTER IS ANNEXED TO THE SOF AS EXHIBIT 'D' ) 1 3 . THE SAID E NQUIRIES REVEALED THAT THE SHARE BROKER FROM WHOM THE ASSESSEE HAD PURCHASED THE SHARES WAS NOT ACTIVE ON THE BOMBAY STOCK EXCHANGE NOR HE WAS FOUND AT THE ADDRESS. THE PLEA OF THE ASSESSEE ON THE OTHER HAND WAS THAT THE SALE PROCEEDS WERE RECEIVED FR OM THE BROKER THROUGH RTGS AND WERE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. HOWEVER THE ASSESSEE EXCEPT FOR P RODUCING THE CONTRACT NOTES HAS FAILED TO FURNISH THE DETAILS VIS - - VIS DELIVERY OF THE SHARES AND THEIR TRANSFER TO THE DEMAT ACCOUNT OR SALE THROUGH DEMAT ACCOUNT. 1 4 . UNDER THE PROVISIONS OF SECTION 45 OF THE ACT IT IS PROVIDED THAT GAIN ARISING ON THE TRANSFER OF A CAPITAL ASSET IS TO BE ASSESSED AS CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. THE TERM TRANSFER IS DEFINED UNDER SEC TION 2(47) OF THE ACT WHICH TALKS OF SALE EXCHANGE OR RELINQUISHMENT OF AN ASSET ALONG WITH OTHER MODES OF TRANSACTION WHICH FALL WITHIN THE UMBRELLA OF THE TRANSFER. THE UNDERLYING MEANING OF THE TRANSFER IS THE HANDING OVER OF THE POSSESSION SHARES ITA NO . 840 /PN/20 1 2 CO NO. 3 5/PN/201 3 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD . 8 B Y THE SELLER TO THE ASSESSEE AND ITS CONSEQUENT DELIVERY TO THE PURCHASER OF THE SHARES. THE CASE OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAD NOT TAKEN DELIVERY OF ANY SHARES. THE PERUSAL OF DETAILS ANNEXED IN ANNEXURE A TO THE ASSESSMENT ORDER AL SO REFLECTS THE TRANSACTION TO HAVE HAPPENED IN OVER 1 3 DAYS AND IN THE ABSENCE OF THE ASSESSEE HAVING ESTABLISHED THAT IT HAD TAKEN DELIVERY OF THE SAID SHARES THE GAIN ARISING ON SUCH TRANSFER CANNOT BE ASSESSED AS INCOME FROM CAPITAL GAINS OR INCOME FROM BUSINESS. WE FIND MERIT IN THE ORDER OF ASSESSING OFFICER THAT SINCE THE ASSESSEE HAD FAILED TO EXPLAIN WITH DOCUMENTARY EVI DENCE THE INTRODUCTION OF UNACCOUNTED / UNDISCLOSED INCOME TO THE TUNE OF RS. 65 51 352/ - IN THE GUISE OF SHORT TERM CAPITAL GAINS ON SALE OF SHARES THE SAME IS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE AS INCOME FROM OTHER SOURCES. IN THE ABSENCE OF ASSESSEE HAVING FURNISHED THE DETAILS OF SAID SHARES AND ESTABLISHING THE FACTUM OF TRANSFER OF SHARES WE REVERSE THE ORDER O F CIT(A) AND UPHOLD THE ORDER OF ASSESSING OFFICER. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE ALLOWED. BY THE REVENUE ARE ALLOWED. 1 5 . THE ASSESSEE IN CROSS OBJECTION IS AGGRIEVED BY THE ADDITION OF RS.25 LAKHS WHICH WAS CLAIMED AS REVENUE EXPENDITURE BY THE ASSESSEE. 1 6 . TH E FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE CLAIMED TO HAVE ENTERED INTO AN AGREEMENT ON 07.12.2005 FOR ACQUIRING RIGHTS IN THE LAND AND HAD PAID SUM OF RS.25 LAKHS TO PARSHARAMPURIA INDUSTRIES LTD. THE TOTAL CONSIDERATION OF THE SAID LAND WAS FIX ED AT RS. 1 07 60 000/ - . SINCE THE ASSESSEE COULD NOT MANAGE TO PROCURE THE FUNDS WITHIN PRESCRIBED TIME MENTIONED IN THE AGREEMENT HENCE AS PER CLAUSES OF THE AGREEMENT THE SAID AMOUNT WAS FORFEITED AND THE ASSESSEE CLAIMED THE SAME AS BAD DEBTS. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER: - 5. THE ABOVE SUBMISSION OF THE ASSESSEE IS GIVEN DUE CONSIDERATION. ON GOING THROUGH THE DEED DATED 7/12/2005 EXECUTED BY ASSESSEE WITH PARSHURAMPURIA INDUSTRIES LTD IT IS NOTI CED THAT THE AGREEMENT IS IN RESPECT OF NON - AGRICULTURAL LAND BEARING PLOT NO . 3 OF SURVEY NO.215 OF VILLAGE DADRA FOR I NDUSTRIA L PURPOSE. FURTHER AS PER CLAUSE 9 OF THE DEED THE VENDOR (PARDHURAMPURIA INDUSTRIES LTD.) SHALL COMPLETE ALL FORMALITIES ITA NO . 840 /PN/20 1 2 CO NO. 3 5/PN/201 3 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD . 9 IN THE GOVERNMENT OFFICES AND PANCHAYAT OFFICE AND OTHER CONCERN PLACES TO CLEAR THE TITLE OF THE SAID LAND AND MAKE THE SAID LAND FOR THE USE OF THE INDUSTRIAL ACTIVITIES OF THE PURCHASER WITH ITS OWN COSTS. THE DEED ITSELF CLARIFIES THAT THE LAND WAS INT ENDED FOR THE PURPOSE OF SETTING UP AN INDUSTRY BY ASSESSEE AND NO T FOR TRADING/RESALE. THUS THE ADVANCE WAS GIVEN FOR ACQUIRING A CAPITAL ASSET. THOUGH ASSESSEE IS INTO THE BUSINESS OF L AND DEVELOPMENT THIS PARTICULAR TRANSACTION CANNOT BE HELD TO BE P ART OF ITS BUSINESS AC T IVITY. THEREFORE THE AMOUNT FORFEITED FOR NOT COMPLYING WITH THE TERMS OF THE CONTRACT IS A CAPITA L EXPENDITURE AND CANNOT BE CLAIMED AS BAD DEBT PERMISSIBLE AS DEDUCTABLE UNDER SECTION 36(1)(VII). IN VIEW OF THE ABOVE FACTS THE DE DUCTION CLAIMED OF RS. 25 00 000 / - ON ACCOUNT OF BAD DEBTS IS DISALLOWED AND ADDED TO THE TOTAL INCOME. 1 7 . THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER HOLDING AS UNDER: - 5.4 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE THE ASSESSMENT ORDER AN D THE RIVAL CONTENTIONS. THE ISSUE TO BE DECIDED IS WHETHER THE APPELLANT HAS ADVANCED THE AMOUNT OF RS. 25 00 000/ - FOR ACQUIRING CAPITAL ASSET OR REVENUE ASSET I.E. STOCK IN TRADE. IN ORDER TO DEC ID E THE ISSUE CLAUSE NO.9 OF THE AGREEMENT TO SALE THE P LOT DATED 7/12/2005 IS RELEVANT AND HENCE THE SAME IS REPRODUCED BELOW: 9. THE VENDOR SHALL COMPLETE ALL FORMALITIES IN THE GOVERNMENT OFFICES AND PANCHAYAT OFFICE AND OTHER CONCERNED PLACES TO CLEAR THE TITLE OF THE SAID LAND AND MAKE THE SAID LAND FOR THE USE OF THE INDUSTRIAL ACTIVITIES OF SAID LAND AND MAKE THE SAID LAND FOR THE USE OF THE INDUSTRIAL ACTIVITIES OF THE PURCHASER WITH ITS OWN COSTS. THE ABOVE AGREEMENT IS SIGNED BY THE VENDOR AS WELL AS AUTHORIZED SIGNATORY OF THE APPELLANT COMPANY. FROM THE ABOVE STATED CLAUSE NO.9 IT IS EVIDENT THAT THE APPELLANT COMPANY H AS PAID AN ADVANCE FOR PURCHASING THE LAND FOR ITS USE FOR INDUSTRIAL PURPOSE. THEREFORE THE INTENTION OF THE APPELLANT IS TO PURCHASE THE INDUSTRIAL PLOT FOR USING THE SAME FOR SETTING UP THE INDUSTRY I.E. FOR ACQUIRING A CAPITAL ASSET. THE PAYMENT OF A DVANCE OF RS.25 00 000/ - IS THEREFORE ON CAPITAL ACCOUNT AND THE FORFEITURE OF THE SAME HAS RESULTED INTO CAPITAL LOSS. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF CANNOT BE ALLOWED AS DEDUCTION AS REVENUE EXPENDITURE. THE ADDITION OF RS.25 00 000/ - IS THEREFORE CONFIRMED. GROUND NOS.1 & 2 ARE DISMISSED. 1 8 . THE ASSESSEE BEFORE US HAS FAILED TO ESTABLISH ITS CASE AND WHERE THE INTENTION OF THE ASSESSEE WAS TO ACQUIRE A CAPITAL ASSET THE PAYMENT OF ADVANCE MONEY OF RS.25 LAKHS BEING PAID ON CAPI TAL ACCOUNT AND ITS FORFEITURE WOULD RESULT INTO CAPITAL LOSS AND THE SAME CANNOT BE ALLOWED AS REVENUE EXPENDITURE. UPHOLDING THE ORDER OF CIT(A) WE DISMISS THE GROUNDS RAISED IN CROSS OB JECTION BY THE ASSESSEE. ITA NO . 840 /PN/20 1 2 CO NO. 3 5/PN/201 3 LALITNIRMAN BUSINESS DEVELOPMENT PVT. LTD . 10 19 . IN THE RESULT THE APPEAL OF THE RE VENUE IS ALLOWED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER P RONOUNCED ON THIS 29 TH DAY OF APRIL 201 5 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 29 TH APRIL 2015 GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A) - I NASHIK ; 4) THE CIT - I NASHIK ; 5) THE DR A BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T. PUNE