9911796707
Advanced Search 
TMI Blog2016 (4) TMI 1317X X X X Extracts X X X X X X X X Extracts X X X X ..... means, was with the purpose of availing wrong benefits of Section 10(38). 3. That the Ld. CIT(A) has erred in law and on facts by not adhering to the direction of the Supreme Court as propounded in the cases of CIT Vs Durga Prasad More (1971) 82 ITR 540 and Sumati Dayal Vs CIT (1995) 214 ITR 801 to judge the evidence before him by applying the test of human probabilities and he has ignored the following issues :- a. The assessee had purchased 36000 shares of M/s BND Neo Polymers Ltd. at a cost of Rs. 36 lakhs from broker(s) in Kolkata in cash while the Assessee resides in Ludhiana. CIT(A) has not given a finding on purchases of shares in cash by the Assessee from Kolkata as the assessee has not shown investment in the shares of M/s BND Neo Polymers Ltd. in the assessment year 2010-11. b. Assessee did not reflect investment in shares of M/s BND Neo Polymers Ltd. in his books of account but nevertheless sold the shares in A.Y. 2011-12. The same is evident from the Capital A/c and Balance Sheet of the Assessee for A.Y. 2010-11 and A.Y. 2011-12 filed by the Assessee and submitted to CIT(A) in paper book filed by A.O. wherein there is a variation in the opening & closing balances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross examination taken by the assessee of the statement of Shri Sanjay Kumar Ram, Director of Ashirwad Tieup Private Limited, Ideal Fertilizer Pvt. Ltd. and Moran Plantation Ltd., the brokers involved in the purchase of shares, it was stated that shares were sold to the assessee by them. 4. Thereafter, the Assessing Officer highlighted the fact that the shares of the company M/s Vindus Holding Limited were listed in Kolkatta Stock Exchange and were consistently priced at Rs. 300/- per share leading to the possibility of the same being artificially jacked up. On an enquiry from Kolkatta Stock Exchange, the Assessing Officer brought on record the fact that shared sold through broker, Shri Gautam Kumar Agrahari to four persons, namely Shri Prem Lal Roy, Shutanuti Distributors Pvt. Ltd., Murlidhar Commercial Pvt. Ltd. and Yashoda Marketing Pvt. Ltd. On enquiry made by the Assessing Officer, he brought on record the fact that Shri Prem Lal Ray is not traceable and not filing any return and money deposited in his bank accounts in cash are of other persons who are receiving it back by cheque or through a number of colorable transactions. As regards other three entities being companies, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares were credited in his account and whole transaction is a sale transaction. Therefore, section 68 of the Act is not applicable in the present case. Since the assessee has already offered the income for taxation in the return but that income was exempt under section 10(38) of the Act, therefore, by adding the same income again in the return of income, it will amount to double taxation, which is not permissible under the law. 7. The submissions of the assessee were forwarded to the Assessing Officer, who filed his Remand Report dated 14.7.2014 before the learned CIT (Appeals). The main thrust of the submission made by the Assessing Officer was that in the Balance Sheet of the present year filed by the assessee in the list of fixed asset and depreciation, the investment on shares in BND Neopolymers Pvt. Ltd. is not reflected. The details of closing stock filed by the assessee also do not show investment in 36000 shares of BND Neopolymers Pvt. Ltd. during the financial year ending as on 31.3.2009. Neither in capital account, nor in Balance Sheet, this figure is appearing. The Assessing Officer apprehended that the assessee had made paper arrangements and created a smoke screen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Assessing Officer contains the balance figure of capital account. It was vehemently contended that the view of the Assessing Officer that the transaction was not genuine, is totally based on suspicion, surmises, doubts and conjectures. The purchase part of the transaction was confirmed by the sellers and the sale part of the transaction was confirmed by the brokers in proceedings under section 133(6) of the Act. It was stated that the Assessing Officer has ignored the facts that the transactions are being routed through computer via stock exchange. Therefore, the allegation of the Assessing Officer that the transactions are not genuine, is not as per law. The assessee had proper Demat account with HDFC bank and all the transactions have been verified and examined by the Assessing Officer independently and no discrepancy of any kind of adverse material or document was pointed out. Relying on a few judgments of the I.T.A.T., Chandigarh Bench in view of the said submissions, the assessee contended that addition made by the Assessing Officer is illegal. 10. The submissions of the assessee in this rejoinder were further sent to the Assessing Officer for his comments, which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heets raised by the Assessing Officer was given by the assessee. It was explained that the investments in shares were debited in the capital account that is the reason why the investments are not being reflected independently in the Balance Sheet. With respect to the enquiries made from the persons, who have purchased the shares from the assessee, it was submitted that the assessee has sold the shares through the brokers, which were also confirmed by the brokers. Therefore, in the background of the fact that the brokers have not denied the sale transaction, proper contract notes were issued and even in the enquiry made at Kolkatta stock exchange, there were the record of transactions entered by the assessee, the genuineness of the transaction cannot be challenged. After making detailed submissions, it was prayed that since there were no material before the Assessing Officer which could have lead to a conclusion that the transaction was a device to camouflage activities to defraud the Revenue, no presumption against the assessee can be raised. 12. The learned CIT (Appeals) after considering the submissions of the assessee, various Remand Reports and rejoinders allowed the issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatives of both the parties, perused the findings of the authorities below and considered the material available on record. On perusal of the order of the learned CIT (Appeals), we do not find any infirmity in the same. This kind of transaction involve two aspects i.e. purchase of shares and sale of shares. The contention of the assessee was that the shares were purchased in the preceding assessment year through cash. For this, the cash flow statement was filed by the assessee and enquiries were conducted by the Assessing Officer from Kolkatta Stock Exchange, wherein the shares of the amalgamating company were listed. The confirmation from Kolkatta Stock Exchange as well as the confirmation made by the brokers through whom the shares were purchased by the assessee are on record, which are in fact culmination of the enquiries initiated by the Assessing Officer himself. No material has been brought on record by the Assessing Officer to arrive at the fact that these confirmations received from Stock Exchange or made by the brokers in their statements were not proved. In such circumstances, we cannot just by indulging in surmises brush aside these evidences on record. As regards the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change, the identity of such a company cannot be doubted. 17. With respect to the sale aspect of this transaction, as stated hereinabove in the statements of the brokers of the company, they have confirmed the transaction of sale. The company whose shares were sold is a company listed in Kolkatta Stock Exchange being a recognized Stock Exchange. The evidences in the form of contract note, bank account, Demat account, etc. were filed before the Assessing Officer, which have nowhere been doubted by the Assessing Officer, neither in his assessment order, nor any of the Remand Reports furnished by him. The brokers through whom sale was made had also confirmed the sale of shares. The Assessing Officer has made the detailed exercise by analyzing the persons who have purchased the shares from the assessee and in view of the fact that these persons have not shown the investments in their Balance Sheets, the adverse view has been taken by him. As we understand that any transaction relating to sale or purchase of shares through a Stock Exchange is done through a broker registered in Stock Exchange. The transaction is between the seller and the broker. The seller never knows on whose behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not justified in invoking the provisions of section 68 of the Act. This also amounts to double taxation or double addition of the income in view of the fact that the same amount has actually been shown by the assessee as his income in his computation of income though the same has also been claimed as exempt under section 10(38) of the Act. In view of the above, the action of the learned CIT (Appeals) in deleting the addition is justified and is hereby upheld. 20. Before concluding the issue, we would like to deal with two more contentions of the Department in the grounds of appeal raised in the present appeal. Firstly, there is a mention of applying the test of human probabilities as propounded in the judgments of the Hon'ble Supreme Court in the case of Durga Prasad More (1971) 82 ITR 540 and Sumati Dayal Vs. CIT (1985) 214 ITR 801. We are aware of the proposition laid down by the Hon'ble Supreme Court and we humbly bow down before the same. However, in the facts and circumstances of the present case in the face of numerous documentary evidences crying for bonafide of the assessee as against only suspicion and surmises in favour of the Department, we do not hesitate to ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer, while the learned counsel for the assessee relied on the order of the learned CIT (Appeals). 25. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. On perusal of the order of the learned CIT (Appeals), we do not find any infirmity in the same as the proposition laid down by the Punjab & Haryana High Court in the case of Lakhani Marketing Inc (supra) is squarely applicable to the facts of the present case, as no exempt income has been earned by the assessee during the year. As regards the contention of the learned D.R. that the said judgment was delivered before the insertion of Rule 8D, we are of the view that the Rule 8D is just a mechanism provided to compute the disallowance under section 14A of the Act. The provisions of the Rules can never prevails over the provisions of the Act. The judgment has been given in the context of the provisions of the section. If the situation demands for no disallowance, the computational provision does not come into the picture at all. In view of this, we uphold the action of the learned CIT (Appeals) in deleting the disallowance. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Upinderjeet Kaur, Rajeev Aggarwal and Surinder Goyal, while confirming the same with respect to Anju Bhatia and Ishan Aggarwal. 29. Aggrieved by this, the Department has come up in appeal before us. The learned D.R. relied on the order of the Assessing Officer, while the learned counsel for the assessee relied on the order of the learned CIT (Appeals). 30. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. On perusal of the order of the learned CIT (Appeals), we observe that the finding on this ground has been recorded in para 6.4, which reads as under : "6.4 I have considered the facts of the case, the basis of addition made by the Assessing Officer, the arguments of the AR during assessment as well as appellate proceedings and the comments of the Assessing Officer in the Remand Report. It is seen that the amounts representing as loan in respect of Upinderjeet Kaur, Rajeev Aggarwal, Surinder Goyal were in facts amounts received by the Assessee in earlier year on which interest had also been paid but the same were recorded mistakenly as loans and advances. The amount in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by him. It was stated that the sale consideration of various lands are properly credited in the cash book. In the Remand Report, the Assessing Officer contended that since the assessee had filed two capital accounts, reliance could not be placed on his cash flow statement. After considering all this, the learned CIT (Appeals) decided the issue in favour of the assessee. 35. Aggrieved by this, the Department has come up in appeal before us. The learned D.R. relied on the order of the Assessing Officer, while the learned counsel for the assessee relied on the order of the learned CIT (Appeals). 36. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The learned CIT (Appeals) has recorded his finding at page 95, para 7.4 of his order, which reads as under : "7.4 I have considered the facts of the case, the basis of addition made by the Assessing Officer, the arguments of the AR during assessment as well as appellate proceedings and the comments of the Assessing Officer in the Remand Report. It is seen that the Assessing Officer had filed explanation regarding the accountab ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
