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TMI Blog2019 (6) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... rather than on any question of law much less a substantial question of law. The scope of appeal under Section 260A before the High Court is limited. The Appellate Tribunal took notice of something very important. It took notice of the fact that the loss in trading of the lands had occurred much before the assessee earned profit on the sale of land. The Appellate Tribunal took notice of the fact that the loss in trading of lands was suffered by the assessee on 1st January 2013, whereas he derived profit on the sale of land on 24th January 2013. In such circumstances, there was no good reason for the C.I.T. (A) to doubt the bona fide of the assessee and take the view that the transactions were not fair and genuine. In the instant case, there is no substantial question of law which could be said to be arising from the order of the Tribunal. It cannot be argued on behalf of the Tribunal that the findings recorded by the Tribunal are based on no evidence and or while arriving at a said finding relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee owned a land admeasuring 6880 sq mts. at Survey No 262( 692) at village Bhadaj, Taluka Ghatlodia (the erstwhile Daskaroi), Ahmedabad which he purchased on 21/10/2011 vide registration no. 19001/2011 of the Sub Registrar, Ahmedabad 2, Adalaj. The cost of the land in the Profit Loss account shown by the assessee was ₹ 1,58,85,350/which during the year had been sold at ₹ 6,19,20,000/. The sale was made on 24/01/2013 through the Development Agreement registered by the Sub Registrar, Ahmedabad 8, Sola vide Registration No. 485/2013, As such, the assessee earned business profit of ₹ 4,60,34,650/( 6,19,20,000 1,58,85,350/ ) on this transaction. However this profit was almost nullified by debiting his P L Account by showing Purchase of Securities for ₹ 1,04,42,33,893/and credited the P L against the sale of the securities for ₹ 99,85,04,803/. Thus the assessee had shown loss of ₹ 4,57,29,090/( 104,42,33,893 99,85,04,803) in the security trading. 4.2 The A.O. further noticed that the securities purchased from the Vitale Bio Science Ltd Ahmedabad were sold to the Fortune Gilts Pvt Ltd Ahmedabad and the securities purchased f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order for the assessment year 2013-14 and 201415, allowed the appeals of the assessee holding that although the Assessing Officer entertained a serious doubt as regards the genuineness of the transactions, yet such doubt was not fortified with some concrete materials to take the view that the transactions were bogus. 6 Being dissatisfied with the order passed by the Appellate Tribunal, the Revenue is here before this Court with this appeal. 7 The Revenue has proposed the following two substantial questions of law in the memorandum of the appeal: [ A] Whether on the facts and circumstances of the case, different Appellate Tribunal has erred in deleting disallowance of loss on sale of securities of ₹ 4,57,29,090/? [ B] Whether on the facts and circumstances of the case, the Appellate Tribunal has erred in holding that the transaction in securities has no nexus and corelation with the deal in land transaction? 8 The grounds of challenge raised in the memorandum of the appeal to the order passed by the Appellate Tribunal are as under: [ i] T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted in respect of Amrapali Group, it is pertinent to note here that Vitale Biotech Ltd has also been held as one of the accommodation entry provider and the case has been centralized subsequent to search proceedings. [ vii] The transaction was done with the money borrowed of ₹ 15 Crore from Vitale Bioscience Ltd. and within an hour book the loss of ₹ 4,67,50,000/. The chain of transaction was reflected above and ultimately account had been settled with cross sale of different bonds to them. [ viii] In view of the facts discussed above, it is to submit that in the present case, there is an obvious and plain transaction of tax evasion by the assessee. The facts of the instant case clearly reveals that such trading transactions of purchase and sale of bonds had not been effected, for commercial purpose but to create artificial loss, with a view to reducing tax liability. Considering the same, the decision of the Appellate Tribunal is erroneous. 9 We have heard Ms. Mauna Bhatt, the learned senior standing counsel appearing for the Revenue and Mr. S.N. Soparkar, the learned senior counsel appearing for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough online transfer of funds though net banking. Bank statements and copies of deal confirmations of all the transactions were filed before the A.O. The A.O. has accepted the result of profit in case of other three securities traded during the year but he has drawn adverse inference with regard to transactions of 9% BOM lower tire bonds 2022. It is observed the A.O. has neither fully investigated nor brought any material on record to prove that the transactions are bogus. It is also explained that the assessee has squared up the deal which otherwise would have resulted in looking up of huge fund for a longer time and particularly in View of the fact that such long term fund was not available at the disposal and by nonhonoring he would have been declared insolvent. 18 We have noticed that the assessee have provided all the details related to the trading in securities during the course of assessment proceedings to the Assessing Officer. We have further noticed that the assessing Officer has not examined/investigated the transactions in order to prove that the transactions were bogus and not genuine. The A.O. has not contradicted the claim of the assessee that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctively, the book results for the referred assessment years have been accepted without drawing any adverse inference. Needless to state that business loss of ₹ 50,54,456/in A.Y. 2008-09 has been accepted by the A.O. after detailed scrutiny and on the basis of material produced before the A.O., while passing assessment order u/s. 143(3). Similarly, while passing the assessment order for A.V. 200910, the book result has been accepted in toto. 21 The the Hon ble Supreme Court's decision in the case of Radhasoami Satsang Vs. CIT 193 ITR 321. This decision of Apex Court together with other judgments of SC have been referred to by Hon'ble Gujarat High Court in the case of Taraben Ramanbha Patel Vs. ITO 215 ITR 323 (Guj.). The observation of Hon'ble Gujarat High Court may be reproduced from page 330 of the report: It is no doubt true that the strict rule of doctrine of res judicata does not apply to proceedings under the Income tax Act. At the same time, it is equally true that unless there is a change of circumstances, the authorities will not depart from previous decision at their sweet will in the absence of material circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le the bond at ₹ 90.67. According to Ms. Bhatt, thereby the assessee created artificial loss. 12 To the aforesaid submission canvassed on behalf of the Revenue, Mr. Soparkar, the learned senior counsel submitted that by any stretch of imagination, the questions formulated cannot be termed as substantial questions of law. Mr. Soparkar submitted that in the security market, every moment the price remains fluctuating which cannot be fixed by any authority established under the law. The assessee conversely squared up the deal which otherwise would have resulted in locking up of huge fund for a long time and particularly in view of the fact that such longer term fund was not available at the disposal and by nonhonoring he would have been declared insolvent. Thus, in such a situation a prudent business decision was taken immediately to raise short term fund to book a minimum loss and save his reputation in the market and to survive and earn in future. So far as the assessment year 2013-14 is concerned, it is pertinent to state here that since the assessee had incurred the loss of ₹ 4,65,00,000/on 01/01/2013 on the sale of securities and eventually to recoup th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formulated. The expression substantial question of law is not defined in the Act. Nevertheless, it has acquired a definite connotation through various judicial pronouncements. In Sir Chunilal v. Mehta Sons Ltd. vs. Century Spg. Mfg. Co. Ltd. AIR 1962 Sc 1314, a Constitution Bench of this Court, while explaining the import of the said expression, observed that: The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest Court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law. 19. Similarly, in Santosh H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the evidence, or when the evidence has been misread. (See: Madan Lal Vs. Mst. Gopi Anr. [1980] 4 SCC 255; Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi [2009] 3 SCC 287; Commissioner of Customs (Preventive) Vs. Vijay Dasharath Patel [2007] 4 SCC 118; Metroark Ltd. Vs. Commissioner of Central Excise, Calcutta [2004] 12 SCC 505; West Bengal Electricity Regulatory Commission Vs. CESC Ltd. [2002[ 8 SCC 715]. 16 In Commissioner of Incometax v. Kasturi Estates (P) Ltd., [1966] 62 I.T.R. 578 (Mad.), the Madras High Court had expressed the view that the findings of fact arrived at by the Tribunal are conclusive and are not open to review under the limited jurisdiction of the High Court on a reference except on a misdirection in law in the process of arriving at them, or on the ground that there was no evidence on which they could be reached, that the conclusion drawn on proved facts or facts as found on evidence is, however, a different matter and that may raise a question of law or a mixed question of law and fact, and that the question whether a certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant observations are as under: The question that when an assessee transfers some of his stockin trade to another person at a price less than the market price, whether that assessee can be considered to have made any profit merely because he has transferred some of Ms stockin trade not at the market price but at a lesser price, came up for consideration before the High Court of Madras in Sri Ramalinga Choodambikai Mills Ltd. v Commissioner of Incometax, Madras [1955] 28 ITR 952 (mad). The facts of 'that case as set out in the headnote are a limited company sold certain goods showed in its stockin trade to its managing agency firm and to another firm in which one of its directors was interested. The sales in question were held to be bona fide sales. At the same time it was held that the goods were sold at a concessional rate. The Income Tax Officer sought to tax the assessee therein after computing the profits earned by that firm on the basis of the market price of the goods, sold and not the actual price at which those goods were sold. The assessee challenged the said basis. The Tribunal upheld the contention of the assessee. It came to the conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the device depends not upon considerations of morality, but on the operation of the Incometax Act. Legislative injunction in taxing statutes may not, except on peril of penalty, be violated, but it may lawfully be circumvented.' It is a well accepted principle of law that an assessee can so arrange his affairs as to minimise his tax burden. Hence, if the assessee in this case has arranged his affairs in such a manner as to reduce his tax liability by starting a subsidiary company and transferring its shares to that subsidiary company and thus foregoing part of its own profits and at the same time enabling its subsidiary to earn some profits, such a course is not impermissible under law. Mr. Manchanda contented that a person should not be allowed to adopt a device by which he gives up something through the right hand and receives the same through the left hand. According to him there is no difference between the assessee and its subsidiary and, therefore, when the assessee tries to make profits through its subsidiary, we must presume that the profits were made by the assessee itself. In support of that contention he sought to place relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... touchstone of the aforenoted legal principles enunciated in the decisions referred to above, we are of the opinion that in the instant case, there is no substantial question of law which could be said to be arising from the order of the Tribunal. It cannot be argued on behalf of the Tribunal that the findings recorded by the Tribunal are based on no evidence and or while arriving at a said finding relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the evidence or the evidence has been misread. We are of the opinion that on a conspectus of the factual scenario, noted above, the conclusion of the Tribunal that the Assessing Officer had raised number of doubts about the genuineness of the transactions without any supporting substantial question of law. The Tribunal, being a final fact finding authority, in the absence of demonstrated perversity in its finding, the interference therewith by this Court is not warranted. 22 In the result, this Tax Appeal fails and is hereby dismissed. The connected Tax Appeal also consequently fails and is h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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