Ashok Kumar Gupta( L/R Of Mrs Kamala Devi ... vs Assessee
- CitationITA No.500-502/Ko l/2013
Ratio decidendi
The rule this decision rests on
Where the sale consideration on shares is received through account payee cheque from a broker, the shares having been purchased and sold through banking channels and not in cash, and no evidence has been found that the assessee paid or received cash in lieu of the cheques, the assessee who has established the identity, creditworthiness and genuineness of the broker and of the receipt of the consideration cannot be subjected to an addition under section 68 of the Income Tax Act, 1961 merely on the basis of a third party's statement and seized papers not in the assessee's handwriting. A presumption under section 292C of the Income Tax Act, 1961 is available only against the person in whose possession the books of account or other documents were found, and not against a third party; it cannot be invoked to support an addition against an assessee on the strength of documents seized from another person's premises.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Ashok Kumar Gupta, L/R of बनाम D y. Comm issioner of Mrs. Kamala Devi Agarwal / Incom e Tax, Central (deceased), 208, M.G. Road, V/s . Circle -XXVII, Kolkata Kolkata - 700 007 [PAN No.ACIPA 88 41 K]
Mr. Ashok Kum ar Gupta, बनाम D y. Comm issioner of 11 3A, Manohar Das Chowk, / Incom e Tax, Central Kolkata - 700 007 V/s . Circle -XXVII, Kolkata [PAN No. ADNPG 3903 A]
Mrs. Amita Gupta बनाम D y. Comm issioner of 6, Sarat Bose Road, / Incom e Tax, Central Lansdown Heights, Kolkata - V/s . Circle -XXVII, Kolkata 70 0 020 [PAN No.ADYPG 4038 K ]
अपीलाथ /Appellant .. यथ /Respondent
आवेदक क ओर से/By Assessee Shri S.K.Tulsiyan, Advocate राज व क ओर से/By Revenue Smt. Madhumalati Ghosh, JCIT, SR-DR सुनवाई क तार ख/Date of Hearing 02-06-2015 घोषणा क तार ख/Date of Pronouncement 02-06-215
आदेश /O R D E R
Since all these three appeals filed by the respective assessee in all the common issue, therefore, all the appeals are disposed of by this common order.
ITA No.500-502/Kol/2013 A.Y.2005-06 Ashok Kr. Gupta, Mr. Amita Gupta v. DCIT, CC-XXVII Kol. Page 2
2. Ground No.2 not pressed in all the three appeals, hence, dismissed as not pressed. Ground No.1 is general in nature do not require any adjudication.
3. The only common issue involved in Grounds No.3 & 4 which are common in all the three appeals relate to the addition made u/s 68 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') in respect of the sale consideration received by the assessee on the sale of the shares of M/s Continental Fiscal Management Limited (CFML for short). Both the parties agreed that all these appeals be disposed of on the basis of the facts involved in the case of Shri Ashok Kumar Gupta in ITA No. 501/Kol/2013. I, therefore dispose of all the three appeals on the basis of facts involved in the case of Shri Ashok Kumar Gupta.
4. Brief facts are that assessment in the case of all the assessee were re-opened by issuing the notice u/s 148 of the Act for reason that a search operation u/s 132 of the Act was conducted in the case of Shri Narendra Kumar Shyamsukha at his residence and business premises on 24-10-2006. The pages No. 7 to 10 of the loose paper bunch marked as NKS/3 revealed that certain persons including the assessee had laundered their unaccounted money in the guise of Long Term Capital Gains (LTCG for short) on sale of penny stocks of unknown companies. From the seized documents, it was observed that Shri Shyamsukha had helped including the assessee in converting their cash into cheque by way of sale and purchase of shares of CFML and Swastik Securities and Finance Ltd. A statement u/s. 132(4) of Shri Narendra Shyamsukha was recorded in which he stated about these pages that these papers contained details of bogus LTCG taken by the persons mentioned therein. The seized papers contained the names of the person in respect of the transactions of ₹1,49,50,000/-. He further stated that he was acting as intermediary to facilitate the bogus transactions and in turn, he had earned @ 1% commission of the amount of LTCG. The calculation of commission is also recorded on the sale document. The seized paper No. 7 & 8 contained details in tabular having date, name, broker name, number of shares, cheque and cash paid. The pages No. 9 and 10 of NKS/3 contained details like party name, script name, quantity purchase and amount, sale amount and profit on sale. The AO ITA No.500-502/Kol/2013 A.Y.2005-06 Ashok Kr. Gupta, Mr. Amita Gupta v. DCIT, CC-XXVII Kol. Page 3
was of the opinion that the name of all three assessee appeared on these papers when enquired of the assessee, the assessee stated that he did not know by the person of Sri Narendra Shyamsukha, the broker, through whom transaction of purchase and sale was conducted the knowing Sri Narendra Shyamsukha but the AO was of the view that the transaction appearing on the seized papers exactly tallied with the details of the LTCG returned by all the assessee. The AO therefore made the addition u/s 68 of the Act in respect of sale consideration received by the respective assessee.
5. The assessee went in appeal before CIT(A). The CIT(A) confirmed the addition.
6. I have heard the rival contentions and carefully gone through orders of the Tax Authorities Below. I noted the fact in each of the cases, the shares which has been sold by the assessee were brought during the financial year 2002-03 and were shown in the balance-sheet as on 31-03-2003 and 31-03-2004. The shares were sold only during the impugned assessment year. The shares were purchased by making the payment through account payee cheque. Similarly, the shares were sold by receiving of the account payee cheque through the broker Ahilya Commercial Pvt. Ltd. It is not the case that the shares were bought or sold through cash. The statement of Broker CMFL was also recorded but he denied that he knows Shri Narendra Kumar Shyamsukha. The presumption available u/s.292C of the Act relied on by the Ld. DR are available against the person in whose possession the books of account other documents etc., were found. The presumption is not available against the third party and transactions are through Demat account. The assessee filed all the documents and these purchases were made by the assessee through account payee cheque have not been doubted by the Revenue. The action u/s. 68 of the Act has been taken on the basis of the statement of the third party. During the course of search at the premises of Shri Narendra Kumar Shyamsukha no iota of evidence was found which could prove / lead to any inference that assessee had paid cash to Shyamsukha or the cheque has been received or paid to the broker in lieu of cash except a statement which is not in the handwriting of the assessee and which contains numerous details. No action has been taken by the ITA No.500-502/Kol/2013 A.Y.2005-06 Ashok Kr. Gupta, Mr. Amita Gupta v. DCIT, CC-XXVII Kol. Page 4
Revenue in treating the purchase to be the bogus. Under these facts and circumstances, I am of the view that it is not the case where the addition u/s. 68 of the Act could be made. The assessee duly proved the identity, creditworthiness and genuineness of the broker as well as that assessee received the consideration on the sale of the shares from the broker. I, accordingly set aside the order of CIT(A).
7. In the result, all the appeals filed by the respective assessee are allowed.
Order pronounced in open court on 02/06/2015
Sd/-
(P.K. Bansal) Accountant Member Kolkata,
*Dkp दनांकः- 02/06/2015 कोलकाता
आदेश क त ल प अ े षत / Copy of Order Forwarded to:-
1. अपीलाथ / Appellant - Ashok Kr. Gupta, L/R Mrs. Kamala Devi Agarwal 208, M.G.Rd. Kol-07 Mr. Ashok Kr. Gupta, 113A, Manohar Das Chowk, Kol-07 Mrs. Amita Gupta, 6, S.B. Road, Lansdown Heights, Kol-20
2. यथ / Respondent - DCIT, Central Circle-XXVII, Kolkata
3. संबं धत आयकर आयु त / Concerned CIT
4. आयकर आयु त- अपील / CIT (A)
5. वभागीय त न ध, आयकर अपील य अ धकरण कोलकाता / DR, ITAT, Kolkata
6. गाड फाइल / Guard file.
By order/आदेश से,
/True copy/ उप/सहायक पंजीकार आयकर अपील य अ धकरण, कोलकाता
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