Gita Chowdhury, Kolkata vs Assessee

I . T. A . N o. 7 04 / Kol./ 2 01 4 As ses sm e nt y e ar : 20 09 - 20 1 0

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IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA 'A' BENCH, KOLKATA

Before Shri N.K. Saini (Accountant M ember), and Shri Ge orge M atha n (Judicia l Member)

I.T .A. No . 704 /Ko l./ 2 014 Assess ment year : 2009 -2 01 0

Gita Chowd hury ,...... ....... ........ ........ ................................Ap p ella nt C/o. D.J. S ha h & Co., Ka lya n Bha va n, 2, E lgin Roa d , Kol ka ta -700 020 [PA N : A FRPK 9925 J]

-Vs.-

Commi ssi on er of Inco me T a x,.............................. ...........Resp ond ent Kol ka ta -IX, Kolka ta, Ba mb oo V illa , 169 , A .J.C. Bose Roa d, Kol ka ta -700 014

Appeara nces by : Shri Miraj Sh ah, FCA, for the assessee Shri Vij ay Kum ar , CIT, D. R., f or the Depar tment

Dat e of concluding t he hearin g : J anuary 27, 2 015 Dat e of pr onouncing th e order : J anuary 29, 2 015

Per Ge orge M athan:

This is an app eal filed by the ass ess ee again st the ord er p ass ed by the ld. Commissioner of In come Tax, Kolkata-IX, Kolkata in Appeal No. CIT-IX/Kol/S.263 Proceedin g/2013-14/32 50 dated 21.03.2014 for the as se ssm ent yea r 20 09-10 .

2. Sh ri Mi raj Shah, F.C.A., rep res ented on behalf of the assessee and Sh ri Vijay Kum ar, CIT, D.R., repres ent ed o n behalf o f the Reven u e.

I . T. A . N o. 7 04 / Kol./ 2 01 4 As ses sm e nt y e ar : 20 09 - 20 1 0

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3. At the ti m e of hearin g, it was submitt ed b y the ld. A.R. that the as se sse e is an indiv idual, who h ad purchas ed shares in a Private Li mit ed Company, namely M/ s. Incents Con sultan ts Privat e Limited durin g the as se ssm ent y ear 2003-04. It was th e submission that the assessee had purcha sed 71,0 00 shares @ Rs.2/- per share. It wa s the submissio n that durin g the as ses sm ent year 2008-09, the as se ssee h ad sold the same at a price of Rs.35/- per share. It wa s the submis sion that cons equently the as se sse e h ad e arned c apit al g ain s of nea rly Rs.23, 05,611/-. It was th e submission that th e as sessee h ad made inv estments in REC Bonds to an extent o f Rs.23,00,00 0/- and had claimed the cap it al g ains as exempt and not liable fo r taxation. The assessee h ad al so disclosed the same in it s retu rn of inco me filed . The retu rn of th e assessee c ame to be taken up fo r scru tiny un der th e CAS S and the A s ses sing Offi ce r had after verifying th e retu rn filed b y the assessee and d etail s called fo r co mpleted th e as se ssm ent un der section 143(3) on 16 .05.2011.

It was th e submis sion that in the cou rs e of assess men t proc eeding s, the As sessin g Office r had speci fically called fo r th e in fo rmation in resp ect of the det ails of th e invest ment i n sh ares, Mutu al Funds, Bon ds, if any, as al so the d etail s of the capital gain s. Ld. A.R. dre w our att ention to p ages 39 and 40 o f the pap er bo ok, wh ich was the copy of the notice i ssu ed under sectio n 142(1) of the Act. It wa s th e submis sion that con sequent to the information called for, the assessee had p roduced before the A s se ssing Of ficer the ev id ence s in the form of det ails of th e list of long-t erm capital gain s, co mputation of capital gain s as also the co mputation of the total income where the said t ra nsactions had been s pecific ally bro ught out. It was the furthe r submission that fu rther det ails in the form of the sal e bills of the share s of Incents Consulta nts P rivate Li mited as also the B an k Pass Book had been produced. It was the submission that th e bills speci fic ally co ntained th e names of the pu rch asers. The asse ss ee h ad also p roduced the det ails of th e comp an y M /s.

Incen ts Co n sultant s Privat e Li mited a s was also av ailable with th e a ssessee repres entin g the prin ted account s of the s aid Comp any. It was th e submi ssio n that th e d etail s p roduced by the I . T. A . N o. 7 04 / Kol./ 2 01 4 As ses sm e nt y e ar : 20 09 - 20 1 0

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as se sse e h ad been v erif ied and no d ef ect had been pointed ou t in the co urs e o f as ses sment an d the ass essment wa s completed acceptin g the retu rn ed inco me. Ld. A.R. drew our attention to p ag es 41 to 68 of the pap er book, which were the evidences p roduced befo re the A ssessing Officer. It was th e fu rthe r submis sion by the ld. A. R. that in the ord er- sheet noting of th e Ass es sin g o offic er al so cat egorically showed the various e xamin atio n an d details c alled for by the Assessi ng Of fice r. Ld. A.R. drew o u r att ention to page 13 of the paper b ook, which was th e copy of th e o rde r- sheet no tin gs. It was the submis sion th at subsequently the ld. CIT had invoked his power under s ection 263 on the basis of lett ers issu ed by the Assessin g Offi ce r and t he JCIT, Ran ge-25 , Kolkata dated 30/4/2013 and 08 /05/20 13 resp ectively requestin g for re scind in g th e as se ssm ent ord er. It was the submissio n that consequen tly the ld. CIT had called for the reco rds a nd issu ed a show-caus e notice dated 30 .08.2013 to which th e ass ess ee had sp ecifi cally rep lied vide letter dated 17. 09.2013 filed on 1 8.09.2013, wherei n it wa s b rought to the attention to the ld.

CIT all the det ails, which had been p roduced before the Asses sin g Officer. It was the submi ssion th at the ld. CIT without con siderin g the sub mi ssions of the a ssess ee h ad held that the As ses sing Offi ce r n ever had the o ccasion to examine the genuin eness of the sale of shares. It was the submis sion that the ld. CIT furth er h eld that it was very diffi cult to asce rtai n as to wheth er th e Assessin g Offic er had real ly probed the genuinen ess of the incidence of th e c apit al gain s be cau s e ba rrin g the fe w Bonds relat ed document s and no other pap ers rel ating to the purcha se and s ale of share s of the Private Li mit ed Co mp any was availab le on reco rd. It wa s th e furthe r submi ssion that con sequent ly the ld. CIT held that the genuin en es s of the long-t erm capit al gains as declared by the assessee had n ot b een enquired into by the Assessin g Offi cer and had held that the as se ssm ent o rde r was deemed to be p rejudicial a s well as e rroneous. It was the submis sion that the ld. CIT had set aside the assess ment o rde r with a di rection to th e A ssessin g Officer to re-f rame th e same de novo by co nducting n eces sary enquiri es.

It was the subm issio n tha t all the d etail s I . T. A . N o. 7 04 / Kol./ 2 01 4 As ses sm e nt y e ar : 20 09 - 20 1 0

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hav ing been p roduced before the A ssessin g Offi cer and the A ssessin g Officer havin g cond ucted th e nece ss ary enq uiries and havin g co mpleted the as se ssment just on a ch an ge of op in io n, th e powers under section 263 co uld not be invoked to hold th e assess ment o rder as erron eous and prejudicial to the interest of revenu e. It was the submi ssion that, in fact, the ld. CIT in hi s o rder under s ection 263 has not po in ted o ut as to the erro r in the asses smen t order. Th e o rder under s ection 263 is fo unded only o n presu mption and not on th e basis of any sp ecifi c ev idences. It wa s the su bmi ssion that no specific d ef ect had been found in the assessmen t order which called fo r the revision under section 263. It was the submission that the o rder und er section 263 was li able to be quash ed.

4. In reply, ld. CIT, D.R. submitted th at th e as ses sm ent h ad been done under CA SS an d con sequently the CBDT Instruct ion did not preclude the Assessing Of ficer f ro m any further v erific ation. It was the fu rthe r submission that th e A ssessin g Of fice r d id not apply his mind to the crux of the issue. It was th e sub mi ssion that the As sessin g Offi ce r had applied only the stan dard ope ratin g p rocedure when co mpletin g th e a ss ess men t and d id not go bey ond. It was the su bmi ssion that th e fact that the shares had been pu rch ased at Rs.2/- p er share and afte r five years, the sam e was sold @ Rs.35 /- per share, should have been drawn the at tention of the Assessing Offic er that th e re was so met hing more to the t ran sactio n s. It was the submi ssion that th e o rde r und e r section 2 63 pas sed by the ld. CIT was li ab le to be up held.

5. We have con sidered the rival submis si ons. At the outs et, a p eru sal of th e eviden ces which have been placed in the pap er book more speci fically the eviden ces which have been clai med by the asses se e to hav e been p roduced befo re the A s ses si ng Offi ce r an d which the ld. CIT in his ord er und er section 263 ref ers to as only few Bonds rel ated document s and no other pap ers rel ating to the purcha se and s ale of share s o f the Priv ate Li mited Co mpan y has been av ailable on reco rd, shows that thes e documents runnin g from pa ges 2 to 27 being the I . T. A . N o. 7 04 / Kol./ 2 01 4 As ses sm e nt y e ar : 20 09 - 20 1 0

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co mputation of total inco me, income & expendi ture account, detail s of the profit o n th e sale of sh ares, detail s of t he capital gains, Fo rm No. 16, REC Bonds certified copies, ITN S 280 tax paid challan , no tice under sections 143(2), 142, copy of the order- sheet no ting s in th e assess ment folder, the detail s of th e sou rce o f inv est ment in R EC Bonds, the accounts st atemen t with Axis Bank and th e co nfirmation o f accounts with v ario us perso ns are all certified to be true co py by the Office Superint enden t, Office of the Additional CIT, Ran ge-25, Kolkata. The Assess ing O fficer in the asses see's case i s Inco me Ta x Office r, Ward-25 (1), Kolk ata. Further d etail s in the form of bills for the sale of sh ares, prin ted accounts of M/ s. Inc ent s Consultant s P rivate Limited are all part o f the eviden ces rep resentin g the Annexu re s befo re the ld . CIT. What is no ticed is that o nly the ev id ences in regard to the detail s rep resentin g the printed account s of the Comp any M/s. Incen ts Co nsultan ts P rivate Li mit ed and th e copi es o f th e bills for the sal e of shares were not allegedly before the A s ses sin g Office r if at all.

In any cas e that would not make a diff eren ce. The alle gation mad e by the ld. CIT that the tran saction s mi gh t not be genuine and requires deep er investi gation, could be of no relevan ce in so far as the t ran sactions rep resen tin g the actual purch ase of t he said shares took p lace i n the as se ssm ent yea r 200 3-04 . If the tran saction is bogus, then the trans action become s bogu s in th e a ssessment ye ar 2 003-04 because it is th e pu rchase itself. The f actum of sal e ha s been p ro ved and admit ted, in so f ar as the nam e of th e pu rcha ser and th e tran s actions having been rout ed throu gh the Ban k account remai ned p ro ved. In the ass es smen t y ear 2009-10, which i s the assess men t yea r in ap peal, tran sac tion relatin g to the as se ssm ent y ear 200 4-05 cannot b e examin ed. Further a pe rus al of the order-sh eet notin gs as al so the 142 (1) notice issued by the Assessi ng Officer and the evidences p roduced by the ass es see in the course of as se ssm ent cl early show th at the i ssue of the capital gains as al so the invest ment in the REC Bonds h ave b een examin ed by the A ss essin g Officer.

In any cas e, the ld. CIT other than saying that th e a ss ess ment order i s c ry ptic in n ature o r that is very difficult to a sce rtain a s to I . T. A . N o. 7 04 / Kol./ 2 01 4 As ses sm e nt y e ar : 20 09 - 20 1 0

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wheth er the A ssessin g Offi ce r really probed the genuineness of the incidence of cap ital gain s canno t mak e the asse ss ment orde r erroneous and prejudicial to the in terest of revenue. In fact, the ld. CIT has no t pointed out what i s the ex act erro r. Just because th e query no r th e ans we r is reflect ed in the ass es sment orde r, it would not lead to the co nclusion that the ord er of th e A sses sin g Officer c alled for any interfe rence o r revision. Also, the ld. CIT having examin ed an d veri fied the tran sact ions hi ms elf and h aving n ot pointed out any error in the me rit s or th e ord er of th e Ass es sin g Office r o r th e vie w taken b y the Assessing Offi cer, it would not be pos sible to inv oke his powe rs unde r sect ion 263, just becau se the vie w as desi red by the ld. CIT has not b een taken by the Asse ssi ng Off icer in t he assessment ord er. In these circu mstanc es, we a re of the view that th e o rder p assed under s ection 263 by th e ld. CIT is un sust ainable and consequently quash the s ame.

6. In the result, the appeal filed by the ass essee stand s allowed.

Orde r p ronounced in th e open Co urt on 29 t h Jan uary , 2015.

Sd/- Sd/- N.K. Saini George Mathan (A ccountant Me mber) (Judici al Me mber) Kolkata, th e 29 t h day of January, 2015 Co pi e s t o : ( 1) Gi ta Chow dh ur y , C/ o. D . J. S hah & Co. , K al y an B hav an, 2, El gi n R oad, K ol kat a-7 00 020

( 2) Commi ssi one r of Inc ome T ax, K ol kat a-I X, K ol kat a, B amboo V i l l a, 16 9, A. J. C. B ose R oad, K ol kat a-7 00 014 ( 3) Com mi ssi o ne r of I nco m e T ax ( 4) Th e D ep ar tm enta l Re p re se nt at i ve ( 5) Guar d Fi l e B y or de r

Assi st a nt Reg i st r ar I ncom e Tax Ap pe ll a te T ri b unal K ol k at a B e nche s, K o l kat a Laha/Sr. P.S.