Pathik C. Thumar, Navi Mumbai vs Assessee

Shri Pathik C Thumar, बनाम/ Income Tax officer 23(3)(1), Plot No.72, "PATHIK", Vs. C-10/401, 4th Floor, SECTOR-21, Nerul, Pratyakshkar Bhavan, Navi Mumbai-400706 Bandra Kurla Complex, Mumbai-400051 (अपीलाथ /Applicant) .. ( यथ / Respondent) थायी ले ख ा सं . /जीआइआर सं . /PAN/G IRNo.: AHIPT8507A

अपीलाथ ओर से / Applicant by : Shri D C Sejpal यथ क ओर से/Respondent by : Shri Premanand J

सन ु वाई क तार ख / Date of Hearing : 16.4.2015 घोषणा क तार ख /Date of Pronouncement : 1.5.2015

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The assessee has filed this appeal challenging the order dated 30- 11-2012 passed by Ld CIT(A)-33, Mumbai and it relates to the assessment year 2009-10. The assessee is aggrieved by the decision of Ld.CIT(A) in confirming the assessment of sale proceeds realised on sale of shares made by the assessing officer disbelieving the claim of Long term capital loss.

2. We heard the parties and perused the record. The assessing officer received the information that the assessee has purchased an immovable property for a sum of Rs.69,42,000/-. When enquired about the sources, the assessee submitted that he had earned Long term Capital gain on sale of shares and the sale proceeds thereof amounting to Rs.92,14,781/- was 2 I T A N o . 1 9 8 / Mum/2013

used for purchase the immovable property. The assessee furnished the name of shares sold by him as "Sandur Management". The AO made enquiries with Registrar of companies and Bombay Stock exchange. Both the authorities reported that there was no company by name "Sandur Management". The assessee claimed to have sold the shares through a share broker named M/s Vijay Bhagawandas & Co. The said share broker disowned the sale bills submitted by the assessee. The assessee had purchased the shares through another share broker named M/s Jasani Capital Services Ltd and enquiries were made with the said company, it informed that it could not provide requisite information as there was a fire in the premises and the records were destroyed.

3. When the AO confronted all these details with the assessee, then the assessee clarified that the name of the company was "Sandhur Manganese and Iron Ores Ltd" and not "Sandur Management". The AO asked for further details, but there was no response from the assessee. Hence the AO treated the entire sale proceeds of Rs.92,14,781/- as income of the assessee u/s 68 of the Act treating the same as unexplained cash credits. The Ld CIT(A) also confirmed the same and hence the assessee has filed this appeal before us.

4. Both the parties argued before us supporting their respective case. The Ld A.R heavily placed reliance on the documentary evidences furnished by the assessee to support the claim of purchase and sale of shares. He further submitted that the assessee has duly declared the purchase of shares in the Income tax return filed for AY 2004-05 onwards till the shares were sold in the financial year relevant to the assessment year 2009-10. He submitted that the assessee has sold the shares after holding the shares for about five years. He further submitted that the share broker, through whom the shares were sold, has disowned the sale bills by stating that the broking company has been closed, but the undated 3 I T A N o . 1 9 8 / Mum/2013

reply to the assessing officer was given in the letter head of M/s Vijay Bhagawandas & Co only, which clearly shows that there is some fault at their end. The share broker, through whom the shares were purchased, did not deny the transaction, but he could not confirm the same as the records were destroyed by fire. The Ld A.R accordingly submitted that the assessee has duly discharged his responsibilities and the assessing officer has made the impugned addition only on suspicion and surmises.

5. Ld D.R on the contrary submitted that the purchase and sale of shares were not confirmed by the respective brokers and further the assessee has also failed to substantiate the veracity of the documents furnished by him,

6. We have considered the rival submissions and perused the record. In the broker bills, the name of the company is stated as "Sandur mang.", in short form. Hence in the first instance, the assessee has stated that the name of the company was "Sandur management". Accordingly the assessing officer conducted enquiries in respect of the company named Sandur Management. Since no company exists in that name, it is quite natural that the assessing officer would have received negative replies with regard to that company. However, subsequently the assessee has clarified that the name of the company was "Sandur Manganese and iron Ores Ltd". After the said clarification, the AO seems to have not conducted any further enquiry about "Sandur Manganese and iron ores Ltd".

7. The assessee has furnished a print out taken from internet site to show that the said company's shares are being traded regularly. We notice that the above said company is having identification number as 504918 with scrip ID SANDUMA. Thus the first doubt expressed by the assessing officer about the existence of the company stands clarified. We notice that the Ld CIT(A) has proceeded with the view that M/s Sandur Mang. (short 4 I T A N o . 1 9 8 / Mum/2013

form given in the contract notes) is not the short name of M/s Sandur Manganese and Iron Ores Ltd. We notice that the assessee has also furnished the price movement of shares of the above said company. The rate at which the assessee has sold the shares broadly tallies with the closing prices given in the price chart. Hence, we are of the view that there was no reason to suspect that the name "M/s Sandur Mang" does not represent "M/s Sandur Manganese and Iron Ores Ltd".

8. We notice that the assessee has furnished all documents evidencing purchase and sale of shares. The purchase broker could not authenticate the documents furnished in support of the purchase, for the reason that his records have been destroyed by fire. The assessee has furnished further documents to show that the above said claim was not a void claim, i.e., the assessee has furnished certificate from the concerned Society as well as the copy of police complaint. In the absence of any further enquiry/document to disprove the above said claim, we are of the view the same is required to be accepted. Further, it is a fact that the assessee has disclosed the purchase of shares in his return of income filed for AY 2004- 05 onwards and further the assessee has held the said shares for about five years. We notice that the Ld CIT(A) has rejected the said claim for the reason that the returns of income filed for AY 2004-05 onwards were not subjected to scrutiny. Further, the Ld CIT(A) has pointed out that the figures mentioned in the financial statements attached with the return of income did not match with the figures reported in "Saral" form. To substantiate his finding, the Ld CIT(A) has stated that the Long term capital gain disclosed in the financial statement for AY 2004-05 did not find place in the "Saral" form. In our view, the observations made by Ld CIT(A) are out of context, since the errors, if any, in the returns of income filed for AY 2004-05 cannot disprove the claim of purchase of errors. Further the said errors, if any, are the look out of the assessing officer to deal with them in accordance with the law. The assessee has disclosed 5 I T A N o . 1 9 8 / Mum/2013

the value of investment as Rs.20,14,578/- in AY 2004-05 without mentioning the nature of investment. Though the Ld CIT(A) is finding fault with the same, in our view, the said fact is also not relevant, since the assessee has furnished documents to corroborate the investment in shares to the extent of Rs.20,14,578/-. With regard to the payments made for purchase of shares, the assessee has furnished certain bank accounts. However, the Ld CIT(A) has expressed doubt about the same also. In our view, it is a matter of reconciliation and further the assessee is being asked to prove certain transactions entered about eight years back that too over and above the documentary evidences furnished by the assessee.

9. With regard to the sale of shares, the assessee has furnished the relevant contract notes and bills. The assessing officer has disbelieved the same only for the reason that the concerned broker has disowned the sale bills. However, the selling rate shown in the sale bill broadly matches with the share price movement given in the chart downloaded from the internet site, meaning thereby, the sale value stands corroborated. Further, as submitted by the assessee, the reply letter is given by M/s Vijay Bhagawandas & Co, on its letter head and the same mentions that the above said broker is still a member of Bombay Stock Exchange. However, in the reply, the above said share broker has stated that the concern "Vijay Bhagawandas & Co." was dissolved. Thus, it is seen that the reply given is contradictory to the facts available on the letter head of the above said broker. Accordingly, we find merit in the contentions of the assessee that the reply given by the broker is not reliable.

10. In view of the foregoing discussions, we are of the view that the assessee's claim of sale of shares of M/s Sandur Manganese & Iron Ores Ltd cannot be disbelieved, in the facts and circumstances of the case.

6 I T A N o . 1 9 8 / Mum/2013

Accordingly, we set aside the order of Ld CIT(A) and direct the assessing officer to delete the impugned addition made u/s 68 of the Act.

11. In the result, the appeal filed by the assessee is allowed.

The above order was pronounced in the open court on 1st May,2015.

घोषणा खल ु े यायालय म दनांकः1st May,2015,को क गई ।

Sd sd

(जो ग दर संह/JOGINDER SINGH) (बी.आर. बा करन,/ B.R. BASKARAN) या यक सद य / Judicial Member लेखा सद य/Accountant Member

मब ुं ई Mumbai: 1st May,2015.

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. आयकर आयु त(अपील) / The CIT(A)- concerned 4. आयकर आयु त / CIT concerned 5. वभागीय त न ध, आयकर अपील य अ धकरण, मब ुं ई / DR, ITAT, Mumbai concerned 6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER,

True copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai

Date Initials 1. Draft dictated on 1.5.2015 SPS 2. Draft placed before author 1.5.2015 SPS 3. Draft proposed & placed before the Second JM Member 4. Draft discussed/approved by Second Member AM 5. Approved Draft comes to the Sr. PS SPS 6. Kept for pronouncement on SPS 7. File sent to the Bench Clerk SPS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to A.R. 10. Date of dispatch of order