GARDEN VIEW REALTORS PVT LTD.,MUMBAI vs. INCOME TAX OFFICER-3(1)(4), MUMBAI

Per contra, the Ld. Departmental Representative submitted that 4. pursuant to the directions issued by the Tribunal vide order, dated 03/12/2015 in the Assessing Officer had granted sufficient opportunity to the Appellant to prove the genuineness of the transaction. However, the Appellant failed to file any documentary evidence in respect of acquisition of shares. The shares were sold to Mrs. Anjana Gupta at INR 2/- each who in turn sold the shares to Mr. Vinod Gupta, the Director of SVA India Limited on 03/08/2005 at book value. In this regard, the Ld. Departmental Representative placed reliance on the certificate, dated 01/11/2008, issued by the Chartered Accountant of Mrs. Anjana Gupta (placed at page 12 of the paper-book).

We have considered the rival submissions and perused the material 5. on record. On perusal of the Assessment Order, dated 30/12/2016, we find that the Assessing Officer had rejected the Appellant’s claim for business loss arising from transfer of 9,000 shares of SVA India Limited to Mrs. Anjana Gupta at INR 2/- per share holding the same to be a sham transaction. In appeal, the CIT(A) confirmed the order passed by the Assessing Officer holding that the Appellant was not entitled to loss on sale of shares. While concluding as aforesaid, the CIT(A) noted in paragraph 9.8 of the order impugned that even during the course of appellate proceedings, the Appellant neither filed any submissions in support of genuineness of loss arising from sale of shares, nor produced any evidence. In the appellate proceedings before us, it was contended by the Ld. Authorised Representative for the Appellant that relevant documents/submissions were filed before the CIT(A). However, the CIT(A) failed to consider the same. We note that in paragraph 4.1, the CIT(A) has recorded that the Appellant has filed certain written submissions and has requested that the appeal be disposed on the basis of the same. Therefore, we find merit in the contentions advanced on behalf of Appellant that the CIT(A) failed to consider the relevant submissions/documents filed before the CIT(A).

However, the averments made by the Ld. Authorised Representative for the Appellant during the appellate proceedings before us regarding the circumstances in which the price of shares of SVA India Limited fell from INR 100/- in 1997, when the investment was converted into inventory, to INR 2/- the price at which shares were sold, are not supported by relevant documents/details. Apart from the Balance Sheet drawn by the Appellant for the Financial Year 1996-97, there is nothing on record to support the averment that the shares of SVA India Limited were subscribed by way of public issue. The sale of shares by the Appellant is supported by a Debit Note, dated 31/03/2004 and the shares transfer form. There is nothing on record to show actual payment of consideration. Further, as per the certificate issued by the Chartered Accountant of Mrs. Anjana Gupta the shares which were sold by the Appellant to Mrs. Anjana Gupta at INR 2/- per share on 31/03/2004 were sold on book value to Mr. Vinod Gupta, Director of SVA India Limited at book value on 03/08/2005. Therefore, the reasoning/rational for selling the shares of INR 2/- also requires substantiation. Despite the aforesaid, the Ld. Authorised Representative for the Appellant asserted that the transaction of sale of shares as well as the consequent loss was genuine. Since, the CIT(A) failed to consider the submissions/documents and/or confront the Appellant, the Appellant was denied the opportunity to establish the genuineness of the transaction by filing the necessary documents and details. Keeping in view the aforesaid submissions of the Ld. Authorised Representative for the Appellant, and the insufficiency of the material on record to put quietus to the issue, we are constrained to remand the issue back to the file of the Assessing Officer. It is clarified that the Appellant would be under obligation to discharge the onus, as cast under law, to establish genuineness of the transaction of purchase/sale of shares of SVA India Limited and the loss arising therefrom. In view of the above, Ground No. 1 raised by the Appellant is allowed for statistical purposes.

In result, the present appeal preferred by the Appellant is allowed 6. for statistical purposes. Order pronounced on 16.05.2023.