C I T vs. PUSHPA MALPANI

ITA50/2010 // 1 // IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR ORDER IN D.B. Income Tax Appeal No.50/2010 Commissioner of Income Tax, Jaipur-II, Jaipur Vs. Smt. Pushpa Malpani Date of Order ::: 15.11.2010 Present Hon'ble the Acting Chief Justice Mr. Arun Mishra Hon'ble Mr. Justice Mohammad Rafiq Shri R.B. Mathur, Counsel for appellant-revenue #### By the Court (Per Hon'ble Mohammad Rafiq, J.):- This appeal has been filed by revenue against order of Income Tax Appellate Tribunal, Jaipur (for short, 'ITAT') dated 28.11.2008 which dismissed its appeal preferred against order of Commissioner of Income Tax (Appeals) {for short, 'CIT (Appeals)} dated 10.01.2008. CIT (Appeals), in his order, directed assessing officer to treat sale consideration of shares at Rs.21,87,800/- as long term capital gain instead of treating it as income from other sources. Assessee originally filed return declaring income of Rs.21,45,950/- on 29.03.2005 on sale of twenty thousand shares of M/s. Nageshwar Investment Limited. Those shares were purchased by assessee on 09.05.2002 at the

ITA50/2010 // 2 // rate of Rs.2.02 Per share through broker Shri V.K. Singhania & Company of Calcutta, which were sold on 22.07.2003 at the rate of Rs.109.50 per share. In assessment order passed on 29.12.2006 assessing officer held that total transaction in shares were only 1331 during period from December, 2002 to April, 2003 but sale price of shares shot up dramatically within a short span of time. Assessee having not furnished any supporting evidence like balance-sheet/final-statement of M/s. Nageshwar Investment Limited proving worth of the company, sale consideration of its shares was liable to be treated as income from other sources. Shri R.B. Mathur, learned counsel for revenue, argued that it was a case of artificial jacking up of price of shares and broker M/s Ahilya Commercial Private Limited, Kolkata through whom shares were purchased, had suffered a bar from Securities and Exchange Board of India at the time of transaction. CIT (Appeals) and ITAT both erred in law in deleting additions made by assessing officer under head of income from other source. There was no justification of their interference with well reasoned assessment order passed by

ITA50/2010 // 3 // assessing officer. Learned counsel argued that assessee had in fact not made any genuine transaction of shares and converted her undisclosed income into long term capital gain through accommodation entry of bogus sale consideration. It was therefore argued that substantial question of law arises in this matter whether despite numerous discrepancies pointed out by assessing officer in working of assessee and broker, who was later on banned by the Stock Exchange for artificially jacking up price of shares, ITAT/CIT (Appeals) were justified in reversing additions made by the assessing officer? Upon hearing learned counsel for revenue and perusing impugned order, we find that whether or not sale of shares and receipt of consideration thereof on appreciated value is essentially a question of fact. CIT (Appeals) and ITAT have both given reasons in support of their findings and have found that at the time of transactions, the broker in question was not banned by SEBI at the time of transaction and that assessee had produced copies of purchase bills, contract number share certificate, application for transfer of share certificate to Demat Account along with copies of holding

ITA50/2010 // 4 // statement in Demat Account, balance-sheet as on 31.03.2003, sale bill, bank account, Demat Account and official report and quotations of Calcutta Stock Exchange Association Limited on 23.07.2003. In our view, present appeal does not raise any question of law, much-less any substantial question of law. This appeal is accordingly dismissed. (Mohammad Rafiq) J. (Arun Mishra) Acting CJ. //Jaiman//