Principal Commissioner Of Income Tax 1 vs. Shri Ramesh Chandra Agarwal

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE SHEEL NAGU & HON'BLE SHRI JUSTICE AMAR NATH (KESHARWANI) ON THE 18th OF AUGUST, 2023 INCOME TAX APPEAL No. 104 of 2018 BETWEEN:- PRINCIPAL, COMMISSIONER OF INCOME TAX-1, BHOPAL (M.P.) .....APPELLANT (BY SHRI SIDDHARTH SHARMA - ADVOCATE ) AND SHRI RAMESH CHANDRA AGARWAL THROUGH L/H SHRI GIRISH AGARWAL, E-1/79, ARERA COLONY, BHOPAL (M.P.) .....RESPONDENT (BY SHRI SUMIT NEMA - SENIOR ADVOCATE WITH SHRI AYUSH GUPTA - ADVOCATE) This appeal coming on for admission this day, JUSTICE SHEEL NAGU passed the following: ORDER The instant appeal preferred by the Revenue u/S.260-A of the Income Tax Act, 1961 (for short 'IT Act') in respect of assessment year 2008-09 questions the legality, validity and proprietary of the final order dated 31.01.2018 passed by the Income Tax Appellate Tribunal Indore Bench, Indore in ITA No.394/Ind/2013 contained in Annexure A/3 whereby the Tribunal dismissed the appeal of Revenue upholding the order of Commissioner of Income Tax (Appeals)- I, Bhopal (in short 'CIT(A)') passed on 26.03.2013 1 deleting the additions made by the Assessing Officer of Rs.5,80,51,000/- and Rs.6,93,51,178/- on account of cheating the sale consideration and income from other sources and Long Term Capital Gain treated as income from other sources. 2. Learned counsel for the Revenue has proposed the following substantial questions of law : "1. Whether, on the facts and in the circumstances of the case and in law, the ITAT was justified in holding the transactions of sale of unlisted shares at exorbitant premium as genuine, without any inquiry & finding in the appellate order? 2. That the order of ITAT is erroneous both in law and facts." 3. Testing the impugned order of the Tribunal on the anvil of the aforesaid proposed substantial questions of law, this Court finds that in respect of two additions made by the Assessing Officer, the CIT(A) passed a detailed order giving specific reason for upturning the finding of the Assessing Officer in regard to the said two additions. 3.1 After reproducing the relevant portion of the CIT(A)'s order dated 26.03.2013, the Tribunal upheld the order of CIT(A) by recording findings based on facts and documents on record. The relevant portion of para 8, 9 & 10 of the impugned order of the Tribunal are reproduced below for ready reference and convenience: "8. However, the Ld. CIT(A) after considering the submissions and examining the assessment order has given finding on fact as under: “5.5 I have carefully considered the submission of the appellant and facts of the case. The appellant had shown long term capital gains of Rs.6,93,51,178/- on the sale of 1652318 shares of M/s Mercator Lines Ltd. 28671 shares of M/s Reliance National Resources Ltd. and 23178 shares of Visa Steel Limited during F.Y. 2007-08 and claimed the same as exempt u/s 10(38) of the 2 IT Act. The appellant had also furnished copy of his demat accounts as well as copy of broker’s notes for sale of shares on the National Stock Exchange of India ltd. and Bombay stock exchange Ltd. it is also noticed that security transaction tax (STT) was paid by the appellant on the transactions of sale of these shares, as is mentioned in the broker’s notes. As per computation of long term capital gains furnished by the appellant, it is noticed that the appellant had shown sale of these shares after holding the same for more than one year. Thus, the appellant had earned long term capital gains on the transfer of share on the recognized stock exchanges and paid security transaction tax on the sale of these shares. Therefore, the appellant had fulfilled the conditions u/s 10(38) and was eligible for exemption u/s 10(38) on the long term capital gains earned on sale of 1652318 shares of M/s. Mercator Lines Ltd. 28671 share of M/s. Reliance Natural Resources Ltd. and 23178 shares of Visa Steel Limited during the previous year relevant to A.Y. 2008-09 under consideration. On perusal of Demat Account maintained by the appellant with IDBI Ltd. it is noticed that appellant was allotted 1317850 bonus shares of M/s. Mercator Lines Ltd. on 08.03.2006. Since, the appellant had sold these bonus shares, the cost of acquisition of these bonus shares had been correctly shown to Rs.NIL, as there was no cost incurred by the appellant in acquisition of bonus shares. As regards observation of the AO that ‘when the appellant was holding 1259329 shares only in his demat account, how can be sell 1652318 shares of M/s Mercator Lines Ltd., it is noticed that 450000 shares of M/s Mercator Lines Ltd. belonging to the appellant were transferred from appellant’s demat account no.11145756 with IDBI Bank Ltd. to appellant’s own another ledger account CMP 90 for clients margin by the broker. The appellant had also furnished a certificate from M/s. Kassa Finevest Ltd. as well as copy of his account of demat ledger CPM 90 of Ramesh Chandra Agrawal, the appellant, wherein 450000 shares of M/s. Mercator Lines Ltd. were credited and these shares were shown sold during F.Y. 2007-08. It may be noted that the demat account for the appellant with IDBI Bank Ltd. was showing opening balance of 1259329 shares of M/s Mercator Lines Ltd. s on 01.04.2007 and another 450000 shares of M/s Mercator Lines Ltd. were there in another account of the appellant client ledger CMP 90 kept for client margin by Kassa Finevest Pvt. Ltd. Thus, the appellant was 3 (SHEEL NAGU) JUDGE (AMAR NATH (KESHARWANI)) JUDGE having sufficient number of shares for making sale of 1652318 shares on which the long term capital gains earned was claimed as exempt u/s 10(38) of the Act. 9. There is no dispute with regard to the fact that the AO made addition on the basis that as per the details of long term gain, profit/loss in case of assessee relating to the shares of Mercator lines it is stated that the assessee sold 1652318 shares during F.Y.2007- 08 whereas the total no. of share in the name of the assessee as per the Demat account with IDBI Bank Ltd. relating to Mercator lines was 1259329 share only. However, this objection of the AO is rebutted by the assessee by furnishing the evidence that the assessee was having sufficient number of shares for making sale of 1652318 shares. No contrary material is placed before this Tribunal by the Revenue, therefore, we do not see any reason to interfere in the finding of the Ld. CIT(A), same is hereby upheld. Thus, the ground of revenue is dismissed. 10. In the result, the appeal of the Revenue in ITA No.394/Ind/2013 is rejected." 3.2 A bare perusal of the aforesaid reveals that factual findings have been rendered by CIT(A) as well as the Tribunal and also that the reason assigned by the Tribunal to concur with the order of the CIT(A) cannot be termed as arbitrary or perverse. 4. It is trite law that an appeal u/S.260-A of IT Act can be admitted only on existence of substantial question of law. Since the findings rendered by the two authorities below which are concurrent in nature and do not disclose any substantial question of law, this Court declines admission of this appeal. 5. Accordingly, appeal stands dismissed in limine. DV

4 DINESH VERMA 2023.08.24 10:32:28 +05'30'