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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, JM & SHRI RAJESH KUMAR, AM
O R D E R
PER RAJESH KUMAR, AM
This is an appeal filed by the revenue challenging the order dated 9.6.2014 passed by the ld.CIT(A)-37, Mumbai deleting the addition on account of unexplained receipt of sale of shares of ARSS Infrastructures Project Ltd amounting to Rs.1,20,00,000/- for the assessment year 2008-09.
The facts of the case are that a search was conducted on 6.10.2010 in the case of M/s ARSS Infrastructures Project Ltd and group concerns. During the course of search action, at the premises of Shri Jitendra Mehta, father of the assessee, certain incriminating materials in the form of various loose papers were found and seized, which pertained to the assessee. 3. Ground No.1 and 2 are against the deletion of addition on account of receipt of sale of shares of M/s ARSS Infrastructures Project Ltd amounting to Rs.1,20,00,000/- by the ld. CIT(A) ignoring the facts that AO had relied upon the documentary evidences which were found during the course of search action. Grounds of appeal
no.3 and 4 are general in nature, therefore, need no adjudication, hence dismissed.
4. At the outset, the ld.AR submitted before us that an identical issue has been decided by the Co-ordinate Bench of Mumbai Tribunal in DCIT V/s M/s Jyoti Bright Bar Pvt Ltd in and 2833/Mum//2014 (AYs-2009-10 and 2010-11) dated 8.6.2016 and the facts of the said case were identical to that of the assessee’s appeal and hence the issue raised in this appeal was squarely covered by the above said decision of the Tribunal. He, therefore, prayed that following the same analogy, the appeal filed by the department be dismissed.
5. On the other hand, the ld. DR vehemently submitted that the case of the assessee has wrongly been allowed by the ld.CIT(A) despite the fact that the addition was made by the AO on the basis of incriminating documentary evidence found during the source of search.
6. We have carefully considered the rival contentions and perused the relevant material available placed before us including the impugned orders of authorities below and case law relied upon by the assessee. A search was conducted on 6.10.2010 in the case of M/s ARSS Infrastructures Project Ltd and group concerns. During the course of search action, at the premises of Shri Jitendra Mehta, father of the assessee, certain incriminating material in the form of various loose papers were found and seized, which pertained to the assessee and accordingly, the notice was issued to the assessee u/s 153C of the Act. During the course of assessment proceedings, the AO noticed that Mr.Suresh Gaggar , the related entities, Mr.Jitendra Mehta and the assessee Shri Deven Mehta were engaged in the business of buying, transferring and manipulating the shares of M/s ARSS Infrastructures Project Ltd before its listing on 3.3.2010. The AO observed that the assessee sold 60000 shares to Shri Suresh Gaggar @ Rs.13.33 ps per share and thus the AO noted that the assessee was involved in managing the IPO to which private limited companies and Mr. Suresh Gaggar were privy to such operations. According to the AO, two groups were indulged in manipulation in the share transactions of M/s ARSS Infrastructures Project Ltd before IPO and purchase and sales were made at different rates thereby earning profit outside the books of accounts. Finally, the AO came to the conclusion that the assessee sold 60000 shares of M/s ARSS Infrastructures Project Ltd to Mr.Suresh Gaggar at higher price than the price of Rs.13.33 per share as disclosed by the assessee and accordingly, considering the sale price of these shares at Rs.200 per share on the basis of sale instances on the same date held the assessee has concealed income to the tune of Rs.1,20,00,000/- and added the same to the total income of the assessee from undisclosed sources of income besides making the other additions by passing order u/s 143(3) dated 30.3.2011 determining the total income at Rs.4,88,38,370/-. Aggrieved by the order of AO, the assessee carried the matter before the ld.CIT(A), who decided the issue in favor of the assessee by observing and holding as under :
“Decision 14.0 The facts of the case, the stand taken by the A.O in the assessment order the submissions of the appellant during the appeal proceedings have been care' considered. 14.1 As it can be seen that the A.O had adopted the sale consideration @ Rs.200/-per share at market value on the basis of certain instances of share transaction cited by him as against the actual consideration received of RS.13.33 per share adopted by appellant for the A.Y.2008-09. From the submissions of the appellant, it can be seen that the decisions cited by the A.O are not applicable to the facts of the case. On the contrary, the decisions cited by the appellant in the following cases are directly relevant and applicable to the facts and circumstances of the appellant's case: (1) K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC) (ii) CIT vs. Godavari Corporation Ltd. (1993) 200 ITR 567 (SC) (iii) CIT vs. Shivakami Co. Pvt. Ltd. (1986) 159 ITR 71 (SC) (iv)CIT V/s Smt.Nandini Nopany (1998) 230 IRE 679 (Cal)
14.2 In view of the decisions cited above, it is established that even if there were some other instances of sale of shares at a higher price that cannot lead to a conclusion that the appellant had also sold its shares at higher price until otherwise the A.O is able to prove that the consideration received by the appellant is more than what is shown in the return of income. Since the A.O failed to establish that the appellant had received the sale consideration more than what is shown, the addition of Rs.1,20,00,000/-”
We find that an identical issue has been decided in favour of the assessee by the co-ordinate bench of the Tribunal in the case of M/s Jyoti Bright Bar Pvt Ltd(supra). The operative part of the said decision is reproduced below : “18. We had also carefully gone through the seized documents to which our attention was invited by ld. DR and found that seized papers are draft MOU and agreement in the name of Devan Mehta, which shows that he was indulged in the business of providing services for listing of shares on various stock exchanges, which is not an illegal, no cogent material was there to indicate that Devan Mehta was engaged in manipulating IPOs. We also found that during the course of search statement of Mr. Devan Mehta was recorded, wherein he has clearly stated that assessee’s business was investment. Shares were also reflected in the balance sheet as investment. There is no question in not treating the income from sale of shares as capital gain. Even in the assessment order except in the computation part the AO has mentioned the addition as made u/s.68. The AO has referred to para 5 of his order which para also describes activity in which assessee is engaged i.e. investment in shares. Provision of Section 68 cannot be involved because requirement of Section is nature and source, both should be unexplained. In the instant case both the nature and source of money has been explained and only addition has been made by substituting the actual sale price. Accordingly, addition has been wrongly made by AO u/s.68.”