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Income Tax Appellate Tribunal, DELHI BENCH ‘G ’, NEW DELHI
Before: SHRI N. K. SAINI & SHRI KULDIP SINGH
ORDER PER KULDIP SINGH, JM:
The appellant ITO Ward 9(2), New Delhi by filing the present appeal sought to set aside the order dated 11.01.2005 passed by Ld. CIT(A) XII, New Delhi for the Assessment Year 2004-05 on the ground that: “Ld. CIT(A) erred in law and on the facts in deleting the addition made u/s 68 of the I. T. Act amounting to Rs.25,10,000/- on account of unexplained cash credit.”
Briefly stated, the facts of the case are: that on the basis of information received form Investigation Wing of the Department that the assessee was in the business of bogus /accommodation entry detailed as under:
S.No. Value of Date on Name of the Bank from which entry Account entry which account received NO. of taken entry taken holder of the entry (Rs.) entry provider provider 1 40,40,000 04.08.2003 Exclusive Ratnakar Bagh, Karol 403 Garments Bagh, New Delhi the case of the assessee was reopened u/s 147 of the Act and subsequently, notice u/s 148 was issued to the assessee on 28.03.2011. Consequently, notices u/s 143(2) and 142(1) of the Act were also issued and in response thereto, Shri Naresh Sharma, CA and Authorized Representative of the assessee attended the proceedings and filed details and documents called for from time to time.
The reasons recorded for reopening of the case were provided to the assessee and in response thereto, the assessee stated as under: “Further to notice dated 06.09.2011, it is submitted that the assessee company has received two cheques i.e. en. No. 078035 of Rs. 505000/- and cheque No. 078036 of Rs.505000/- 0;1 04.08.2004 and not of Rs. 40,40,000/- as stated in the notice. The assessee company has not allotted any shares to M/s Exclusive Garments and payments were received 011 account of regular business transactions wrt sales and purchases. As the amounts received were through account payee cheques against business transactions and duly recorded in the books of account has not escaped assessment in the hands of the assessee.
The assessee has sold shares to M/s Exclusive Garments amounting to Rs. 25.10 Lacs. During the year under consideration. Further the assessee has received total payment from the party for the sales of shares thru account payee cheques only.
The assessee was having opening stock of Rs. 142.50 Lacs and there were no purchases during the year. Further the assessee is having sales of Rs. 142.85 lacs during the year under consideration. The assessee company has already filed balance sheet and tax audit report along with the return of income. The assessee company has not allotted any shares to M/s Exclusive Garments and payments were received on account of regular business transactions wrt sales and purchases. As the amounts received were through account payee cheques against business transactions and duly recorded in the books accounts has not escaped assessment in the hands of the assessee.”
However, the Assessing Officer has not agreed with the explanation furnished by the assessee and observed that from the detailed report relating to the accommodation entries provided by DIT( Investigation) and from the survey conducted on Mukesh Gupta Group of cases, it was found that accommodation entries were also given through the disguised channels of sales and purchase of shares and they had operated accounts in various banks out of which one of the Bank was Ratanakar Bank, Karol Bagh. From the Bank account called from the entry provider, return u/s 133(6) from Exclusive Garments, it was found being operated by Shri Sanjay Kumar Chaudhary with Address, F-229, Lado Sarai, New Delhi. The A.O. held that as per the provision of Section 68 of the Act, an amount of Rs.25,10,000/- on account of M/s. Exclusive Garments is being treated as undisclosed income of the assessee for the year.
The assessee contested A.O.’s order before Ld. CIT(A), who has deleted the addition of Rs.25,10,000/- made by the A.O. by partly allowing the appeal. Feeling aggrieved, the revenue has come up before the Tribunal by way of filling the present appeal.
Ld. D.R. challenging the impugned order contended that when the assessee has failed to explain the credit of Rs.40,40,000/-, provisions contained u/s 68 of the Act are attracted and the A.O. has rightly treated the amount of RS.25,10,000/- as undisclosed income of the assessee and has relied upon the order dated 23.11.2011 passed by the A.O.
However, on the other hand, Ld. A.R. repelled the contention made by Ld. D.R. by contending inter alia that amount of Rs.25,10,000/- termed as ‘undisclosed income’ is the sale proceeds of shares sold by the assessee which have already been included by the assessee in its income and as such, Section 68 is not applicable; that two cheques for Rs.5,05,000/- each received by the assessee from Exclusive Garments are in respect of sales made to Exclusive Garments and this is not the amount received on account of share capital or share application money; that the purchase of shares in question have already been shown by the assessee in the balance sheet for the preceding year; that A.O. has not given findings that it was a bogus transaction in the hands of assessee nor pointed out that shares were bogus purchase by the assessee and relied upon the judgements cited as ITO Vs Jatin Investment Pvt. Ltd. and 4326/Del.2009 and in the case of CIT vs Vishal Holding & Capital (P) Ltd. (2011) 200 Taxman 186 (Del.). 8. We have heard Ld. Authorized Representatives of both the parties, gone through the documents relied upon in the light of the facts and circumstances of the case. 9. From the facts and circumstances of the case, submissions made by the parties and case law cited in this case, we are of the considered view that no ground is made out to interfere into the order passed by Ld. CIT(A) for the following reasons: i) that in the instant case, A.O. has merely acted upon information supplied by DIT (Inv.) and has not preferred to analyze the previous returns filed by the assessee to make out if he has already disclosed the purchase of shares in question. ii) that from the perusal of copies of assessment proceedings initiated u/s 147 read with section 143(3) of the Act, pertaining to Assessment Year 2003-04 lying at pages 45-46 of the ledger book, in ledger account showing purchase of shares qua the Assessment Year 2003-04 lying at page 34 which have never been disputed by the A.O., it is abundantly clear that the assessee had purchased the shares in Assessment Year 2003-04. iii) that when the assessee has sold the shares for Rs.25,10,000/- undisputedly purchased by him in Assessment Year 2003-04, no adverse inference can be drawn against him. iv) that when purchased shares now sold by the assessee in Assessment Year 2003-04 has been accepted in the preceding Assessment Year, the assessee cannot be put to such a situation to prove the source of buyer in the subsequent Assessment Year. Moreover, the seller can make sale of shares in cash u/s 40A(3) of the Act. v) that when assessee has shown an amount of Rs.25,10,000/- as sale proceeds of shares as income, there is no ground for making the same as addition in the income which would amount to double addition. vi) that the books of account maintained by assessee have never been disputed by the A.O. nor he has held that the purchase of shares was bogus transaction or the shares sold by the assessee were bogus one.
vii) In I.T.O. Vs Jatin Investment Pvt. Ltd. (supra), it is held that when the assessee purchased the shares in earlier year which were shown as investment in the books of account and reflected in the balance sheet then the assessee sold certain investments and accounted for the profit or loss, the provisions of Section 68 of the Act were not applicable. viii) Similarly, Hon’ble Jurisdictional High Court in the case cited as CIT Vs Vishal Holding and Capital Pvt. Ltd. vide order dated 9th August, 2010 upheld the order dated 30.07.2009 of the ITAT in for the Assessment Year 2000-2001 wherein the order of the Ld. CIT(A) making the similar deletion was upheld by observing in para 6 as under:- “We are of the view that the assessee had produced copies ) of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd., and had been maintaining books of account as per Companies Act. The assessee had also demonstrated the purchase and sale of shares over a period of time as seen from the balance sheet. In our opinion, the Assessing Officer has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim. Consequently the addition made by the Assessing Officer cannot be sustained." ix) that the issue in controversy is squarely covered by the judgements: Vishal Holding and Capital Pvt. Ltd. and Jatin Investment Pvt. Ltd. (supra) as the assessee in the instant case has purchased the shares to the tune of Rs.25,10,000/- in the Assessment Year 2003-04 and then credited the receipt on account of sale of shares to the tune of Rs.25,10,000/- to its P & L account, which has already been declared and considered as its income by the appellant / assessee. So Ld. CIT(A) has legally and rightly deleted the addition of Rs.25,10,000/- vide impugned order.
As a sequel to the discussion made in the preceding paragraphs and in view of the ratio of judgement in the case of Vishal Holding and Capital Pvt. Ltd. (supra), we are of the opinion that when the assessee has proved to have purchased the shares of Rs.25,10,000/- in the preceding assessment year duly shown in the balance sheet and then sold the same and shown an amount of Rs.25,10,000/- as sale proceeds of the share as income, the provisions contained in Section 68 of the Act are not attracted and holding the same as income would tantamount to double taxation which is not permissible under law and as such, the Ld. CIT(A) has rightly deleted the addition made by the A.O. Consequently, no ground to interfere in the impugned order, the appeal of Revenue is hereby dismissed. Order pronounced in the open court on 07th Oct., 2015. 12.