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2013 DIGILAW 400 (GAU)

Commissioner of Income Tax v. Jaswinder Kaur

2013-06-12

I.A.ANSARI, INDIRA SHAH

body2013
JUDGMENT I.A. Ansari, J. 1. This is an appeal, made under Section 260A of the Income Tax Act, 1961 (in short, 'the Act'), against the order, dated 14.03.2008, passed, in I.T.A. No. 51/(Gau)/2008, for the assessment year 2003-04, whereby the learned Income Tax Appellate Tribunal, Guwahati Bench (in short, 'the Tribunal') has allowed the appeal of the assessee-appellant, set aside the assessment order, dated 30.03.2006, as well as the appellate order, dated 21.01.2008, passed against the assessee. The appeal has been admitted, for hearing, on the following substantial question of law: Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in setting aside the orders passed by the Assessing Officer as well as by the Commissioner of Income Tax (Appeals) and directing the Assessing Officer to accept Rs. 18,73,210/- as a long term gain of the assessee from the sale of shares of M/s Ocean Entrade Limited and M/s United Impex Limited. 2. The assessee-respondent, who is an individual, filed annual return, for the assessment year 2003-04, showing her income derived from salary, capital gains and also income from other sources. In the course of time, when the assessee-respondent's case was selected for scrutiny, notices were accordingly issued under Sections 143(2) and 142(1) of the Act. 3. The Assessing Officer found that the assessee, during the relevant assessment year, had shown long term capital gain of Rs. 18,73,210/- by selling shares of two companies, namely, Ocean Entrade Limited and United Impex Limited. 'The purchases and sales of the shares, in question, as reflected in the return of income, may be summarised as follows: Sl. Name of the Company Sale Particulars Purchase Particulars Share 1 Ocean Entra de Ltd. 2200 04.07.02 261,360 26.03.01 4,510 2 Ocean Entra de Ltd. 3200 02.08.02 379,840 26.03.01 6,560 3 Ocean Entra de Ltd. 3600 08.08.02 430,560 26.03.01 7,380 4 United Impex Ltd. 1200 29.05.02 144,000 26.03.01 2,520 5 United Impex Ltd. 1800 08.08.02 214,200 26.03.01 3,780 6 United Impex Ltd. 4000 09.07.02 476,400 26.03.01 8,400 Total = 16,000 1,906,360 33,150 4. In order to verify the genuineness of the transactions, as regard purchases and sales of shares, the Assessing Officer asked for certain information and materials to be furnished by the assessee including Demat account, bank statement, etc. 5. In order to verify the genuineness of the transactions, as regard purchases and sales of shares, the Assessing Officer asked for certain information and materials to be furnished by the assessee including Demat account, bank statement, etc. 5. According to the relevant assessment order, the Assessing Officer took the view that the assessee could not produce any documentary evidence of purchases of shares except showing the purchases of the shares, in question, in her balance sheet, along with the income tax return, showing purchase of shares from S.K. Jain & Company, which is a share broker. Having arrived at the conclusion that the assessee had not been able to produce sufficient materials to justify the long term gain, which the assessee had claimed, the Assessing Officer treated the income, derived from sales of shares by the assessee, as her income from undisclosed sources and taxed the same accordingly. 6. Aggrieved by the assessment order, so made, the assessee preferred an appeal, under Section 143(3) of the Act. The Appellate Authority was of the view that though the Assessing Officer had concluded that since the shares had been purchased in cash and had not been routed through any Stock Exchange, the demand of Demat account or bank statement, etc., was untenable. However, the appellate authority noted, in its appellate order, dated 21.01.2008, that the profits, shown in the case of both the companies, whose shares had been purchased and sold by the assessee, were either negligible or ended in loss, and, therefore, it was illogical to take the view that the value of the shares of the companies concerned would jump to more than 57 times in a brief span of 16 months. The Appellate Authority also noted, in its order, dated 21.01.2008, that the said companies were not financially sound and, hence, their performance did not justify such an extra-ordinary jump, in the prices of their shares, as had been reflected by the value/prices at which the shares had been sold by the assessee. For the reasons, so assigned, the learned Appellate Authority concurred with the ultimate finding of the Assessment Officer and upheld the assessment order. Dissatisfied by the appellate order, dated 21.01.2008, aforementioned, the assessee carried the matter, in appeal, to the learned Tribunal. 7. The learned Tribunal, having noted, in its order, dated 14.03.2008, which stands impugned in this appeal, that the learned. Dissatisfied by the appellate order, dated 21.01.2008, aforementioned, the assessee carried the matter, in appeal, to the learned Tribunal. 7. The learned Tribunal, having noted, in its order, dated 14.03.2008, which stands impugned in this appeal, that the learned. Appellate Authority had not given relief to the assessee on the ground that since the prices of shares of the companies concerned could not have risen as high as had been claimed to have risen, the assessee's claim for profits were liable to be rejected. The observations, so made, by the learned appellate authority, are not, according to the learned Tribunal, based on any material and can be regarded as assumption and surmises inasmuch as nothing had been brought on record to show that what the assessee had claimed, as regards the value of the shares, was factually incorrect and, hence, in these circumstances, the learned Appellate Authority ought not to have confirmed the assessment order of Assessing Officer. 8. On the basis of the conclusion, so reached, the learned Tribunal has allowed the appeal and aggrieved by the order, so made by the learned Tribunal, the Revenue is, in appeal, before us. 9. We have heard Mr. S. Sarma, learned Standing counsel, Income Tax, appearing for the appellant, and Mr. O.P. Bhati, learned counsel, appearing for the assessee-respondent. 10. While considering the present appeal, what needs to be noted is that when a query had been made by the Assessing Officer directing the assessee-respondent to furnish necessary materials to show that the return of income, which the assessee-respondent had filed, was correct, justified and tenable in law, the onus rested on the assessee-respondent to produce necessary materials and convincingly show that the value of the shares, as had been reflected in her annual return of income, had gone as high as the assessee-respondent had claimed. The onus, which so rested on the assessee-respondent, was never discharged by the assessee-respondent. This aspect appears to have escaped the notice of the learned Tribunal. 11. The onus, which so rested on the assessee-respondent, was never discharged by the assessee-respondent. This aspect appears to have escaped the notice of the learned Tribunal. 11. By the order under appeal, the learned Tribunal appears to have placed the burden of proving the correctness of the return of income, which the assessee-respondent had filed, on the Revenue; whereas it was for the assessee to show, by-placing all materials including the profits of the two companies aforementioned, that, if not arithmetically, there was, at least, reasonable possibility of the value of shares having risen as high as had been shown by the assessee-respondent in her annual return of income. 12. Situated thus, we are clearly of the view that the impugned order suffers from non-application of mind and, therefore, the same needs to be set aside and the appeal, which had been filed before the learned Tribunal, needs to be remanded for being decided in accordance with law. 13. In the result and for the reason discussed above, this appeal partly succeeds. The impugned order, dated 14.03.2008, passed by the learned Tribunal is hereby set aside and the proceeding is remanded to the learned Tribunal for its decision in accordance with law. 14. Before parting with this appeal, we, however, make it clear that the observations, which we have made, while disposing of this appeal, are our views on the basis of the materials, on record, placed before us and, hence, it would remain open to the learned Tribunal to complete the proceeding depending upon the material or materials, which may be placed before the learned Tribunal at the time of re-hearing of the appeal. With the above observations and directions, this appeal shall stand disposed of.