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Nikunj J. Shah, 1683/16-A, Kinjalk Apartment, Dr. Ambedkar Road, Mulund (W), Mumbai 80 Vs. The ITO 10(3) (2), Room No.259, 4th Floor, Aaykar Bhavan, Mumbai 400 020
August, 04th 2015
                          ,                
               IN THE INCOME TAX APPELLATE TRIBUNAL
                     MUMBAI BENCHES `B' MUMBAI
                   è    [, Û è
           [ .. Û,

          BEFORE SHRI    G.S.PANNU, ACCOUNTANT MEMBER AND

                SHRI SANJAY GARG, JUDICIAL MEMBER
                   . / ITA No.6545/MUM/2011
                   [ [ /Assessment         Year 2005-06
     Nikunj J. Shah,         /             The ITO 10(3) (2),
     1683/16-A, Kinjalk                    Room No.259, 4th Floor,
                              Vs.
     Apartment, Dr. Ambedkar               Aaykar Bhavan,
     Road, Mulund (W),                     Mumbai 400 020
     Mumbai ­ 80

     è    . /   . / PAN/GIR No. : AAVPS 0118E
      ( /Appellant)     ..        (× / Respondent)

      Appellant by           Dr. K.Shivram / Ms.Neelm C.
                             Jadhav
      Respondent by          Dr. Yogesh Kamat
                / Da te o f Hearing       : 2/06/2015
              /Date of Pronouncement : 31/07/2015

                                   / O R D E R

PER G.S.PANNU, A.M:

      The present appeal is preferred by the assessee and is directed against
the impugned   appellate order    dated 16/08/2011 passed by Ld. CIT(A)-22,
Mumbai pertaining to the assessment year 2005-06, with reference to the
assessment order dated 28/12/2007 passed in terms of section 143(3) of the
Income Tax Act, 1961(the Act).


2.    In this appeal although assessee has raised multiple grounds of appeal
but the   solitary grievance is with respect to the action of the income tax
authorities in treating the income declared by the assessee on sale      and
                                        2             . / ITA No.6545/MUM/2011
                                                        [ [ /Assessment Year 2005-06


purchase of shares of Robinson Worldwide Trade Ltd.[formerly            known as
Robinson Impex (India) Ltd.] as an income assessable under the head `income
from other sources' as against assessee's stand of the same being assessable
as long term capital gain.


3.    In brief, the relevant facts are that the appellant is an individual, who
filed his return   of income   for A.Y 2005-06 on 24/3/2006 declaring total
income of Rs.4,68,678/- which, inter-alia,       included incomes by way of
salaries, capital gain and income from other sources.          In the course of
assessment proceedings, the AO noticed that assessee had made investment in
NABARD bonds to the tune of Rs.12.00 lacs and claimed exemption under
section 54EC of the Act in respect of long term capital gain earned in respect of
the sale of shares of Robinson Worldwide Trade Ltd. The AO noticed that
assessee had purchased 11,500 shares of Robinson Worldwide Trade Ltd. @
1.30 per   share for a total consideration of   Rs.15,191.99 and had sold the
same for a consideration of Rs..11,29,475/-.    The AO carried out a verification
exercise and concluded that the purported purchase of 11500 shares of
Robinson Worldwide Trade Ltd. was nothing but a sham transaction.
Accordingly, the AO treated the consideration received on the sale of 11500
shares of Robinson Impex Ltd. of Rs.11,29,475/- as income from undisclosed
sources.   This resulted in assessment of Rs.11,29,475/- as an income under
the head income from other sources and consequently the exemption claimed
under section 54 EC of the Act with respect to the investments in NABARD
bonds was disallowed as the assessee did not have any income under the head
capital gains. The aforesaid stand of the AO has since been affirmed by Ld.
CIT(A). In this background, the assessee is in further appeal before us.





4.    At the time of hearing, the Ld. Representative of the assessee pointed out
that an    identical controversy in the case of Jagdish H. Shah has been
considered by the Tribunal vide     order in    ITA No.6557/Mum/2011 dated
                                       3             . / ITA No.6545/MUM/2011
                                                       [ [ /Assessment Year 2005-06


5/9/2012 for assessment year 2005-06, whereby the income earned on sale of
the shares of Robinson Impex Ltd. has been accepted as an income assessable
under the head long term capital gain. Ld. AR also filed a tabulation showing
similarity of facts between the case of the assessee and that of Jagdish H.
Shah(supra). The tabulation furnished by the assessee depicts the similarity
in scrip involved, assessment year involved, the broker involved, enquiries by
AO from BSE, etc.     Apart therefrom, it has also been pointed out that the
same AO as well as the same CIT(A) have rendered the decisions on the same
dates in the case of Jagdish H. Shah (supra) as well as the assessee.       Under
these circumstances, it has been pointed out that the impugned orders of the
lower authorities are unsustainable and that income from sale of the shares of
Robinson Impex Ltd. be accepted as long term capital gain as returned by the
assessee.


5.    The Ld. DR appearing for the Revenue has not controverted the factual
matrix brought out by Ld. Representative of the assessee.


6.    Having perused the orders of the authorities below as well as the
submissions put forth before us, it is evident that similar controversy has been
considered by our Co-ordinate Bench in the case of Jagdish H. Shah (supra).
The Ld. Representative of the assessee has also placed on record copies of the
assessment order as well as order of CIT(A) in the case of Jagdish H.
Shah(supra) which     reveal that the discussion contained therein is almost
similar to the discussion in the impugned     orders before us.    The enquiries
made by the AO in case of Jadish H. Shah (supra)         are on similar lines to
those made in the case before us. In the case of the assessee as well as in the
case of Jagdish H. Shah(supra) the shares were purchased from the same
broker namely DPS Shares and Securities Pvt. Ltd. It is also emerging that the
AO carried out a verification exercise which involved recording of statement of
one Shri Raj Kumar Masalia, Principal Officer of DPS Shares & Securities Ltd.;
                                          4               . / ITA No.6545/MUM/2011
                                                           [ [ /Assessment Year 2005-06


similar action was taken in the case of Jagdish H. Shah (supra) also. Be that
as it may,    it is quite clear that the stand of the Revenue as well as the
assessee in the present case is on similar footing to their respective stands in
the case of     Jagdish H. Shah (supra).         Having regard to the aforesaid
similarities, which are not controverted by the Revenue, we deem it fit and
proper to rely upon the reasoning taken by the Co-ordinate Bench in the case
of Jagdish H. Shah(supra) and hold that the income tax authorities have erred
in treating the sale consideration on the sale of shares of Robinson Worldwide
Trade Ltd. as an income from undisclosed sources. Nevertheless in order to
impart completeness to this order, we deem it fit and proper to reproduce
hereafter the relevant portion of the order        of the Tribunal in the case of
Jagdish H. Shah(supra), which is as under:
      "11. We have heard the rival contentions and perused the orders of the
      Authorities and also the Paper Book submitted by the assessee. It is not in
      dispute that the shares were purchased in physical form in            off market
      transaction. It is also not in dispute that the shares were subsequently de-
      matted and the sales have taken place out of the DMAT A/c. The only dispute
      relates to the genuineness of the purchases' as doubted by the Lower Authorities.
      We find that the purchases. are supported by purchase bills issued by M/ s. DPS
      Shares ~ Securities Pvt. Ltd., exhibited at Pages 28 to 32 of the Paper Book. We
      also find that the shares so purchased were transferred to DMAT A/c with HDFC
      Bank. Cop,!! of which is exhibited at Page No. 34 of the Paper Book. We have also
      considered the letter of the Director of M/s. DPS Shares & Securities Pvt. Ltd.,
      addressed to the AO by which the. Director has confianed 'the off-market
      transaction in physical mode of shares of the 11,500 shares of M/s.Robinson
      Impex (India) Ltd (Robinson Worldwide Trade Ltd.,). We have also considered the
      retraction letter of Shri Rajkumar Masalia addressed to the AO by which he
      accepted that he. was not aware of the transaction and he has stated wrong
      facts during the course of his statement recorded by the A.O.

      12. We find that during the course of the appellate proceedings, the CIT(A) has
      called for a Remand Report from the AO relating to the purchase of 11500 shares
      of M/s. Robinson Worldwide Trade Ltd., (formerly known as robinson Impex
      (India) Ltd.]. We have perused the Remand Report of ITO 10(3)(2) Mumbai dt.
      11.4.2011. In his Remand Report, the AO states that an opportunity of cross-
      examination of Shri Rajkumar Masalia was given to the assessee on 18-02-2009,
      29-04-2009 and 09-11-2009. However, despite of giving aforesaid opportunities,
      Shri Rajkumar Masalia did not attend though assessee's representative attended
      on all of above dates and whose attendance was duly recorded on the
      attendance Sheet. In his Remand Report, the AO further states that the said
      shares of M/s. Robinson Worldwise Trade Ltd. (formerly known as Robinson
      Impex (India) Ltd.] were purchased on 05-04-2003 for a consideration of
                                           5              . / ITA No.6545/MUM/2011
                                                            [ [ /Assessment Year 2005-06

      Rs.15191.99 from M/s. DPS Shares and Securities Pvt. Ltd. As per record of the
      said company, the shares were endorsed in favour of the assessee on 30-04-
      2003 in physical format only. The AO further states that as per investigation
      made, these shares were sent for dematerialization to HDFC Bank on 03-05-2004
      and were converted into De-mat form on 22-05-2004. In his Remand Report, the
      AO has further confirmed the sale transaction made through broker, M/s.
      Ajmeera Associates Pvt. Ltd.

      13. After considering all the above stated facts in totality, we do not find any
      reason or logic in treating the purchase of 11,500 shares as bogus. The Lower
      Authorities could have directly verified the transaction from the company itself,
      whose shares were questioned to be bogus but both the Lower Authorities did
      not do this exercise. The Remand Report of the AO itself show that the
      transactions have been treated as genuine subsequently by the AO himself while
      sending the Remand Report to the CIT(A). We find that the sale transaction of
      11,500 shares of M/s.Robinson Impex (India) Ltd. (Robinson Worldwide Trade
      Ltd.) has been doubted or question by the Lower authorities. A simple logical
      question arises if the shares were never purchased, how can they be sold
      subsequently?

      14.   After considering all the facts and submissions, we find that both the
      Lower Authorities have grossly erred in treating the sale consideration as `Income
      from undisclosed sources.'

      15. We, therefore, reverse ht finding of Lower Authorities and direct the AO to
      accept the Long Term Capital Gains as returned by the assessee."





6.1   Following the aforesaid precedent we hereby allow the appeal of the
assessee, and direct the AO to accept the long term capital gain as returned by
the assessee.
7.    In the result, the appeal filed by the assessee is allowed.


      Order pronounced in the open court on 31/7/2015
           Û   31/07/2015                            

                  Sd/-                                      Sd/-
(  [ / SANJAY GARG)                      (.. Û / G.S.PANNU)
Û è / JUDICIAL MEMBER                           è / ACCOUNTANT MEMBER
 Mumbai;          Dated 31/07/2015
                           6         . / ITA No.6545/MUM/2011
                                        [ [ /Assessment Year 2005-06




    /Copy of the Order forwarded to :
1.    / The Appellant
2.   × / The Respondent.
3.    È() / The CIT(A)-
4.    È / CIT
5.    ,   ,  / DR, ITAT,
     Mumbai
6.   [  / Guard file.


                                            / BY ORDER,
×  //True Copy//
                           /            (Dy./Asstt. Registrar)
                             ,  / ITAT, Mumbai
.../Vm, Sr. PS

 
 
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