1/9 itxa-1568-12.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1568 OF 2012 WITH INCOME TAX APPEAL NO.1569 OF 2012 WITH INCOME TAX APPEAL NO.1570 OF 2012 WITH INCOME TAX APPEAL NO.1571 OF 2012 Commissioner of Income Tax-13 Appellant v/s. Mr.Shyam R. Pawar Respondent Mr.Suresh Kumar for Appellant. Mr.K.Gopal with Ms.Neha Paranjape i/b Jitendra Singh for Respondent. CORAM : S.C.DHARMADHIKARI & A.A. SAYED, JJ. DATED : 10 DECEMBER 2014 P.C. We have heard Mr.Sureshkumar appearing on behalf o Revenue in all these Appeals. Mr.Sureshkumar submits that Tribunal s order and impugned in these Appeals dated 4 May 2012 for Assessment Years 2003-04 to 2006-07 raises following substantial questions of law: (1) Whether on facts and in circumstances of case and in law, ITAT is correct in deleting addition confirmed by CIT (A) under section 68 of IT Act 1961? Uday Kambli 1/9 ::: Uploaded on - 17/12/2014 ::: Downloaded on - 04/03/2019 16:13:42 ::: 2/9 itxa-1568-12.doc (2) Whether on facts and circumstances of case and in law, finding recorded by Tribunal contrary to record and thus perverse? Additional question in Income Tax Appeal No.1568 of 2012 (3) Whether on facts and circumstances of case and in law Tribunal is correct in law in deleting disallowance of claim of loss of Rs.5,95,720/- incurred on sale of share capital market Ltd.? 2. Mr.Sureshkumar would submit that Tribunal seriously erred and in law in reversing finding of fact by Commissioner and Assessing Officer. That was based on report of Investigation Branch of Department, Bhuvaneshwar. That revealed and as Commissioner noted that there was erroneous client head mentioned. That would prove that Department did not proceed merely on suspicion but on cogent and satisfactory evidence with it. Tribunal should not have reversed this concurrent finding and by relying upon some of conclusions in report. Tribunal should have adverted to this specific finding of Commissioner. In para 21 of Commissioner s order, in Appeal pertaining to 2003-04, he has observed that Department is having material to show that Uday Kambli 2/9 ::: Uploaded on - 17/12/2014 ::: Downloaded on - 04/03/2019 16:13:42 ::: 3/9 itxa-1568-12.doc Directors of company namely Bolton Properties Ltd. have manipulated share price of Bolton Properties Ltd. Investigating Wing has revealed in its report as to how there were two operators namely Mr.Sushil Purohit and Shri Jagdish Purohit and one of them was Director of this Company. Mr.Jagdish reportedly floated several investment companies which were aggressively used in entire deal with broker M/s.Prakash Nahata & Co. shares offloaded by beneficiaries through M/s.Prakash Nahata & Co. were ultimately purchased by investment companies controlled by Shri Purohit, and some of such companies have been enlisted. name of Assessee Mr.Shyam Pawar figured during course of investigation. Commissioner has observed that Assessee is not new to shares dealing. He is purchasing and selling shares through broker in Mumbai. For impugned penny stock, he has transacted through broker at Calcutta, which itself raises doubt about genuineness of transaction. entities/ companies, whose shares were traded on exchange namely M/s.Bolton Properties Ltd., Prime Capital and M/s.Mantra were not having sufficient business activities justifying increase in their shares prices. Commissioner, therefore, concluded that certain operators and brokers devised scheme to convert Uday Kambli 3/9 ::: Uploaded on - 17/12/2014 ::: Downloaded on - 04/03/2019 16:13:42 ::: 4/9 itxa-1568-12.doc unaccounted money of Assessee to accounted income and Assessee utilized this scheme. Therefore, claim that Assessee earned capital gain was disallowed and addition of Rs.25,93,150/- made under section 68 of IT Act was upheld. 3. Mr.Sureshkumar seriously complained that such finding rendered concurrently should not have been interfered with by Tribunal. In further Appeal, Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by Assessing Officer and Commissioner are perverse. Tribunal proceeded on footing that onus was on Department to nail Assessee through proper evidence and that there was some cash transaction through these suspected brokers, on whom there was investigation conducted by Department. Once onus on Department was discharged, according to Mr.Sureshkumr, by Revenue-Department, then, such finding by Tribunal raises substantial question of law. Appeal, therefore, be admitted. Uday Kambli 4/9 ::: Uploaded on - 17/12/2014 ::: Downloaded on - 04/03/2019 16:13:42 ::: 5/9 itxa-1568-12.doc 4. Mr.Gopal, learned Counsel appearing on behalf of Assessee in each of these Appeals, invites our attention to finding of Tribunal. He submits that if this was nothing but accommodation of cash or conversion of unaccounted money into accounted one, then, evidence should have been complete. Change of circumstances ought to have, after result of investigation, connected Assessee in some way or either with these brokers and persons floating two companies. It is only, after Assessee who is supposed to dealing in shares and producing all details including DMAT account, Exchange at Calcutta confirming transaction, that Appeal of Assessee has been rightly allowed. Tribunal has not merely interfered with concurrent orders because another view was possible. It interfered because it was required to interfere with them as Commissioner and Assessing Officer failed to note some relevant and germane material. In these circumstances, he submits that Appeals do not raise any substantial question of law and deserve to be dismissed. Uday Kambli 5/9 ::: Uploaded on - 17/12/2014 ::: Downloaded on - 04/03/2019 16:13:43 ::: 6/9 itxa-1568-12.doc 5. We have perused concurrent findings and on which heavy reliance is placed by Mr.Sureshkumar. While it is true that Commissioner extensively referred to correspondence and contents of report of Investigation carried out in paras 20, 20.1, 20.2 and 21 of his order, what was important and vital for purpose of present case was whether transactions in shares were genuine or sham and bogus. If purchase and sale of shares are reflected in Assessee s DMAT account, yet they are termed as arranged transactions and projected to be real, then, such conclusion which has been reached by Commissioner and Assessing Officer required deeper scrutiny. It was also revealed during course of inquiry by Assessing Officer that Calcutta Stock Exchange records showed that shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt.Ltd. is listed in appraisal report and it is stated to be involved in modus-operandi. It is on this material that he holds that transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee s role in all this, all that Commissioner observed is that Assessee transacted through brokers at Calcutta, which itself raises doubt Uday Kambli 6/9 ::: Uploaded on - 17/12/2014 ::: Downloaded on - 04/03/2019 16:13:43 ::: 7/9 itxa-1568-12.doc about genuineness of transactions and financial result and performance of Company was not such as would justify increase in share prices. Therefore, he reached conclusion that certain operators and brokers devised scheme to convert unaccounted money of Assessee to accounted income and present Assessee utilized scheme. 6. It is in that regard that we find that Mr.Gopal s contentions are well founded. Tribunal concluded that there was something more which was required, which would connect present Assessee to transactions and which are attributed to Promoters/Directors of two companies. Tribunal referred to entire material and found that investigation stopped at particular point and was not carried forward by Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by Assessee during month of January 2003 and he continued to hold them till 31 March 2003. present case related to 20,000 shares of Mantra Online Ltd for total consideration of Rs.25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and sums received by cheques have been referred extensively by Tribunal in para 10. Uday Kambli 7/9 ::: Uploaded on - 17/12/2014 ::: Downloaded on - 04/03/2019 16:13:43 ::: 8/9 itxa-1568-12.doc copy of DMAT account, placed at pages 36 & 37 of Appeal Paper Book before Tribunal showed credit of share transaction. contract notes in Form-A with two brokers were available and which gave details of transactions. contract note is system generated and prescribed by Stock Exchange. From this material, in para 11 Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. discrepancy pointed out by Calcutta Stock Exchange regarding client Code has been referred to. But Tribunal concluded that itself is not enough to prove that transactions in impugned shares were bogus/sham. details received from Stock Exchange have been relied upon and for purposes of faulting Revenue in failing to discharge basic onus. If Tribunal proceeds on this line and concluded that inquiry was not carried forward and with view to discharge initial or basic onus, then such conclusion of Tribunal cannot be termed as perverse. conclusions as recorded in para 12 of Tribunal s order are not vitiated by any error of law apparent on face of record either. Uday Kambli 8/9 ::: Uploaded on - 17/12/2014 ::: Downloaded on - 04/03/2019 16:13:43 ::: 9/9 itxa-1568-12.doc 7. As result of above discussion, we do not find any substance in contention of Mr.Sureshkumar that Tribunal misdirected itself and in law. We hold that Appeals do not raise any substantial question of law. They are accordingly dismissed. There would no order as to costs. 8. Even additional question cannot be said to be substantial question of law, because it arises in context of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. relevant details pertaining to shares were already on record. This question is also fall out of issue or question dealt with by Tribunal and pertaining to addition of Rs.25,93,150/-. Barring figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For same reasons, even this additional question cannot be termed as substantial question of law. (A.A. SAYED, J.) (S.C.DHARMADHIKARI,J.) Uday Kambli 9/9 ::: Uploaded on - 17/12/2014 ::: Downloaded on - 04/03/2019 16:13:43 ::: Commissioner of Income-tax-13 v. Shyam R. Pawar