It Is Submitted By The Learned Counsel On Either Sidethat The Assessee Has Already Availed The Benefit Of Vivad Sevishwas Scheme By Filing The Declaration/ Unde v. Https://Hcservices.ecourts.gov.in/Hcservices

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.01.2021 CORAM : The Honourable Mr.Justice T.S.SIVAGNANAMandThe Honourable Ms.Justice R.N.MANJULA The Principal Commissioner of Income Tax,Chennai. ...Appellant/RespondentVs Smt.Rakhee JainNo.35, Perumal Mudali Street,Sowcarpet, Chennai - 600070.PAN: ...Respondent/ Appellant APPEAL under Section 260A of the Income Tax Act, 1961 againstthe order dated 04.03.2020 made in ITA.No.1375/Chny/2019 on thefile of the Income Tax Appellate Tribunal, Madras "A" Bench,Chennai for the assessment year 2014-15 against the order of theCommissioner of Income Tax (Appesls)-5, dated 26/03/2019 in ITANO.224/CIT(A)-5/2016-17 for the assessment year 2014-15 againstthe order of the Income Tax Department, office of the AssistantCommissioner of Income Tax, Non corporate circle -17(1) Chennai-6, dated 23.12.2016 in PAN/GIR NO. . For Appellant: Mrs.R.Hemalatha Senior Standing CounselFor Respondent: Mr.A.S.Sriraman JUDGMENT (Delivered by T.S.Sivagnanam,J) This appeal, filed by the Revenue under Section 260A of theIncome Tax Act, 1961 ('the Act' for brevity), is directedagainst the order dated 04.03.2020 passed by the Income TaxAppellate Tribunal, Chennai "A" Bench ('the Tribunal' forbrevity) in ITA.No.1375/Chny/2019 for the assessment year 2014-15. 2. The Revenue has raised the following substantialquestions of law for consideration:“1. Whether on the facts and in thecircumstances of the case, the Tribunal wasright in setting aside the well reasoned https://hcservices.ecourts.gov.in/hcservices/ order passed by the Assessing Officer forre-examination,especiallywhentheassessing officer had duly examined all thematerial placed while passing the assessmentorder? 2. Whether on the facts and in thecircumstances of the case, the Tribunal wasright in remitting the issue back to thefile of the Assessing Officer by quoting thedecision in the case of Kanhaiyal and Sons(HUF) in ITA No 1849/Chny/2014 Sunil kumarLalwani and that Aashesh Kumar Lalwaniwherein the onus has been shifted to therevenue with a direction that the AssessingOfficer is to bring on record the role ofthe Assessee in promoting the Company andthe relation of the Assessee if any withthat of the promoters and role of inflatingof prices etc which exercise had alreadybeen done by the AO and the SEBI? 3. Is not the finding of the Tribunalperverse especially when the decision of theTribunal is contrary to the time testedPrincipal that the person who asserts a facthas to discharge the initial burden caseupon him to show that the said facts aretrue and only thereafter the burden wouldshift to the department?" 3. We have heard Mrs.R.Hemalatha, learned Senior StandingCounsel appearing for the appellant-Revenue and Mr.A.S.Sriraman,learned counsel for the respondent. 4. It is submitted by the learned counsel on either sidethat the assessee has already availed the benefit of Vivad SeVishwas Scheme by filing the declaration/ undertaking and isawaiting orders to be passed in Form No.3. 5. In the light of the above, there may not be any necessityto answer the substantial questions of law, which have beenraised before us. Nevertheless, we wish to point that identicalquestions were answered in favour of the Revenue in TCA.No.223of 2020 dated 16.12.2020 in the case of Commissioner of IncomeTax vs Manish D.Jain (HUF) reported in [2020] 122 taxmann.com180 (Madras). We wish to refer to the relevant paragraphs of thejudgment, so that the Assessing Officer is aware of the legalposition and the findings rendered by this Court in the saiddecision, which is identical to the case on hand. https://hcservices.ecourts.gov.in/hcservices/ 5. In the light of the above, there may not be any necessityto answer the substantial questions of law, which have beenraised before us. Nevertheless, we wish to point that identicalquestions were answered in favour of the Revenue in TCA.No.223of 2020 dated 16.12.2020 in the case of Commissioner of IncomeTax vs Manish D.Jain (HUF) reported in [2020] 122 taxmann.com180 (Madras). We wish to refer to the relevant paragraphs of thejudgment, so that the Assessing Officer is aware of the legalposition and the findings rendered by this Court in the saiddecision, which is identical to the case on hand. https://hcservices.ecourts.gov.in/hcservices/ decision of the Hon'ble Supreme Court in thecase of NRA Iron & Steel Private Ltd., in mind,if we examine the order passed by the AssessingOfficer, we find that a detailed enquiry hadbeen conducted by the Assessing Officer afteraffording an opportunity to the assessee. Theassessee availed the opportunity through writtensubmissions. The assessee was represented by anauthorized representative and thereafter afinding had been rendered. The said finding wastested for its correctness by the CIT(A), whoapproved the same by order dated 07.8.2018. 25. We refer to the following factual findingsrendered by the CIT(A) while dismissing theappeal filed by the assessee :“2.1. .......In response to notices, the ARof the assessee Shri Omprakash Jain, B.Com, FCAof Om Jain & Associates, Chartered Accountantsappeared and filed the details of purchase of450 shares of M/s.Dhanlabh Merchandise Limited,later it was merged with M/s.Bakra PratisthanLimited and 450 shares converted into 4500shares. In this connection, the AR furnished thecopy of sale bill dated 15.1.2010 ofM/s.Excellent Barter Private Limited of ShaymNagar WB 743127 wherein it is noticed that theassessee has purchased 450 shares of DhanlabhMerchandise Limited @ Rs.200 each per share fora consideration of Rs.90,000/-. But the billdoes not contain any distinctive numbers and itwas stated 'as per Demat form'. The AR of theassessee also furnished the copy of transactionreport from Motilal Oswal Securities asdocumentary evidence for purchase of theseshares and later converted into M/s.BakraPratisthan Limited on 28.12.2011. ..... 2.2........On the perusal of the same, itis noticed that the closing balance as on02.3.2010 was Rs.5,607/-. On 03.3.2010, therewas a credit entry of Rs.90,000/- and a debitentry with narration 'manual chg' Rs.90,000/-.As per the narration of the bankers, it ismanual cheque only and the same was passed inclearing on the same day by Calcutta basecompany. It is not at all possible. .... 2.3. As it was held by the assessee the shares of M/s.Dhanlabh Merchandise Limited waspurchased from M/s.Excellent Barter Pvt. Ltd. OfShaym Nagar WB 743127, a communication dated28.9.2017 was sent to M/s.Excellent BatterPrivate Limited calling for the followingdetails under Section 133(6) of the I.T. Act1961. By the examination of the details and thesame was returned unserved by the postalauthorities with remarks 'not known'. ...... Besides the above, the AR of the assesseehas not furnished any documentary evidences withrespect to the sale of shares of M/s.BakraPratisthan Limited. Instead, he furnished thebank account copy wherein on 03.1.2012, anamount of Rs.9,50,714/- was credited in the bankwith description 'RTGS-INWFIX- FIT SECURITIES'.Considering the abovefact, it is concluded as under : shares of M/s.Dhanlabh Merchandise Limited waspurchased from M/s.Excellent Barter Pvt. Ltd. OfShaym Nagar WB 743127, a communication dated28.9.2017 was sent to M/s.Excellent BatterPrivate Limited calling for the followingdetails under Section 133(6) of the I.T. Act1961. By the examination of the details and thesame was returned unserved by the postalauthorities with remarks 'not known'. ...... Besides the above, the AR of the assesseehas not furnished any documentary evidences withrespect to the sale of shares of M/s.BakraPratisthan Limited. Instead, he furnished thebank account copy wherein on 03.1.2012, anamount of Rs.9,50,714/- was credited in the bankwith description 'RTGS-INWFIX- FIT SECURITIES'.Considering the abovefact, it is concluded as under : 2.4. The purchase of 450 shares ofM/s.Dhanlabh Merchandise Limited is itself asham transaction for the following reasons:1. Based on the details filed by the AR ofthe assessee and the address was provided theassessee the communication sent by this officeto M/s.Excellent Batters Private Limited.2. The postal remarks is 'not known' only.The postal authorities did not mention that theperson left or something else. The word 'notknown' means that the address itself bogus orincorrect one.3. Accordingly, it is established thatthere is no such person in that address havingname M/s.Excellent Batters Private Limited.4. It is onus on the part of the assesseeto prove the genuineness of the transaction.5. It is also noticed that the documentaryevidence filed by the assessee towards paymentmade for purchase of shares also not related tothis transaction. 6. In the absence of the distinctive nos.,in the sale bill dated 25.1.2010 ofM/s.Excellent Batters Pvt. Ltd., and hence, itis not known that to whom the shares wereoriginally allotted and how the same wassubsequently transferred to the assessee forthat there is no documentary evidence produced.The assessee HUF not furnished the copy of nametransfer application also. 7. It is also noticed from the AR of the assessee's submission dated 15.11.2017 thatM/s.Excellent Batters P. Ltd., is a shareholderof M/s.Dhanlabh Merchandise Ltd., but there isno documentary evidence was filed by him. 8. As the assessee HUF itself has statedthat the HUF is doing commodities trading, whyoff market transaction for purchase of sharesnot reported to BSE. Considering the above factfindings, it is established that the purchase of450 shares of M/s.Dhanlabh Merchandise Limitedfrom M/s. Excellent Barter Private Limited bythe assessee is itself a sham transaction.Accordingly, the documentary evidence furnishedby the assessee towards purchase of shares of4500 M/s.Bakra Pratisthan Limited is not agenuine one and hence, the claim of exemptionunder Section 10(38) towards selling of the sameis not entertained. .... convert their black money into white. It is asham transaction only. .... 9. Considering the above factual positionas also the legal position, it is held that theassessee has entered into an engineeredtransaction to generate artificial long termcapital gains. As the explanation furnished bythe assessee regarding the credits ofRs.15,86,250/- in its books is found to beunsatisfactory, the same are hereby held as'unexplained cash credits' in the books of theassessee and accordingly added to the totalincome of the assessee in accordance with theprovisions of Section 68 of the IT Act, 1961 andassessed under the head 'income from othersources' Penalty proceedings under Section 271(1)(c) read with Explanation 1 thereto areseparately initiated for furnishing theinaccurate particulars of income with respect tothe claim of capital gain made in the light ofthe findings made in the preceding paragraphs....... 7.3.......However, in the present appeal,the appellant purchased the shares of M/s.BakraPratisthan Limited in off market. During thecourse of the hearing on 24.7.2018, the ARadmitted that the assessee purchased the sharesof M/s.Dhanlab Merchandise Limited in offmarket...... 7.4. These shares were purchased throughoff market and not through Stock Exchange.The notice under Section 133(6) dated28.9.2017 sent by the Assessing Officer toM/s.Excellent Barter Private Limited from whichthe assessee had purchased the shares ofM/s.Dhanlab Merchandise Limited was returnedunserved with remark 'not known'. Moreover, the assessee did not bring anyother material on record to establish thegenuineness of the purchase of shares.M/s.Bakra Pratisthan Limited did not paydividend or did not issue bonus shares duringthe period of holding of these shares by theassessee corresponding to the increase in theprice of the share of M/s.Bakra PratisthanLimited. During this period, there has been nocorporate announcement by M/s.Bakra PratisthanLimited which suggests that the company is undertakinganysubstantialdevelopmentactivity.The above facts were not disputed by theappellant.These facts clearly establish that theshare prices of M/s.Bakra Pratisthan Limitedwere artificially hiked...... 7.6. In the present case also, the shareswere purchased through off market and notthrough Stock Exchange and selling rates wereartificially hiked later on.” 26. The above findings will clearly show thatnot only the Assessing Officer, but also the CIT(A) examined the modus operandi of the assesseeand held that the shares were purchased throughoff market and not through Stock Exchange andthat the selling rates were artificially hikedlater on. The above findings have not been setaside by the Tribunal and there is no reason forthe Tribunal to remand the matter to theAssessing Officer for a fresh consideration. 27. As pointed out in the decision of this Courtin the case of Cholamandalam MS GeneralInsurance Co., we find in the instant case thatthere was no material, which necessitated theremand of the case to the Assessing Officer andit is a clear case where the Tribunal had failedto exercise its jurisdiction in the manner knownto law. The Tribunal, being a last fact findingAuthority, is under the legal obligation torecord a correct finding of fact. It has beenheld in thecases of (i) M.R.M.Periyannan Chettiar Vs. CIT [reportedin (1960) 39 ITR 159 (Madras)] (ii) V.Ramaswamy Iyengar Vs. CIT [reported in(1960) 40 ITR 377 (Madras)] (iii) Hindustan Sanitary Ware and IndustriesLtd. Vs. CIT [reported in (1978) 114 ITR 85(Calcutta)](iv) CIT Vs. Ishwardass [reported in (1986) 158ITR 168 (Delhi)] and (v) CIT Vs. Harikishan Jethalal Patel [reportedin (1987) 168 ITR 472 (Gujarat)]that the power to remand the case should beexercised on judicial principles. 28. Further, in the decisions in the cases of(i) United Commercial Bank Vs. CIT [reported in(1982) 137 ITR 434 (Calcutta)](ii) Darjeeling Dooars Plantations Vs. CIT[reported in (1988) 174 ITR 37 (Calcutta)] and(iii) Siemens India Ltd. Vs. CIT [reported in(1997) 226 ITR 801 (Bombay)],it was held that where all the evidence had beenproduced and the CIT(A), after fullinvestigation of the evidence and examination ofthe accounts, had given a definite finding onthe question in issue, the Tribunal's order ofremand was held to be invalid. 29. Further, in the recent decision of theHon'ble Division Bench of this Court in the caseof Tharakumari Vs. ITO [TCA.No.128 of 2019 dated11.2.2019], the appeal filed by the assessee ina case relating to penny stock was dismissedafter noting the factual findings rendered bythe Assessing Officer, the CIT(A) and theTribunal. Thus, for all the above reasons, wehold that the order passed by the Tribunal callsfor interference. 29. Further, in the recent decision of theHon'ble Division Bench of this Court in the caseof Tharakumari Vs. ITO [TCA.No.128 of 2019 dated11.2.2019], the appeal filed by the assessee ina case relating to penny stock was dismissedafter noting the factual findings rendered bythe Assessing Officer, the CIT(A) and theTribunal. Thus, for all the above reasons, wehold that the order passed by the Tribunal callsfor interference. 30. In the result, the above tax case appeal isallowed, the impugned order passed by theTribunal is set aside and the substantialquestions of law framed are answered in favourof the Revenue and against the assessee.Consequently, the order passed by the CIT(A)stands restored." 6. As mentioned above, since the assessee has alreadyavailed the benefit of the scheme and filed a declaration, theCompetent Authority shall process the application/declaration inaccordance with the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3of 2020) and pass appropriate orders as expeditiously aspossible. The assessee is given liberty to restore this appealin the event the ultimate decision to be taken on thedeclaration filed by the assessee under Section 4 of the saidAct is not in favour of the assessee. If such a prayer is made,the Registry shall entertain the prayer without insisting uponany application to be filed for condonation of delay inrestoration of the appeal and on such request made by theassessee by filing a miscellaneous petition for restoration, theRegistry shall place such petition before the appropriateDivision Bench for orders. https://hcservices.ecourts.gov.in/hcservices/ aforementioned liberty and consequently, the substantialquestions of law framed are left open. No costs. Sd/- Assistant Registrar(CS III) //True Copy// hvk/cseTo Sub Assistant Registrar 1. The Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai.2. The Principal Commissioner of Income Tax, Chennai.3. The Commissioner of Income Tax Appeals-5, Chennai.4. The Assistant Commissioner of Income Tax, Non-corporate circle-17(1), Chennai.5. The Section Officer, Judicial Department, High Court, Madras-104.TCA.No.490 of 2020ssd(CO)rv(04/02/2021)