Ita/104/2018 Of Principal Commissioner Of Income Tax 1 v. Shri Ramesh Chandra Agarwal

1 IN THE HIGH COURT OF MADHYA PRADESHAT JABALPURBEFORE HON'BLE SHRI JUSTICE SHEEL NAGU & HON'BLE SHRI JUSTICE AMAR NATH (KESHARWANI)ON THE 18[th] OF AUGUST, 2023 INCOME TAX APPEAL No. 104 of 2018 BETWEEN:- PRINCIPAL, COMMISSIONER OF INCOME TAX-1,BHOPAL (M.P.) (BY SHRI SIDDHARTH SHARMA - ADVOCATE ) .....APPELLANT AND SHRI RAMESH CHANDRA AGARWAL THROUGH L/HSHRI GIRISH AGARWAL, E-1/79, ARERA COLONY, BHOPAL (M.P.) .....RESPONDENT (BY SHRI SUMIT NEMA - SENIOR ADVOCATE WITH SHRI AYUSH GUPTA -ADVOCATE) This appeal coming on for admission this day, JUSTICE SHEEL NAGU passed the following: ORDER The instant appeal preferred by the Revenue u/S.260-A of the IncomeTax Act, 1961 (for short 'IT Act') in respect of assessment year 2008-09questions the legality, validity and proprietary of the final order dated31.01.2018 passed by the Income Tax Appellate Tribunal Indore Bench, Indorein ITA No.394/Ind/2013 contained in Annexure A/3 whereby the Tribunaldismissed the appeal of Revenue upholding the order of Commissioner ofIncome Tax (Appeals)- I, Bhopal (in short 'CIT(A)') passed on 26.03.2013 deleting the additions made by the Assessing Officer of Rs.5,80,51,000/- andRs.6,93,51,178/- on account of cheating the sale consideration and incomefrom other sources and Long Term Capital Gain treated as income from othersources. 2. Learned counsel for the Revenue has proposed the following substantialquestions of law : "1. Whether, on the facts and in the circumstances of thecase and in law, the ITAT was justified in holding thetransactions of sale of unlisted shares at exorbitant premium asgenuine, without any inquiry & finding in the appellate order? 2. That the order of ITAT is erroneous both in law and facts." 3. Testing the impugned order of the Tribunal on the anvil of the aforesaidproposed substantial questions of law, this Court finds that in respect of twoadditions made by the Assessing Officer, the CIT(A) passed a detailed ordergiving specific reason for upturning the finding of the Assessing Officer inregard to the said two additions. 3.1 After reproducing the relevant portion of the CIT(A)'s order dated26.03.2013, the Tribunal upheld the order of CIT(A) by recording findings based on facts and documents on record. The relevant portion of para 8, 9 &10 of the impugned order of the Tribunal are reproduced below for readyreference and convenience: "8. However, the Ld. CIT(A) after considering the submissions andexamining the assessment order has given finding on fact as under:examining the assessment order has given finding on fact as under: “5.5 I have carefully considered the submission of the appellantand facts of the case. The appellant had shown long term capitalgains of Rs.6,93,51,178/- on the sale of 1652318 shares of M/sMercator Lines Ltd. 28671 shares of M/s Reliance NationalResources Ltd. and 23178 shares of Visa Steel Limited duringF.Y. 2007-08 and claimed the same as exempt u/s 10(38) of theand facts of the case. The appellant had shown long term capitalgains of Rs.6,93,51,178/- on the sale of 1652318 shares of M/sMercator Lines Ltd. 28671 shares of M/s Reliance NationalResources Ltd. and 23178 shares of Visa Steel Limited duringF.Y. 2007-08 and claimed the same as exempt u/s 10(38) of the “5.5 I have carefully considered the submission of the appellantand facts of the case. The appellant had shown long term capitalgains of Rs.6,93,51,178/- on the sale of 1652318 shares of M/sMercator Lines Ltd. 28671 shares of M/s Reliance NationalResources Ltd. and 23178 shares of Visa Steel Limited duringF.Y. 2007-08 and claimed the same as exempt u/s 10(38) of theand facts of the case. The appellant had shown long term capitalgains of Rs.6,93,51,178/- on the sale of 1652318 shares of M/sMercator Lines Ltd. 28671 shares of M/s Reliance NationalResources Ltd. and 23178 shares of Visa Steel Limited duringF.Y. 2007-08 and claimed the same as exempt u/s 10(38) of the IT Act. The appellant had also furnished copy of his demataccounts as well as copy of broker’s notes for sale of shares onthe National Stock Exchange of India ltd. and Bombay stockexchange Ltd. it is also noticed that security transaction tax(STT) was paid by the appellant on the transactions of sale ofthese shares, as is mentioned in the broker’s notes. As percomputation of long term capital gains furnished by theappellant, it is noticed that the appellant had shown sale of theseshares after holding the same for more than one year. Thus, theappellant had earned long term capital gains on the transfer ofshare on the recognized stock exchanges and paid securitytransaction tax on the sale of these shares. Therefore, theappellant had fulfilled the conditions u/s 10(38) and was eligiblefor exemption u/s 10(38) on the long term capital gains earnedon sale of 1652318 shares of M/s. Mercator Lines Ltd. 28671share of M/s. Reliance Natural Resources Ltd. and 23178 sharesof Visa Steel Limited during the previous year relevant to A.Y.2008-09 under consideration. On perusal of Demat Account maintained by the appellantwith IDBI Ltd. it is noticed that appellant was allotted 1317850 bonus shares of M/s. Mercator Lines Ltd. on 08.03.2006. Since,the appellant had sold these bonus shares, the cost of acquisitionof these bonus shares had been correctly shown to Rs.NIL, asthere was no cost incurred by the appellant in acquisition ofbonus shares. As regards observation of the AO that ‘when theappellant was holding 1259329 shares only in his demataccount, how can be sell 1652318 shares of M/s Mercator LinesLtd., it is noticed that 450000 shares of M/s Mercator Lines Ltd.belonging to the appellant were transferred from appellant’sdemat account no.11145756 with IDBI Bank Ltd. to appellant’sown another ledger account CMP 90 for clients margin by thebroker. The appellant had also furnished a certificate from M/s.Kassa Finevest Ltd. as well as copy of his account of dematledger CPM 90 of Ramesh Chandra Agrawal, the appellant,wherein 450000 shares of M/s. Mercator Lines Ltd. werecredited and these shares were shown sold during F.Y. 2007-08.It may be noted that the demat account for the appellant withIDBI Bank Ltd. was showing opening balance of 1259329shares of M/s Mercator Lines Ltd. s on 01.04.2007 and another450000 shares of M/s Mercator Lines Ltd. were there in anotheraccount of the appellant client ledger CMP 90 kept for clientmargin by Kassa Finevest Pvt. Ltd. Thus, the appellant was having sufficient number of shares for making sale of 1652318shares on which the long term capital gains earned was claimedas exempt u/s 10(38) of the Act. having sufficient number of shares for making sale of 1652318shares on which the long term capital gains earned was claimedas exempt u/s 10(38) of the Act. 9. There is no dispute with regard to the fact that the AO madeaddition on the basis that as per the details of long term gain,profit/loss in case of assessee relating to the shares of Mercator linesit is stated that the assessee sold 1652318 shares during F.Y.2007-08 whereas the total no. of share in the name of the assessee as perthe Demat account with IDBI Bank Ltd. relating to Mercator lineswas 1259329 share only. However, this objection of the AO isrebutted by the assessee by furnishing the evidence that theassessee was having sufficient number of shares for making sale of1652318 shares. No contrary material is placed before thisTribunal by the Revenue, therefore, we do not see any reason tointerfere in the finding of the Ld. CIT(A), same is hereby upheld.Thus, the ground of revenue is dismissed. 10. In the result, the appeal of the Revenue in ITA No.394/Ind/2013is rejected." 3.2 A bare perusal of the aforesaid reveals that factual findings have been rendered by CIT(A) as well as the Tribunal and also that the reason assignedby the Tribunal to concur with the order of the CIT(A) cannot be termed asarbitrary or perverse. 4. It is trite law that an appeal u/S.260-A of IT Act can be admitted onlyon existence of substantial question of law. Since the findings rendered by thetwo authorities below which are concurrent in nature and do not disclose anysubstantial question of law, this Court declines admission of this appeal. 5. Accordingly, appeal stands dismissed in limine. (SHEEL NAGU)JUDGE DV (AMAR NATH (KESHARWANI))JUDGE