2015 (5) TMI 723 - ITAT DELHI

Undisclosed Short Term Capital Gains from sale of Share - Held that:- The arguments of the learned Authorized Representative that the appellant had not sold the property cannot be accepted since it is judicially well known that in the case of a company the entire property held in the name of Company can be transferred through the mode of transfer of shares. This is approved by the Hon’ble Karnataka High Court in the case of Bhoruka Engineers Vs. DCIT, [2013 (7) TMI 543 - KARNATAKA HIGH COURT]. As noticed that M/s Smriti Buildcon Pvt. Ltd. owns only the property in question. Therefore, the underlying object of transfer of shares is only the transfer of property in question. It is well known settled principle of law that the substance of a transaction should be considered rather than the form of the transaction. This principle is reiterated by the Hon’ble Jurisdictional High Court in CIT Vs. EKL Appliances Ltd., [2012 (4) TMI 346 - DELHI HIGH COURT]. Therefore, the argument of learned counsel that the appellant had not transferred any property to the HBN Group of Companies cannot be accepted.

Non availed the opportunity of cross examination - Held that:- The statements recorded from the witnesses are clear, categoric and they do not suffer from any contradictions are sufficient when read along with the fact of sale of shares in Smriti Buildcon Pvt. Ltd. held by the appellant with the underlying object of sale of property held by the said company. When the Assessing Officer is possessed of this information that raises a presumption that on money of 8.70 crores was paid to the appellant. The burden to rebut this presumption shifts to the appellant. The appellant failed to rebut the same. Therefore, that it stands corroborated. It is equally settled principle of law that strict technical rules of Evidence are not applicable in the income tax proceedings. The Assessing Officer may act on material which may not be accepted as evidence in a court of law as held in the case of Dhakeswari Cotton Mills Ltd. Vs. CIT, (1954 (10) TMI 12 - SUPREME Court); Vasantlal & Co. (C) Vs. CIT (1962 (2) TMI 7 - SUPREME Court) and CIT Vs. East Coast Commercial Co Ltd., (1966 (10) TMI 37 - SUPREME Court).

Addition made purely based on the photocopy of the agreement to sell - Held that:- This submission cannot be accepted because it is settled principle that Photostat copy can be taken as an evidence, if the circumstantial evidence justifies, please refer to Moosa S Madha & Azam S Madha Vs. CIT, (1973 (2) TMI 5 - SUPREME Court). In the present case, as held by us in supra, the presumption drawn by the Assessing Officer that the on money was paid to the appellant remains unrebutted, therefore, the Photostat copy of agreement to sell can very well form the basis for the addition.

The argument advanced before us that the appellant had never signed such an agreement cannot be accepted at this stage of proceedings since he had not availed to rebut the same before the lower authorities knowing fully well that this was going to be used against him. Agitating on this issue, at later stage is not acceptable, since the appellant had chosen not to advance this argument before the lower authorities, when he was confronted with the information. Had the appellant chosen to advance this argument before the Assessing Officer, the Assessing Officer should have sent this document for examination by the Forensic Authorities to examine the veracity of this document and conveniently the appellant has chosen to avoid this offer and agitating on this ground before us does not help the case of the appellant. Hence, this ground of appeal filed by the appellant is dismissed.

However the on money of ₹ 8.7 crores was paid in connection with the transfer of entire shareholding in the M/s Smriti Buildcon Pvt. Ltd. Therefore, the on money should be apportioned in the ratio of the shareholding held. Indisputably, the total shareholding in the said company was 2,94,700 shares. The on money paid per share comes to ₹ 295 per share. The number of shares held by the appellant were only 60,000 share therefore the on money paid to the appellant comes to ₹ 1,77,00,000/-. Apart from this the share of the on money paid on account of the shareholding held by the spouse of the appellant i.e. Mrs. Ritu Parwal is to be added in the hands of the appellant since she made categorical statement before the Investigation Wing that it was only her husband Mr. Sanjay Parwal who looked after all her financial affairs and the full control vested with him and the appellant had chosen not to rebut the same. Hence, the on money attributable to shareholding of Mrs. Ritu Parwal is taxable in the hands of the appellant. Mrs. Ritu Parwal was holding 58,000/- shares. The share of on money comes to ₹ 1,71,10,000/-. Therefore, the total addition in the hands of the appellant comes to ₹ 3,48,10,000/-. Hence, we confirm the addition in the hands of the appellant only to the extent of ₹ 3,48,10,000/-. Decided partly in favour of assesse.