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Mrs. Aruna J. Kapse, Nashik and others Versus Dy. Commissioner of Income Tax, Central Circle 1, Nashik

2015 (7) TMI 604 - ITAT PUNE

Validity of proceedings u/s. 158BD - Held that:- The provisions of section 158BD can be invoked where the Assessing Officer is satisfied that any undisclosed income of a person other than one against whom search was conducted is reflected in the books of accounts/documents of the person searched. We find that after recording of satisfaction notice u/s. 158BD was issued to the assessees by the Assessing Officer on 29-09-2004. The ld. AR of the assessees has contended that the entire income has be .....

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f LTCG - Consideration for transfer of shares - CIT(A) adopting sale consideration for transfer of 400 shares at ₹ 22,50,000/- as against ₹ 5,00,000/- contentions of the assessees is that they have received only ₹ 10,00,000/- and the remaining amount of ₹ 35,00,000/- has not been received by the assessees from Shri Prakash Laddha till date - Held that:- We do not concur with the submissions of the assessees that the consideration of ₹ 45,00,000/- is towards transfer .....

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t to reduce the capital gains arising on sale of shares.

A perusal of the above letter of Shri Prakash P. Laddha shows that an amount of ₹ 40,000/- was allegedly paid to Shri Janardan R. Kapse against purchase of shares. The claim made by the assessee and the statement given by Shri Prakash P. Laddha are not congruent. Shri Prakash P. Laddha during the course of assessment further admitted that payment to the extent of ₹ 17,89,000/- in cash and ₹ 40,000/- by cheque o .....

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t assessee. - ITA No. 163/PN/2009,ITA No. 164/PN/2009 - Dated:- 10-7-2015 - Shri R.K. Panda and Shri Vikas Awasthy, JJ. For the Petitioner : Smt. Deepa Khare For the Respondent : Shri B.C. Malakar ORDER PER VIKAS AWASTHY, JM: The appeals have been filed by the assessees impugning the order of Commissioner of Income Tax (Appeals)-I, Nagpur dated 29-08-2008 for the block period 1997-98 to 2003-04 u/s. 158BD r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). Since, fac .....

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d share capital of ₹ 5,00,000/- and paid up share capital of ₹ 80,000/-. A search and seizure action u/s. 132 was conducted in the case of Laddha Group on 09-10-2002. During verification of materials found in search, it transpired that Laddha Group had acquired entire paid up shares of M/s. Vastukrupa Construction (India) Pvt. Ltd. from the assessees. Shri Prakash Laddha in his statement recorded u/s. 132(4) on 11-10-2002 admitted that he and his wife have taken over the shares of Va .....

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e assessees are Directors of the company. Out of the total paid up share capital, the assessees were having 400 shares each having face value of ₹ 100/- each. The assessee in ITA No. 163/PN/2009 (Mrs. Aruna J. Kapse) sold her 400 shares for consideration of ₹ 13,00,000/-. The assessee in ITA No. 164/PN/2009 (Shri Janardan R. Kapse) sold his 400 shares at ₹ 32,00,000/-. The total sale consideration of the company was fixed at ₹ 45,00,000/-. Out of the total sale considerat .....

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received by the assessees till date and the cases are pending before the District Court, Nashik. The actual amount received by the assessees is ₹ 5,00,000/- each, which is less than the amount of investment made by them in the company, therefore, there is no question of any tax liability. The assessee further claimed that they had spent collectively a sum of ₹ 17,49,617/- for improvement of site. The Assessing Officer did not accept the contentions of the assessee. The Assessing Offi .....

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sites. Aggrieved by the assessment order dated 21-11-2006 passed in the respective cases of the assessees, both the assessees filed appeals before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) rejected the contentions of the assessees and confirmed the findings of the Assessing Officer. Now, the assessees have come in second appeal before the Tribunal against the order of Commissioner of Income Tax (Appeals). 4. The assessees have raised following grounds be .....

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n the facts and in law the CIT(A) has erred in accepting part of the contents of the letter filed by the appellant beneficial to the revenue and rejecting part of the contents of the same letter, which is not beneficial to the revenue against the proposition of law laid down by hon'ble Pune ITAT, in the case of Chandramohan Mehta Vs. ACIT, 71 ITD 245. 4. On the facts and in law the CIT(A) has erred in taxing the consideration of ₹ 27,00,000/- towards expenditure incurred by the appella .....

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377; 13,37,745/- while arriving at taxable capital gain. Except for amounts, the grounds raised in both the appeals are identical. 5. Smt. Deepa Khare appearing on behalf of the assessees submitted that the authorities below have erred in invoking jurisdiction u/s. 158BD. During the search proceedings in the case of Laddha Group no incriminating material was found against the assessees. The ld. AR submitted that there was no undisclosed income as the entire income was accounted for and reflected .....

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eceived ₹ 10,00,000/-. The remaining consideration of ₹ 35,00,000/- was never received by the assessees as the cheques issued by Shri Prakash Laddha were not honoured. The assessees have filed criminal complaints against Shri Prakash Laddha under Negotiable Instrument Act which are sub-judice before the District Judge, Nashik. The ld. AR further submitted, that the authorities below have erred in not considering the amount given by assessees for development of sites as unsecured loan .....

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d notices. Incriminating material was found during the search operation conducted at the premises of Shri Prakash Laddha, therefore, notices u/s. 158BD were issued to the assessees. Both the assessees had equal number of shares and the face value of shares were same. However, the assessees divided the consideration of shares ₹ 32,00,000/- in hands of assessee in ITA No. 164/PN/2009 and ₹ 13,00,000/- in the hands of the assessee in ITA No. 163/PN/2009 in an arbitrary manner and withou .....

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horities below. The first argument raised by the ld. AR is with respect to validity of proceedings u/s. 158BD. We find that the assessees had neither raised this ground before the Commissioner of Income Tax (Appeals) nor this ground has been taken in the grounds of appeal before the Tribunal. The ld. AR for the first time has assailed the invoking of jurisdiction u/s. 158BD in oral arguments before the Tribunal. The ld. DR has strongly objected to the same. It is a well settled law that the appe .....

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oup, documents relating to sale of shares of Vastukripa Construction (I) Pvt. Ltd. were found and seized. Sh. Prakash Laddha and his wife Smt. Aruna P. Laddha had purchased 400 shares each in Vastukripa Construction (I) Pvt. Ltd. from the assesses in Financial year 1999-2000. In statement recorded u/s. 132(4), Sh. Prakash Laddha admitted the purchase of shares. For verification of facts, assesses were summoned u/s. 131. On the basis of documents seized, verification of case records and the state .....

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sfaction notice u/s. 158BD was issued to the assessees by the Assessing Officer on 29-09-2004. The ld. AR of the assessees has contended that the entire income has been accounted for and is reflected in the balance sheet of the assessees. However, no documentary evidence has been placed on record in support of such contentions. Further, the ld. AR has not been able to show that the assessees have disclosed Capital Gains on sale of shares in any of the impugned assessment years. Thus, we are not .....

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0,000/- and the remaining amount of ₹ 35,00,000/- has not been received by the assessees from Shri Prakash Laddha till date. The post dated cheques issued by Shri Prakash Laddha for the payment of remaining amount were dishonoured. Further, the stand of the assessees is that Shri Janardan R. Kapse had incurred expenses to the tune of ₹ 13,37,745/- and Mrs. Aruna J. Kapse had incurred expenses to the tune of ₹ 4,11,872/- for improvement of site. The aforesaid amounts aggregating .....

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yment of cost of improvement of site. The assessees till date have not brought on record any document to show the terms and conditions and the allocation of consideration for transfer of company from assessees to Laddha Group. In the absence of any documentary evidence the only inevitable inference that can be drawn is that ₹ 45,00,000/- is sale consideration for transfer of shares alone. To treat ₹ 17,49,617/- as part of sale consideration is nothing but an attempt to reduce the cap .....

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is immaterial whether the sale consideration is received in full or in part in that particular assessment year. The income has to be taxed in the year of accrual. In other words, once the ownership in the capital asset is transferred, long/short term capital gain as the case may be arising on the said transaction is liable to be taxed in the year of transfer of title. In the instant case the shaes stand transferred in the name of Shri Prakash Laddha and Mrs. Aruna P. Laddha in assessment year 20 .....

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he remaining consideration in the entire cross-examination. 11. A copy of the assessment order for the block period 1997-98 to 2003-04 passed u/s. 158BD r.w.s. 143(3) in the case of Shri Prakash P. Laddha and the order of the Commissioner of Income Tax (Appeals)-I, Nashik dated 28-12-2006 u/s. 158BD r.w.s. 143(3) has been placed on record. A perusal of the assessment order and the order of First Appellate Authority in the case of Shri Prakash P. Laddha shows that an amount of ₹ 41,50,000/- .....

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₹ 8,60,000/- have been shown in F.Y. 1999-00 & 2000-01 respectively as paid to Shree. J.R. Kapse. Further, in F.Y 2001-02 ₹ 23,21,000/- have been shown as received against "Plot Advance Paid" in the regular books of Accounts for which corresponding source is UDI financial transactions, this did not actually represent any transaction/transfer of funds. Thus, for ₹ 23,21,000/- in F.Y 2001-02 neither any amount was paid nor any amount was received. However, the amou .....

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. Shri Prakash P. Laddha during the course of assessment further admitted that payment to the extent of ₹ 17,89,000/- in cash and ₹ 40,000/- by cheque out of the total of ₹ 41,50,000/- as appearing in seized documents. Thus, in view of seized documents and the admission of Shri Prakash P. Laddha regarding the payment of consideration and also the fact that share of M/s. Vastukrupa Construction (India) Pvt. Ltd. have been transferred in the name of Shri Prakash P. Laddha and his .....

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in tax arising from the transfer of such asset. The income accrues to the assessee in the year of transfer, irrespective of the fact whether entire sale consideration is received or not. 14. The ld. AR of the assessees in support of his submissions has placed reliance on certain decisions of the Hon ble High Courts. 14.1 In the case of CIT Vs. Vikram A. Doshi (supra) one the issue raised before the Hon ble High Court was with respect to recording of transactions. The Hon ble High Court held that .....

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