IN THE ITAT AGRA BENCH (THIRD MEMBER)
Smt. Amita Agarwal
Assistant Commissioner of Income Tax
IT APPEAL NOS. 182 AND 323 (AGRA) OF 2006
[ASSESSMENT YEARS- 2001- 02 AND 2002- 03]
DATE OF DECISION- AUGUST 30, 2011
G.E. Veerabhadrappa, Vice-President (As a Third Member)- These two appeals are by two different individuals. The case of Smt.Amita Agarwal is for the assessment year 2001-02 while the case of Shri Rajesh Kumar Garg is for assessment year 2002- 03.
2. The only issue of difference between the Members of the Division Bench constituted in these cases was the non-acceptance of their claims in respect of long term capital gain (LTCG) on the sale of shares, which was treated by the Revenue as income from other sources.
3. According to the Revenue, the assessee failed to prove the share transactions yielding the capital gains. The learned Judicial Member, who first wrote the order, accepted the assessee’s contention in the light of the overwhelming evidences produced by the assessee to prove the genuineness of the transaction and in the absence of any material to show that the transactions of sale of shares resulted in long term capital gains were camouflaged to defraud the Revenue. The claims of the assessee stood accepted. When the matter went before the learned Accountant Member, he based his dissent in the following manner:-
“I have carefully perused the order proposed by my ld.Brother, and also discussed the same with him. However, being unable to bring myself in agreement therewith, I proceed to write my separate order, as under.
2. The only issue arising in the assessee’ appeal in the present case is the non-acceptance of its claim in respect of long term capital gain (LTCG) on the sale of shares, which stands treated by the Revenue as income from other sources, as in its view the assessee was unable to prove the share transaction(s) yielding the ‘capital gain’ under reference.
3.1 For the detailed reasons listed in the case of Shri Baijnath Agarwal (ITA No.133/Agr/2007), I have, vide my dissenting order dated 10.02.2009, taken a different view from that by my ld. Brother, dismissing the assessee’s appeal on this ground, in that case.
3.2 On the basis of the hearing, and the examination of the record, I find the facts and circumstances in the present case, as also the respective cases of the opposing parties, as very similar to that obtaining in the case of Shri Baijnath Agarwal (supra). As such, for the detailed reasons as mentioned therein, I consider the Revenue’s case as legally sustainable, so that it would stand to be upheld, and the assessee’s appeal, consequently, dismissed. A decision, it needs to be appreciated, is taken on the basis of a given complex of facts and circumstances, as obtaining, and some variation in the individual facts or circumstances, where not material, as in the present case, would not go to alter the inferential findings, which in the present case pertain to the validity or otherwise of the non-satisfaction of the Revenue with the assessee’s explanation in respect of the impugned credit(s) in proving the same u/s 68 of the Act, with the Revenue, rather, exceeding, as in the said case, the mandate of s.68 (which only requires it to have cogent and reasonable basis for its non-satisfaction with the assessee’s explanation(s) by holding the credit(s) to be bogus, so that it represents the assessee’s own monies, routed thus. My separate order in the case of Shri Baijnath Agarwal (ITA NO.133/Agr/2007) would, concomitantly, form part of this order, and stands duly enclosed along with by way of Annexure-A thereto. I decide accordingly, dismissing the assessee’s appeal.”
4. As could be seen from the above, the difference is for the reasons mentioned in the case of Baijnath Agarwal v. Asstt. CIT  40 SOT 475 (Agra)(TM) vide learned AM’s dissenting order dated 10.2.2009 wherein he has taken a different view from that of the learned JM. The learned AM further writes that the facts and circumstances in the present case, as also the respective cases of the opposing parties, are very similar to those obtaining in the case of Baijnath Agarwal ( supra). That is how the difference of opinion between the Members constituting the Division Bench in both these cases has come up before me and the Hon’ble President has nominated me as a Third Member under Section 255(4) of the IT Act, 1961 to resolve this difference.
5. In the case of Shri Rajesh Kumar Garg, written submissions were filed wherein it is contended by the assessee that the Hon’ble Accountant Member has dissented from the views of the learned Judicial Member on the basis of discussions in Shri Baijnath Agarwal and the case of Baijnath Agarwal (supra) has since been decided by the Third Member in 133 TTJ 129 vide order dated 13th April, 2010. In the light of the same, his appeal be decided in his favor.
6. In the case of Smt.Amita Agarwal, the learned counsel who appeared for the assessee also pleaded that the facts of the assessee’s case are similar to those facts obtaining in the case of Shri Baijnath Agarwal (supra) and in the light of the decision of the Third Member in Baijnath Agarwal’s case (supra) , the assessee’s appeal be decided.
7. The learned DR fairly agreed that the facts and circumstances of both the cases are similar to those obtaining in the case of Shri Baijnath Agarwal (supra) which was also the subject-matter of difference and, in fact, the present difference originated from the difference in the case of Baijnath Agarwal ( supra). He also agreed that in the case of Baijnath Agarwal (supra), the Third Member has agreed with the stand of the assessee, although the learned DR strongly supported the view in the order of the learned Accountant Member.
8. I have carefully gone through the records as also the points of difference between the Members and the decision rendered by the Third Member in the case of Baijnath Agarwal (supra). Since the difference between the Members in these two cases is the result of difference they carried from the case of Baijnath Agarwal (supra) which, as I understand, is decided in favour of the assessee by the Third Member, therefore, on the basis of the discussions by the Third Member in the case of Baijnath Agarwal (supra), I agree with the view taken by the learned Judicial Member and hold that the CIT(A) has erred in facts as well as in law in upholding the order of the Assessing Officer treating the income in question under the head ‘long term capital gain’ as sham and bogus and taxing the same under the head ‘income from other sources’. The questions raised on the disputed issue are answered accordingly.
9. The matter shall now be placed before the regular Bench for deciding the appeals in accordance with the majority opinion.
PER BENCH :
In these two cases the difference arose between the Members of the Division Bench hearing these appeals. Therefore, the matter was referred to the opinion of the ld. Third Member. The ld. Third Member has agreed with the view taken by the ld. Judicial Member in both these cases. Therefore, in view of the majority decision, the appeals of the assessees are allowed.
2. In the result, appeals of the assessees are treated as allowed.