2019 (10) TMI 465 - AT - Income Tax

Tribunal denies Stay Petition but allows early appeal hearing with no adjournments

The tribunal dismissed the Stay Petition seeking a stay of the outstanding tax demand of Rs. 13,93,880 but granted an early hearing of the appeal before ... Stay of demand - Exemption under section 10(38) - Long term capital gains - Manipulation and rigging of stocks - Early hearing - No adjournment unless genuine and bona fideStay of demand - Exemption under section 10(38) - Long term capital gains - Manipulation and rigging of stocks - Stay petition against the demand of tax and interest for AY 2014-15 - HELD THAT: - The Tribunal considered the facts that the AO framed assessment u/s 143(3) disallowing exemption claimed u/s 10(38) on alleged long term capital gains from shares, treating the gains as resulting from organised manipulation and rigging in penny stocks; the CIT(A) confirmed the disallowance. Although the assessee maintained that the gains were genuine and accepted that she had a prima facie case, the Bench observed the detailed inquiries recorded by the AO and CIT(A) and declined to grant a stay of the outstanding demand. The Bench recorded that it has not expressed any view on the merits of the appeal, but found the balance of circumstances insufficient to justify a stay of tax and interest. [Paras 1, 2]Stay petition dismissed.Early hearing - No adjournment unless genuine and bona fide - Request for early listing of the appeal (ITA No. 2342/Chny/2019) arising from AY 2014-15 - HELD THAT: - In lieu of granting the stay the Tribunal granted the assessee an early hearing before the Division Bench, listing the appeal for hearing on 09.10.2019. The Tribunal imposed the condition that the assessee shall not seek adjournments when the appeal is listed before the regular Bench unless there are genuine and bona fide reasons; the Tribunal clarified that no observations were made on the merits and both parties were present when the date was announced in open court. [Paras 1]Early hearing granted for 09.10.2019 subject to condition against adjournments; no comment on merits.Final Conclusion: The stay petition is dismissed; the appeal for AY 2014-15 is granted early hearing before the Division Bench on 09.10.2019 with a condition that the assessee shall not seek adjournment except for genuine and bona fide reasons, and the Tribunal made no comment on the merits of the appeal. Issues:Stay of demand of disputed tax amount for Assessment Year 2014-15.Analysis:The assessee filed a Stay Petition seeking a stay of the demand of disputed tax amount of Rs. 13,93,880 arising from the assessment for the year 2014-15. The assessment was framed by the Assessing Officer (AO) under section 143(3) of the Income-tax Act, 1961, making two additions to the returned income. The first addition was disallowing an exemption claimed by the assessee under section 10(38) of the Act, and the second addition was on account of cash deposits made by the assessee in its bank account. The total income assessed by the AO was Rs. 51,05,496, resulting in an income tax payable of Rs. 18,95,280. The assessee challenged this assessment by filing an appeal before the CIT(A), who deleted the addition related to cash deposits but confirmed the addition on account of disallowance of exemption under section 10(38). Dissatisfied with the CIT(A)'s order, the assessee filed an appeal before the tribunal, which was pending for disposal. The assessee then filed the Stay Petition seeking a stay of the outstanding demand of tax and interest amounting to Rs. 13,93,880.The primary issue in contention was regarding the genuineness of long-term capital gains claimed by the assessee on the sale of shares. The AO alleged manipulation and rigging in penny stocks through stock exchanges, leading to the disallowance of the exemption claimed under section 10(38) of the Act. The counsel for the assessee denied any manipulation and rigging, stating that the gains were legitimate and the shares were purchased with cash payments, later dematerialized after a period. The AO and the CIT(A) supported the disallowance based on detailed investigations and contentions of organized manipulation and rigging of stocks. The counsel for the assessee argued for the genuineness of the gains and requested a stay of the outstanding demand.After considering the arguments from both sides, the tribunal rejected the Stay Petition filed by the assessee. However, the tribunal granted an early hearing of the appeal before the Division Bench on a specified date. It was clarified that the grant of early hearing did not imply any judgment on the merits of the case. The tribunal also imposed a condition that the assessee should not seek adjournment during the hearing unless for genuine reasons. The decision was announced in open court, and the Stay Petition was dismissed, with the appeal scheduled for early hearing before the Division Bench.In conclusion, the tribunal dismissed the Stay Petition while granting an early hearing of the appeal, emphasizing the importance of presenting the case before the Division Bench without seeking adjournments unless for valid reasons.