2023 (1) TMI 974 - HC - Income Tax

Appeals Dismissed, Transactions Legitimate, No Question of Law

Pr. Commissioner Of Income Tax-10 Versus M/s. Rajat Finvest

Pr. Commissioner Of Income Tax-10 Versus M/s. Rajat Finvest - TMI Issues Involved:1. Condonation of delay in re-filing appeals.2. Allegation of introducing unaccounted income as bogus Long Term Capital Gains (LTCG).3. Validity of the assessment order and findings of the Assessing Officer (AO).4. Findings and conclusions of the Commissioner of Income Tax (Appeals) [CIT(A)] and the Income Tax Appellate Tribunal (Tribunal).Issue-wise Detailed Analysis:1. Condonation of Delay in Re-filing Appeals:The applications filed by the appellant/revenue seeking condonation of delay in re-filing the appeals were considered. The court condoned the delay for the reasons given in the applications and disposed of the applications accordingly.2. Allegation of Introducing Unaccounted Income as Bogus Long Term Capital Gains (LTCG):The main allegation against the respondent/assessee was that it introduced unaccounted income in its books under the guise of bogus LTCG. The amounts of LTCG recorded in the assessment years 2008-09, 2009-10, and 2010-11 were Rs. 37,41,74,914/-, Rs. 2,29,30,711/-, and Rs. 59,24,97,150/- respectively. The appellant/revenue's investigation revealed that the respondent/assessee allegedly invested in and sold shares of REI Agro Ltd. and REI Six Ten Ltd. to introduce unaccounted income.3. Validity of the Assessment Order and Findings of the Assessing Officer (AO):The AO relied on the details gathered by the Investigation Wing, including a statement from Mr. Brij Mohan Vyas, an employee of REI Agro Group, to conclude that the transactions were a sham. The AO's assessment was based on the reopening of the respondent/assessee's assessment under Section 148 of the Income Tax Act, 1961. The AO concluded that the respondent/assessee had introduced unaccounted income by purchasing and selling shares of REI, considering the transactions as bogus.4. Findings and Conclusions of the Commissioner of Income Tax (Appeals) [CIT(A)] and the Income Tax Appellate Tribunal (Tribunal):The respondent/assessee appealed to the CIT(A), who partly allowed the appeals. The appellant/revenue then appealed to the Tribunal. The Tribunal examined various aspects, including the fund flow information from the Investigation Wing. The Tribunal confirmed the CIT(A)'s order, stating that the respondent/assessee was engaged in trading and investing in shares, and the transactions were conducted through accredited brokerage firms and the stock exchange, with payments made through banking channels. The Tribunal found no evidence of collusion or manipulation of share prices by the respondent/assessee.The Tribunal noted that the AO's adverse inference was based on assumptions and conjectures without material evidence. The Tribunal emphasized that the shares were traded on the stock exchange after paying securities transaction tax, and the transactions were not bogus. The Tribunal also observed that the statements of Mr. Brij Mohan Vyas and Mr. Manoj Singh Jadoun did not support the AO's conclusions regarding manipulation or collusion.The Tribunal and CIT(A) returned concurrent findings of fact, and the appellant/revenue did not demonstrate that these findings were perverse. Consequently, the court dismissed the appeals, concluding that no substantial question of law arose for consideration.Conclusion:The High Court dismissed the appeals filed by the appellant/revenue, upholding the findings of the CIT(A) and the Tribunal. The court found no substantial question of law and emphasized that the transactions were legitimate and conducted through proper channels, with no evidence of manipulation or collusion.