2023 (3) TMI 1039 - AT - Income Tax

Tribunal decision: Appeal partly allowed for business loss, addition confirmed under Section 68. Deficiency not pressed.

The Tribunal partly allowed the appeal by the assessee for statistical purposes, remanding the issue of quantification and set off of business loss under ... Bogus LTCG - Addition u/s 68 - disallowance of exemption of long-term capital gains claimed u/s 10(38) - treating the share transaction as non-genuine - HELD THAT:- As not only Sunrise Asian Ltd but the exit providers were also found to be involved in manipulative trade practices by the SEBI. Further, Mr. Vipul Bhat in his statement had admitted and confirmed that all the entities controlled and managed by him are mere bogus paper companies and he is involved in providing accommodation entry on a commission basis. Thus, not only Sunrise Asian Ltd but Conart Traders Ltd and Santoshima Tradelinks also, whose shares were initially purchased by the assessee in physical form, were found to be belonging to Mr. Vipul Bhat in the present case. Accordingly, we find no infirmity in the findings of the AO, which were confirmed by CIT(A) - Decided against assessee. Disallowance of set off of carry forward business losses u/s 72 - HELD THAT:- Though the issue of non-quantification of business loss declared by the assessee in his return of income was raised before the learned CIT(A), however, in absence of any evidence to support the contention during the appellate proceedings, CIT(A) dismissed the ground filed by the assessee. AO has also not quantified the loss claimed by the assessee. Accordingly, we deem it appropriate to remand this issue to the file of AO for quantification of loss and set off of same, if any, as per law. As a result, ground No. 3 raised in assessee's appeal is allowed for statistical purposes. Issues Involved:1. Deficiency in the CIT(A)'s order.2. Confirmation of addition under Section 68 of the IT Act.3. Disallowance of set off of carried forward business loss under Section 72 of the IT Act.Summary:Issue 1: Deficiency in the CIT(A)'s OrderThe assessee argued that the CIT(A)'s order lacked discussion and was deficient. However, this ground was not pressed during the hearing and was dismissed as not pressed.Issue 2: Confirmation of Addition Under Section 68 of the IT ActThe assessee challenged the addition of Rs. 73,06,532 as unexplained credit under Section 68, which was initially claimed as exempt long-term capital gains from the sale of shares of Sunrise Asian Ltd. The AO, based on the Investigation Wing's findings and statements from Mr. Vipul Bhat, concluded that the transactions were non-genuine and part of a scheme to provide bogus long-term capital gains. The AO noted significant price manipulation of Sunrise Asian Ltd shares, with an 803% price rise without any substantial corporate announcements. The SEBI investigation also found manipulative trading practices involving Sunrise Asian Ltd and entities to whom the shares were sold. Despite the assessee's claim of genuine transactions through bank payments and dematerialized shares, the AO and CIT(A) found the transactions to be non-genuine. The Tribunal upheld the findings of the AO and CIT(A), dismissing the assessee's appeal on this ground.Issue 3: Disallowance of Set Off of Carried Forward Business Loss Under Section 72 of the IT ActThe assessee claimed a carried forward business loss of Rs. 61,04,247, which was not set off against the income determined under Section 115 BBE. The assessee relied on CBDT Circular No. 11/2019, which allows set off of loss against income under Section 115 BBE till the assessment year 2016-17. The CIT(A) dismissed this ground due to lack of evidence. The Tribunal remanded the issue to the AO for quantification of the loss and set off as per law, allowing this ground for statistical purposes.Conclusion:The appeal by the assessee was partly allowed for statistical purposes, with the Tribunal remanding the issue of quantification and set off of business loss to the AO. The other grounds were dismissed.