TaxTMI 
TaxTMI 
2023 (7) TMI 1347
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....e I.T. Act. 2. Ld. CIT(A), NFAC has erred in law and on fact to confirm assessing officer's addition of Rs.98,037/- u/s 69 of the Act without there being any proof of payment of commission @ 2% of LTCG made by the assessee as per para 15 of assessment order. 3. Ld. CIT(A), NFAC has erred in law and on fact to confirm assessing officer's action of charging Income tax @ 30% u/s 115BBE of the Act." 3. The appeal filed by the assessee for Assessment Year 2014-15, is barred by limitation by 137 days. The assessee has moved a petition requesting the Bench to condone the delay. The contents of the petition for condonation of delay are reproduced below: "1- That appeal order of NFAC, Delhi is dated 19.07.2022 has been communicated through portal under the tab 'For Your Information'. It is deemed to be served on 19.07.2022. Appeal is filed with the registry, ITAT, Surat on 02.02.2023. Thus it is filed after -197- days from the date of order of 1st appellate authority. Limitation period provided under the act, for filing of 2nd appeal is -60- days. Therefore, the appeal is late by -137- days. 2- NFAC has served appeal order on portal electronically. I a....
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....he parties on this preliminary issue. We note that main reason of delay in filing the appeal was due to negligent approach of the assessee`s Tax Consultant/Advocate. We note that assessee should not be penalized because of the mistake of assessee`s Tax Consultant/advocate. Reliance in this regard, is placed on the decision of I.T.A.T., 'C' Bench, Kolkata in the case of M/s. Garg Bros. Pvt. Ltd. & Others vs. DCIT [ITA Nos. 2519 to 2521/Kol/2017, order dated 18.04.2018, wherein under similar set of facts and reasons, the Hon'ble Tribunal was pleased to condone the delay of 211 days by holding as under: "3. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the application for condonation of delay, we are of the considered opinion that assessee was under a bona fide belief that the impugned order of Pr. CIT was not appealable before this Tribunal since they were not advised by their Tax Consultants about this legal right. Later on, when a Senior Lawyer advised them to file an appeal, the assessees immediately took steps to file the appeals. Therefore. the delay caused. we note. was because of the wrong advice of the Tax....
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....cer observed that as per the details available on record, the assessee has sold 10,000 shares of the "Sunrise Asian Ltd" during the year under consideration, on total sale prices of Rs.49,01,840/- which has resulted in total earning of Rs.45,01,840/- in F.Y. 2013-14. During the course of assessment proceeding, information u/s 133(6) of the Act was called for from Bombay Stock Exchange and the details of sale of Sunrise Asian Ltd have been received by the assessing officer. The details of the sale of the script during the year are stated by the assessing officer on page No.5 and 6 of the assessment order. Ongoing through the purchase details of these shares, it was observed by the assessing officer that the Assessee had purchased shares of M/s Conart Trade's Ltd on 21.08.2011, directly from the company. Since the Assessee has purchased share of M/s Conart Trader's Ltd and sold shares of Sunrise Asian Ltd., therefore, the Assessee was asked to clarify the matter. The Assessee has replied to the Assessing Officer that the company Conart Trades Ltd was later amalgamated with Sunrise Asian Ltd. vide order of Hon'ble Bombay High Court dated 24.01.2013. 11. On perusal of th....
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.... assessing officer. Aggrieved by the order of the Ld. CIT(A), the assessee is in further appeal before us. 16. Shri Rajesh Upadhyay, Learned Counsel for the assessee argued that during the assessment stage, the assessee submitted the following documents and evidences to prove its claim, which are reproduced below: (i) Ledger account of Conart Trader, Debit note for purchase of shares, share certificate and assessee's SBI Passbook for FY.2011-12 (vide PB.11 to 18) (ii) Income Tax Return, Computation and Financial statements for AY.2012-13 (vide PB. 19 to 23) (iii) Income Tax Return (ITR), Computation, Financial statements for AY.2013-14 (vide PB. 24 to 30) (iv) ITR, Computation and Financial statements for AY.2014- 15 (vide PB.31 to 35) (v) Copy of ledger account of Nirmal Bang Securities Pvt. Ltd. with their contra account and Demat account (vide PB. 36 to 40) (vi) Contact notes issued by SEBI register, broker Nirmal Bang Securities Pvt. Ltd. w.r.t. sale of shares in BSE with payment of STT (vide PB. 41 to 47) (vii) Appellant's SBI Bank account passbook for FY.2013-14 (vide PB. 48 to 50) (viii) Copy of NSDL ....
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....ts including the judgment of the jurisdictional High Court of Gujarat in the case of Nishant Kantilal Patel, Tax appeal No.296/2021, dated 07.01.2022 and stated that the addition made by the Assessing Officer should be deleted. 19. On the other hand, Ld. Sr. DR for the Revenue submitted that assessee has not proved the genuineness of the transaction, just to submit that the transaction was done through banking channel is not sufficient. The assessee submitted debit note, ledger account and other evidences such as STT was paid on the transaction, these evidences and documents do not show that the transaction is genuine. The Ld. Sr. DR for the Revenue also relied on the judgment of Hon'ble Calcutta High Court in the case of PCIT vs Swati Bajaj (2022) 139 taxmann.com 352 (Calcutta) and stated that assessee has not proved the genuineness of the transaction and therefore addition made by the Assessing Officer should be sustained. 20. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT....
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.... the cash back against such transaction. 22. We note that during the assessment stage, the assessee has provided complete detail of the company. It was submitted that the company's share were listed on BSE and NSE stock exchange. The assessee has also submitted past history and business of the company, market cap and other financial data of the company. The shareholding pattern of the company and management particular, directors, administrators and auditors, were also proved. A price moment chart between April, 2012 to March, 2015 was also supplied. It was submitted that during the given period, high price of "Sunrise Asian Ltd" (in brief "SAL") was Rs.605.50 and low price was Rs.548.50 per share. Further, a list of the company who has given handsome return in the span of one year or less is also supplied to the Assessing Officer. These companies are in existence but not much popular due to its fundamentals, financial and corporate news. The assessee has argued that share market activities are risky business and many persons are losing their money and capital in the market due to its volatile nature. Therefore, only because of sharp moment in prices of shares, transaction in sha....
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....is commonly known as audi alteram partem rule. It says that no one should be condemned unheard. Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of natural justice........" 24. We note that while passing the assessment order, Assessing Officer has relied on certain additional documents, which are neither disclosed before the assessee nor supplied copy of such document to the assessee during assessment proceeding. These documents are listed as under: Sr. No. Additional documents relied on bye the assessing officer Assessment order Page no Para No. i Information collected u/s 133(6) from BSE 2 & 3 4 ii Reports of Directorate of Investigation of Kolkata vide the....
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....thout carrying out any independent investigation of his own. Nothing was brought on record which would establish that the assessee was beneficiary of alleged accommodation entries provided by the so-called Shri Anuj Agrawal. No corroborative evidences to support the findings of Assessing Officer were brought on record. No nexus was established. Further, no contrary and conclusive evidences were brought on record to dispute the documentary evidences furnished by assessee. The enquiries were conducted by the DCIT at Kolkata and the statements were recorded at the back of the assessee. The assessee was deprived off to cross examine the witnesses. The documentary evidences submitted by the assessee were neither proved contrary nor proved fabricated. Assuming that the brokers may have done some manipulation but the assessee cannot be held liable for the act of the brokers when the entire transactions have been done through banking channels duly recorded in the Demat accounts with a Government depository and traded on the stock exchange. The Sale transactions took place through recognized stock exchange and statutory Securities Transaction Tax (STT) as well as Services Tax was paid on sa....
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....the assessee, being an investor, has held shares for 2½ years and after holding shares for long period, the assessee sold the said shares. The assessee submitted Share holding pattern of 'SAL' which is as under: Category No. of shares %age Promoters 8,447,558 18.50% General public 16,385,687 35.88% Others 16,685,906 34.35% Financial Institutions 5,143,909 11.26% The ld Counsel submits that the shares of "Sunrise Asian Ltd.", were being held buy Canara Bank, New Delhi, 6% of SAL shares during September 2015 and 11.26% shares of SAL, during March 2016 and June 2016 respectively. Thus, the sale transaction of 'SAL' shares cannot be doubted as bogus and denying the exemption u/s 10(38) of the Act. The ld Counsel also submitted the judgments of various Coordinate Benches of ITAT, wherein addition made by the assessing officer U/s 68, in respect of sale of shares of "Sunrise Asian Ltd" were deleted: 1) ITO vs. Devyani Dharmendra Shah [ITA No.576/Ahd/2020] (Ahd Trib.) 2) Sita Devi Agarwal Vs. ITO [ITA No.56/JP/2020] (Jaipur Trib.) 3) Ashok Agarwal vs. ACIT [ITA No.124/JP/2020] (Jaipur Trib.) 4) ITO ....
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....ntly the assessment was reopened as information was received that assessee has indulged into script of shell company and had claimed long term capital gain on sale of shares of Devika Proteins Limited to the tune of Rs. 2,10,474/- and that the amount was claimed as exemption under section 10(38) of the Income-tax Act, 1961 (hereafter referred to as 'the Act') 3.1 The Assessing Officer made addition of the said amount. The entire transaction was treated as bogus and in the nature of penny stock. By adding Rs. 2,10,474/- under section 68 of the Act, total income was assessed at Rs. 5,21,964/-. 3.2 In appeal by the assessee before the Commissioner of Income-tax (Appeals), the issue was re-examined. According to the appellate authority the appellant assessee had furnished evidence to show that the shares were brought as genuine investment which was long back in the year 2000-01. As the shares were in the nature of old investment, they could not be treated as penny stock by any stretch of imagination. 4. The Income-tax Appellate Tribunal further examined the question in appeal preferred by the revenue and confirmed the view of the appellate authority n....
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....ons that this claim of LTCG on sale of shares of Global Securities Ltd. was the prearranged mechanism of claiming bogus LTCG. On getting this information, it was deduced that the Global Securities Ltd has been involved in circular trading and sale and purchase of the scrip to convert unaccounted money of several beneficiaries into accounted one by following the said modus operandi. 16. The Assessing Officer to form the opinion there shall need to be some link with the material and as discussed above, the same is missing, the challenge needs to fail. Though no rigid format is a must to express application of mind or for formation of belief that income chargeable to tax has escaped assessment and yet, when reliance on the information is mechanical without reassessment for the verification, independent opinion needs to be held to be absent. 17. Resultantly, this appeal fails and dismissed accordingly." 31. Hon`ble Delhi High Court in the case of Principal Commissioner Of Income vs Smt. Bindu Garg, ITA No.125.2020, order dated 15 January, 2021, held as follows: "10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentio....
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.... convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence ....
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....ctional Coordinate Bench of ITAT Ahmedabad in the case of M/s. Ice Worth Reality LL P, vide ITA Nos. 565 & 566/Ahd/2020, for Assessment Years 2012-13 & 2015-16, order dated 13-03-2023, deleted the addition made by the assessing officer in respect of "SAL" shares. Findings of the Coordinate Bench are reproduced below: "7. We have given our thoughtful consideration and perused the materials available on record. It is seen from the Paper Book filed by the assessee, the assessee produced before the Assessing Officer the documentary evidences in respect of purchase of shares namely copy of allotment letter from Conart Traders Ltd., Ledger account of Conart Traders Ltd. and share certificate of SAL dated 24/05/2013, Copy of Audit Report for the Assessment Year 2013- 14 showing investment in shares of Conart Traders Ltd and bank statement reflecting payments made for purchase of SAL shares [at Page No. 333 to 364 of the Paper Book]. Similarly, the assessee also filed documentary evidences submitted before the Assessing Officer in respect of SAL of shares by producing the copy of the ledger account of the four share brokers, copy of the bank statement reflecting the amount receive....
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....vate Ltd, Share Certificate, Share Transfer Form, Debit Note and Cash Receipt. The payments were received through account payee cheque and transaction was done through recognized stock exchange. The inflow of shares is reflected by way of physical share certificate and demat account. The shares were transferred through demat account. There is no evidence that the cash was recycled back to the assessee. The assessing officer has failed to bring any cogent evidence on record to show that these documents and evidences filed by the assessee are false. The assessee merely acted on the basis of such market information and happened to get phenomenal gain. It could have been otherwise as well. The rags to riches story in the stock market are galore. It has been submitted that the alleged, circumstantial evidence and material has led the Assessing Officer to believe that the real is not the apparent. In the absence of any link between the assessee and the alleged, admissions of the directors and brokers, human probability is being used as a vague and convenient medium for the department's conjectures. To draw an adverse inference without any admissible evidence on record, is ba....
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....e ICICI Securities Ltd. and has also furnished the details of such bank transactions with regard to the purchase of the shares. In the last, the Tribunal took notice of the fact that the statements recorded by the investigation wing of the Revenue with regard to the Tax entry provided were informed to the assessee despite giving him opportunity to meet such an allegation. In the overall view of the matter, we believe that the proposed question cannot be termed as a substantial question of law for the purpose of maintaining the appeal under Section 260-A of the Act, 1961. 5. In the result, this appeal fails and is hereby dismissed. 7.5. Further the Co-ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. Shri Dilip B. Jiwrajka (cited supra) distinguished the Calcutta High Court judgment held as follows: "... 51. Apart from the above, we have also taken suo-motto judicial notice of the judgment rendered by the Hon'ble Calcutta High Court in the case of Pr. CIT Vs Swati Bajaj (288 Taxman 403). Having carefully perused the same, it is noted that peculiar facts were involved before the Hon'ble Court wherein eighty-nine different appeals of diff....
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....he settled position of law that circumstantial evidences can be looked into only when direct evidences are not available (Para 69). In the instant case, direct irrefutable evidences were made available to the AO and, therefore, ignoring the direct evidences and jumping to circumstantial evidences is not justified even if one refers to the decision of Hon'ble Calcutta High Court. Moreover, as noted by us earlier, this issue at hand is squarely covered by the binding judgments of the Hon'ble jurisdictional High Court, in favour of the assessee, and, therefore following the judicial discipline, the order of the Ld. CIT(A) does not require any interference since we have the benefit of guidance on this subject by the Hon'ble jurisdictional High Court, which is binding upon us. 7.6. Similarly, the Co-ordinate Bench of this Tribunal in ITO Vs. Devyani Dharmendra Shah in ITA No.576/Ahd/2020 dated 15.06.2022 held as follows: "... 7. We have heard the rival contentions and perused the material on record. The Assessing Officer has not doubted the purchase of shares were through banking channels. While making the additions, the ld. Assessing Officer has not brought an....
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....ightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. (ii) The Lucknow ITAT in the case of Achal Gupta vs. ITO (ITAT Lucknow) I.T.A. No.501/Lkw/2019 held that the documents demonstrates that the assessee had purchased shares through Brokers for which the payment was made through banking channels. The assessee had sold shares through an authorized stock broker and payment was received through banking channels after deduction of STT. The AO has not doubted any of the documents. The only objection raised is that the scrip from which the assessee had earned Long Term Capital Gain has been held by the Investigation Wing of the Revenue to be a paper entity and that this scrip was being used for creating artificial capital gain. The objection was not found to be acceptable. (iii) The Mumbai ITAT in the case of Dipesh Ramesh Vardhan vs. DCIT (ITAT Mumbai) I.T.A. No.7648/Mum/2019 held that the AO has not discharged the onus of controverting the documentary evidences furnished by the assessee and by bringing on record any cogent material to su....
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....ction in aforementioned scripts as bogus and thus, made addition under section 68 of the Act. We find that similar disallowance was made in the case of Narayan R. Rathi (father-in-law of the present assesse/appellant) for the assessment year 2014-15. Narayan R. Rathi had also sold the shares of same company i.e. M/s. Sunrise Asian Ltd. The issue travelled to the Tribunal. The Co-ordinate Bench of the Tribunal in ITA No. 4811/Mum/2018 (supra) deleted the addition. The Tribunal while allowing the appeal of Narayan R. Rathi held that the principles of natural justice were violated, the benefit of cross examination was not afforded to the assessee, hence, the addition is unsustainable. The relevant extract of the finding of Tribunal are reproduced herein below:- "11. The authorities below have not doubted the documentary evidence produced by the assessee to prove the genuineness of the transaction of sale and purchase of the shares in question. Further, the authorities below have not pointed out any evidence on record to hold that the assessee has obtained bogus entries in connivance with entry operators and brokers etc., in order to claim bogus LTCG. As pointed out by the Ld.....
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....g a transaction to be bogus has to be strictly discharged by adducing legal evidences, which would directly prove the fact of bogusness or establish circumstance unerringly and reasonably raising an interference to that effect. The Hon'ble Supreme Court in the case of Umacharan Shah & Bros. Vs. CIT [37 ITR 271] held that suspicion however strong, cannot take the place of evidence. 8.1. Respectfully following the above judgments of the Jurisdictional High Court and that of the Co-ordinate Benches of the Tribunal, we have no hesitation in confirming the order passed by ld. CIT(A) and deleting the additions made by the Assessing Officer u/s. 68 and u/s. 69C of the Act. Thus the grounds raised by the Revenue are devoid of merits and the same are liable to be rejected." 33. We note that Ld DR for the Revenue heavily relied on the Judgment of Hon`ble Calcutta High Court in the case of Swati Bajaj and others (supra), however, we are of the view that as per the judgment of Hon'ble High Court of Bombay in the case of Thana Electricity Supply Ltd (1994) 206 ITR 727 (Bom) wherein it was held that decision of a High Court will have the force of binding precedent only in the Sta....