Sushil Kumar Jindal, Daryaganj V. ITO Ward 35 (5), New Delhi

ITA 1236/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6564 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 15-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice; Bogus
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1236/DEL/2019 ASSESSMENT YEAR: 2015-16 SUSHIL KUMAR JINDAL, FLAT NO.12, 2 ND FLOOR, SHEEL TARA HOUSE, 4866/24, ANSARI ROAD, DARYA GANJ, NEW DELHI. PAN: AAAHS0041K VS. ITO, WARD-35(5), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI S.L. ANURAGI, SR.DR DATE OF HEARING : 29.07.2019 DATE OF PRONOUNCEMENT : 01.08.2019 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE EX PARTE ORDER DATED 22.11.2018 OF THE CIT(A)-12, NEW DELHI, RELATING TO ASSESSMENT YEAR 2015-16. 2. AN ADJOURNMENT APPLICATION HAS BEEN FILED BY THE LD. COUNSEL FOR THE ASSESSEE SEEKING ADJOURNMENT OF THE CASE. HOWEVER, CONSIDER ING THE FACT THAT THE LD.CIT(A) HAS PASSED THE EX PARTE ORDER, THEREFORE, THE SAME IS REJECTED AND THE MAT TER IS BEING DISPOSED OF ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DR. ITA NO.1236/DEL/2019 2 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN HUF AND FILED ITS RETURN OF INCOME ON 28 TH MARCH, 2016 DECLARING THE TOTAL INCOME OF RS.9,75, 640/-, AFTER CLAIMING DEDUCTION OF RS.1,50,505/- UNDER CHAPTER VIA OF THE IT ACT. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED T HAT THE ASSESSEE HAS CLAIMED EXEMPTION OF LONG-TERM CAPITAL GAIN OF RS.21,82,980 /- U/S 10(38) OF THE IT ACT. HE NOTED THAT THE ASSESSEE HAS EARNED THE LONG-TERM CA PITAL GAIN OF RS.21,82,980/- FROM SALE OF SHARES OF M/S HPC BIOSCIENCES LIMITED, WHIC H IS A PENNY STOCK COMPANY. HE REFERRED TO THE MODUS OPERANDI UNEARTHED DURING THE INVESTIGATION BY THE DIRECTOR OF INVESTIGATION, KOLKATA, ACCORDING TO WHICH THEY HAV E IDENTIFIED 84 PENNY STOCK COMPANIES, THE SHARES OF WHICH WERE USED FOR GENERA TING BOGUS LONG TERM CAPITAL GAIN BY VARIOUS ENTRY OPERATORS. HE OBSERVED THAT THE A SSESSEE IS ONE OF THE BENEFICIARIES WHO HAS OBTAINED LONG-TERM CAPITAL GAIN BY WAY OF T RADING IN THE SHARES OF M/S HPC BIOSCIENCES LIMITED WHICH WAS SUSPENDED BY SEBI DUR ING THE PERIOD. HE FURTHER NOTED THAT THE NOTICES ISSUED U/S 133(6) TO M/S HPC BIOSCIENCES LIMITED WAS RETURNED BACK UNSERVED. HE, THEREFORE, CONFRONTED THE SAME TO THE ASSESSEE AND ASKED HIM TO EXPLAIN THE EARNING OF LONG-TERM CAPITAL GAIN FROM TRADING IN THE SHARES OF A PENNY STOCK COMPANY. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE, THE ASSESSING OFFICER MADE ADDITION OF RS.21,82,980/- U /S 68 OF THE IT ACT. HE FURTHER ADDED AN AMOUNT OF RS.64,489/- BEING COMMISSION @ 3 % ON ESTIMATE BASIS FOR EARNING THE ABOVE BOGUS LONG-TERM CAPITAL GAIN. TH US, IN EFFECT, THE ASSESSING OFFICER MADE AN ADDITION OF RS.23,88,469/- TO THE TOTAL INC OME OF THE ASSESSEE AND DETERMINED THE INCOME OF THE ASSESSEE AT RS.33,64,109/-. ITA NO.1236/DEL/2019 3 4. IN APPEAL, THE LD.CIT(A), IN THE EX PARTE ORDER PASSED BY HIM, UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. 4.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) -X II, NEW DELHI HAS ERRED IN ARBITRARILY CONFIRMING THE ADDITION BY THE LD. I NCOME TAX OFFICER, WITHOUT CONSIDERING THE FACTS OF THE CASE EXPLAINED AND SUB MITTED TO HIM. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - XII, NEW DELHI HAS CONFIRM THE ADDITION MADE BY LD. ITO ON ACCOUNT OF LONG TERM CAPITAL GAIN OF RS. 21,82,980/- ON SALE OF SHARES SOLD ON RECOGNIZE D STOCK EXCHANGE AND ELIGIBLE FOR EXEMPTION U/S 10(38) OF THE ACT AND BRINGING TO TAX AS UNEXPLAINED CASH CREDIT U/S 68. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) -XII, NEW DELHI HAS CONFIRM THE ADDITION DESPITE THE TRANSACTION HAVING BEEN DONE THROUGH PROPER BANKING CHANNELS AND AS PER THE RULES AND REGULATIO NS OF THE STOCK EXCHANGE. THAT THE ASSESSEE HAD MADE INVESTMENT IN VARIOUS SHARE I NCLUDING M/S HPC BIOSCIENCES LIMITED. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - XII, NEW DELHI HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AB OVE ADDITION DESPITE THE ASSESSEE PLACE LATEST PRONOUNCEMENTS OF THE JURISDICTIONAL I TAT DECISION AS OF THE ASSESSEE AND THE SAME SCRIP M/S HPC BIO SCIENCE LTD WHICH AP PENDED BELOW: A. SUNITA KHEMKA, NEW DELHI VS ACIT, CENTRAL CIRCLE -15 ITA NO. 389/DEL./ 2008 DATED 02.08.2018 B. NIDHI GOEL VS ITO, WARD 49(1), NEW DELHI. ITA NO.6882/DEL/2017 DELHI DATED 12.03.2018. C. CHANDER PRAKASH, NEW DELHI VS ITO, WARD- 49(4), NEW DELHI. ITA NO.6880/2017 DELHI DATED 12.03.2018 5. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - XII, NEW DELHI HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AB OVE ADDITION DESPITE THE ASSESSEE DECLARING THE TOTAL CONSIDERATION ON SALE OF SHARES AS HIS INCOME EXEMPT UNDER SECTION 10(38) OF THE ACT, THE ADDITION AMOUNTS TO DOUBLE TAXATION ON THE SAME INCOME. 6. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - XII, NEW DELHI HAS ERRED BOTH ON THE FACTS AND IN LAW CONFIRMING THE A DDITION MADE LD. ITO WHICH IS NOT VERIFIED ALL THE ASPECTS AND DETAILS FILED BY T HE ASSESSEE DURING THE ASSESSMENT ITA NO.1236/DEL/2019 4 PROCEEDING. AS VIDE LETTER DATED 30.11.2017 SUBMITT ED BY THE ASSESSEE GENUINENESS OF LONG TERM CAPITAL GAIN ALONG WITH COPY OF PURCHA SE BILLS OF M/S HPC BIOSCIENCES LIMITED, COPY OF DMAT STATEMENT, COPY O F FINANCIAL LEDGER WITH SHARE BROKER & COPIES OF ALL CONTRACT NOTE OF BROKERS SOL D IN ASST. YEAR 2015-16. THAT THE APPELLANT HAS FILED THE COMPLETE DETAILS OF WHICH S HOWS GENUINENESS OF LONG TERM CAPITAL GAIN U/S 10(38) AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME. 7. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - XII, NEW DELHI HAS ALSO ERRED IN RELYING ON THE REPORT OF INVESTIGATIO N WING WITHOUT APPLYING HIS MIND. 8. THAT THE ADDITION WAS MADE GROSSLY INDULGING IN SURMISES WITHOUT BRINGING ON ANY DIRECT EVIDENCE AGAINST THE ASSESSEE, ONLY O N THE BASIS OF PRESUMPTION AND ASSUMPTION. 9. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - XII, NEW DELHI HAS ERRED IN NOT PROVING THE EVIDENCE WHICH WERE USED A GAINST THE ASSESSEE NOR ANY OPPORTUNITY FOR CROSS VERIFICATION HAS BEEN PROVIDE D RESULTED INTO GROSS VIOLATION OF NATURAL JUSTICE TO THE ASSESSEE. 10. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XII, NEW DELHI HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AD DITION OF RS. 65,489/- MADE BY LD. ITO BY PRESUMING THAT THE ASSESSEE HAD PAID COM MISSION OF RS.65,489/- WITHOUT ANY BASIS AND WITHOUT ANY SOURCES OF SUCH C ASH GENERATION DURING THE YEAR. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIF Y, ANY OTHER MATTER. 5. I HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THE ASSESSING OFFICER IN THE INSTANT CASE, MADE ADDITIO N OF RS.21,82,980/- U/S 68 OF THE IT ACT BEING THE BOGUS LONG-TERM CAPITAL GAIN EARNED F ROM THE SALE OF SHARES OF M/S HPC BIOSCIENCES LIMITED WHICH IS A PENNY STOCK COMPANY. HE ALSO MADE ADDITION OF RS.65,489/- ON ESTIMATE BASIS BEING THE COMMISSION PAID BY THE ASSESSEE FOR EARNING SUCH BOGUS LONG-TERM CAPITAL GAIN @ 3% OF SUCH CAPI TAL GAIN. I FIND THE LD.CIT(A), IN THE EX PARTE ORDER, HAS UPHELD THE ADDITION SO MADE BY THE ASSE SSING OFFICER. ALTHOUGH THE LD.CIT(A) HAS ALSO DECIDED THE ISSUE O N MERIT, HOWEVER, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTERE ST OF JUSTICE, I DEEM IT PROPER TO RESTORE ITA NO.1236/DEL/2019 5 THE ISSUE BACK TO THE FILE OF THE CIT(A) WITH A DIR ECTION TO GRANT ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CASE AND DECIDE THE ISSUE AS PER FACT AND LAW. THE LD.CIT(A) WHILE DECIDING THE APPEAL SHALL KEEP IN M IND THE LATEST DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF UDIT KALRA. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSES. 6. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 01.08.2019. SD/- ( R.K. PANDA) ACCOUNTANT MEMFBE R DATED: 01 ST AUGUST, 2019 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI