SANCHIT VINOD JAIN, MUMBAI V. NATIONAL FACELESS ASSESSMENT CENTRE , DELHI

ITA 1287/MUM/2023

AI Insights

The case involves Sanchit Vinod Jain, who appealed against the penalty levied by the National Faceless Assessment Centre (NFAC), Delhi, under section 271(1)(c) of the Income Tax Act, 1961, for the Assessment Year 2014-15. The penalty was imposed following an addition of Rs. 35,884 to the assessee's income, which was considered as unaccounted income from the sale of penny stocks. The assessee had declared a higher amount under the IDS than the sale proceeds of the stocks, leading to a discrepancy. The Tribunal found that the assessee had not concealed any particulars of income as the entire transaction was disclosed and the difference was merely an oversight in the amount reported under the IDS.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299303 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 04-07-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 16-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AKSHAY JAINMAHAVEER JAIN
• Section: 68; 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM AND SHRI AMARJIT SINGH, AM आयकर अपील सं/ I.T.A. No. 1287/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2014-15) Sanchit Vinod Jain 601, Shrimad Darshan, Shri Rajchandra Mandir Marg, Ghatkopar, Mumbai- 400077. बिधम/ Vs. National Faceless Assessment Centre, Delhi. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. AJLPJ4491L (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) सुनवाई की तारीख / Date of Hearing: 05/07/2023 घोषणा की तारीख /Date of Pronouncement: 24/07/2023 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi dated 21.02.2023 for AY. 2014-15 confirming the action of the AO levying penalty u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter “the Act”) of Rs.11,088/-. 2. Brief facts regarding penalty levied is that the assesse had filed the return of income of Rs.11,64,790/-. The assessment was completed u/s 143(3) of the Act at an income of Rs.12,00,671/- after making an addition u/s 68 of the Act to the tune of Rs.35,884/-. The addition of Rs.35,884/- was because during the course of assessment proceedings, it was observed by AO that assessee had invested in alleged penny stock scrip of M/s Sun Asian; and has derived income by way of sale of the such scrip of M/s Sun Asian of 2800 shares for a total consideration of Rs.13,60,884/-.On being asked, the assessee Assessee by: Shri Akshay Jain/Mahaveer Jain Revenue by: Shri Ram Krishna Kedia (Sr. AR) ITA No.1287/Mum/2023 A.Y. 2014-15 Sanchit Vinod Jain 2 submitted that even though he earned Long Term Capital Gain (LTCG) of Rs.12,90,844/- from sale of scrips in question, he has offered more amount of Rs.13,25,000/- for taxation as per the amnesty scheme announced by Government [Income Disclosure Scheme (IDS)] which amount according to assessee was the capital gains claimed as exempt u/s 10(38) by her. On verification by AO, it was found that assessee has offered Rs.13,25,000/- under IDS, but not the full sale consideration of Rs.13,60,884/-. Thus the AO treated the entire sale proceeds pertaining to the penny stock scrip as bogus by holding that the scrips traded by the assessee and exit entry providers are directly linked to assessee [since they purchased the shares from assessee on the stock exchange], which establishes the direct relation with the transaction. Thus, according to AO, he has sufficient cogent tangible proof to show that long term capital gain booked by the assessee in her books were pre-arranged method to evade taxes and launder money. Hence, the difference, amount of Rs.35,884/- (Rs.13,60,884/- minus Rs.13,25,000/-) was added u/s 68 of the Act. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A) who confirmed quantum addition made by AO of Rs.35,884/-. Thereafter, the AO issued notice u/s 271(1)(c) of the Act to the assessee and pursuant thereto, the assessee filed her reply which was not acceptable for the AO who was pleased to levy penalty of Rs.11,088/- for concealment of particulars of income. Aggrieved, the assessee preferred penalty appeal before the Ld. CIT(A) who was pleased to confirm the same. Aggrieved, the assessee is before us. ITA No.1287/Mum/2023 A.Y. 2014-15 Sanchit Vinod Jain 3 3. We have heard both the parties and perused the records. We note that the assessee has already offered the Long Term Capital Gain (LTCG) on the alleged penny stock (M/s. Sun Asian) of Rs.12,90,884/- on sale of share of M/s. Sun Asian (wherein assessee offered more amount of Rs.13,25,000/-) under the Income Disclosure Scheme (IDS). The AO taking note of the aforesaid fact has added the difference amount of Rs.35,884/- which was the purchase consideration of the M/s. Sun Asian shares which was not offered in the IDS. And since the total sale proceeds was to the tune of Rs.13,60,884/-, and assessee only offered Rs.13,25,000/- under IDS, the AO in the quantum assessment added Rs.35,884/- u/s 68 of the Act which has been confirmed by Ld. CIT(A); and it is noted that against the action of Ld. CIT(A), the assessee has not preferred an appeal before this Tribunal. Be that as it may, the fact that the assessee has made claim of LTCG in the return of income filed by her wherein she has made the claim u/s 10(38) of the Act in respect of earning of LTCG regarding the share transaction of M/s. Sun Asian is not disputed. It is also un-disputed that assessee has claimed LTCG of Rs.12,90,884/- which has been settled in the IDS scheme by offering Rs.13,25,000/-. However, the AO has added the purchase consideration of this scrip of Rs.35,884/- in the quantum assessment, which has already been shown by the assessee in the return of income filed by assessee, so the question of concealment of material particulars cannot be charged/faulted against the assessee; and so the charge/fault levied against assessee fails; and resultant penalty ITA No.1287/Mum/2023 A.Y. 2014-15 Sanchit Vinod Jain 4 fastened on the assessee of Rs.35,884/- is unsustainable. Therefore, we are inclined to delete the penalty. 4. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this 24/07/2022. Sd/- Sd/- (AMARJIT SINGH) (ABY T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 24/07/2022. Vijay Pal Singh, (Sr. PS) आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai