Avnish Navinchandra Shah, Ahmedabad V. The ITO, Ward-7(2)(1), Ahmedabad

ITA 1320/AHD/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6827 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Set aside
• Section: 69; 143(3); 234B; 143(2)

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ SMC’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 1320/AHD/2019 िनधाᭅरण वषᭅ/Asstt. Year: 2011-12 Avnish Navinchandra Shah, 13-14, Umiya Bungalows, Pal Nagar, Naroda, Ahmedabad. PAN: BHHPS5239Q Vs. I.T.O., Ward-7(2)(1), Ahmedabad. (Applicant) (Respondent) Assessee by : Shri Prakash D. Shah, A.R Revenue by : Shri Urjit Shah, Sr.D.R सुनवाई कᳱ तारीख/Date of Hearing : 09/11/2021 घोषणा कᳱ तारीख /Date of Pronouncement: 08/12/2021 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-7, Ahmedabad, dated 24/06/2019 arising in the matter of assessment order passed under s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-12. ITA no.1320/AHD/2019 A.Y. 2011-12 2 2. The assessee has raised the following grounds of appeal: 1. That the learned CIT(A) has erred in [aw and facts by not quashing the order passed under section 143(3) r\*s 147 of the Act as the proceedings under section 147 of !he Act and the learned AO has not issued notice under section 143(2) of the Act and therefore the Id.AO should be directed delete the addition made therein while computing the total income. 2. That the learned CIT(A) has erred in laws and facts by confirming the addition of Rs.3,95,380/- on disallowance of loss on sale of Shares of Swarsarita Gems Limited under section 69 of the Act and therefore the learned AO is to be directed to delete the said addition, while computing the total income. 3. That correct total income and income tax thereon is to be computed and interest under section 234A, 234B and 234C of the Act is to be computed as per law and facts on the record. 4. That your appellant craves a leave lo add, alter or amend any grounds at the time of hearing. 3. The issue raised by the assessee in 2 nd ground of appeal is that the learned CIT (A) erred in confirming the addition made by the AO for ₹ 3,95,380.00 under section 69 of the Act representing the loss on the sale of shares of Swarsarita Gems Limited (for short SGL) 4. The facts in brief are that the assessee in the present case is an individual and filed his return of income under the head other sources. The AO during the assessment proceedings found that the assessee has shown a loss of ₹ 3,95,380.00 through the trading in shares/scripts of SGL. As per the AO, the shares of SGL were representing the penny stock listed on the Bombay stock exchange. However the assessee has not disclosed such loss in the income tax return. According to the AO the shares of SGL were used to facilitate the introduction of unaccounted income of certain beneficiaries in the form of exempted long-term capital gain. Thus the AO treated the amount of loss of ₹ 3,95,380.00 as investment in SGL which was not undisclosed in the income tax return. Hence, the AO made the addition of ₹ 3,95,380.00 under the provisions of section 69 of the Act to the total income of the assessee. ITA no.1320/AHD/2019 A.Y. 2011-12 3 5. Aggrieved assessee preferred an appeal to the learned CIT (A) who also confirmed the order of the AO. 6. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 7. The learned AR before us filed the written submissions running into pages 1 to 18 and submitted that the transactions for the sale/purchase of shares in SGL were carried out in the financial year 2008-09 which resulted the loss of ₹ 3,95,380.00. The learned AR in support of his contention drew our attention on pages 17 and 18 of the written submissions filed by the assessee wherein the details for the purchase and sales of shares of SGL were placed. Accordingly, the learned AR contended that the issue does not pertain to the year under consideration and therefore the same cannot be added to the total income of the assessee. 8. On the other hand the learned DR vehemently supported the order of the authorities below. 9. We have heard the rival contentions of both the parties and perused the materials available on record. The provisions of section 4 of the Act reads as under: Charge of income-tax. 13 4. 14 (1) Where any Central Act enacts that income-tax 15 shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year 16 in accordance with, and 17 [subject to the provisions (including provisions for the levy of additional income-tax) of, this Act] in respect of the total income 16 of the previous year 18 [***] of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. 9.1 On a plain reading of the above provision, it is transpired that income tax shall be charged for the previous year to which the income relates/in which income accrues. Thus the scheme of the Act provides that the income pertaining to a particular previous year shall be charged to tax in the corresponding assessment year. In holding so we draw support and guidance from the judgment of Hon’ble ITA no.1320/AHD/2019 A.Y. 2011-12 4 Supreme Court in the case of P.G. & W. Sawoo Pvt. Ltd. Vs ACIT reported in 69 taxmann.com 188 wherein it was held as under: A reading of the decision of this Court in E.D. Sassoon & Co. Ltd. (supra) would go to show that the income to be chargeable to tax must accrue or arise at any point of time during the previous year. This Court in E.D. Sassoon & Co. Ltd.'s case (supra) has held in categorical terms that income can be said to have accrued or arisen only when a right to receive the amount in question is vested in the appellant-assessee. 9.2 In the given case, the transactions for the purchase and sale of shares have taken place in the financial year 2008-09 and therefore the same at the most can be taxed in the corresponding assessment year. However, we find that the AO has determined the income under the provisions of section 69 of the Act with respect to the transactions carried out by the assessee in the earlier year and not in the year under consideration. The act of the revenue authorities is unwarranted under the provisions of law. Accordingly, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. 10. The assessee in 1 st ground of appeal has challenged the validity of the assessment framed under section 147 of the Act. However, we are not inclined to adjudicate the same for the reason that the assessee on merit got the relief. Therefore, we do not find any reason to adjudicate the technical issue raised by the assessee. As such we dismiss the same being infructuous. Hence, the ground of appeal of the assessee is dismissed. 11. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the Court on 08/12/2021 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 08/12/2021 Manish