Smt. Shashi Maheshwari, Panchkula V. ACIT, Circle, Panchkula

ITA 159/CHANDI/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3305 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-07-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 11-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Business income; Opportunity of being heard; Cost of acquisition; Accommodation entries; Penny stocks; Set aside; Bogus

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH .., ! '# #$ %, & '( BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NOS. 159/CHD/2019 ASSESSMENT YEAR : 2015-16 SMT. SHASHI MAHESHWARI # 295, SECTOR-7, PANCHKULA HARYANA THE ACIT CIRCLE, SECTOR-2 PANCHKULA, HARYANA PAN NO: ABBPM1411H APPELLANT RESPONDENT ITA NOS. 160/CHD/2019 ASSESSMENT YEAR : 2015-16 SMT. SHARMILA MAHESHWARI # 295, SECTOR-7, PANCHKULA HARYANA THE ACIT CIRCLE, SECTOR-2 PANCHKULA, HARYANA PAN NO: ABBPM1411H APPELLANT RESPONDENT !' ASSESSEE BY : SHRI TEJ MOHAN SINGH, ADVOCATE #!' REVENUE BY : SHRI MANJIT SINGH, CIT DR $ %! & DATE OF HEARING : 26/08/2019 '()*! & DATE OF PRONOUNCEMENT : 26/08/2019 ')/ ORDER PER N.K. SAINI, VICE PRESIDENT THESE TWO APPEALS BY THE ASSESSEES ARE DIRECTED AGA INST THE COMMON ORDER DT. 03/01/2019 OF THE LD. CIT(A), PANCHKULA. 2. SINCE THE ISSUES INVOLVED ARE COMMON AND THE APP EALS WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OFF BY THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2 3. AT THE FIRST INSTANCE WE WILL DEAL WITH THE APPE AL IN ITA NO. 159/CHD/2019. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS. 3,10,800/- DISALLOWING THE PURCHASE COST OF SHARES AS DECLARED WHICH IS ARBITRARY AND UNJUSTIFIED. 2. THAT IT IS THE SETTLED PRINCIPLE THAT COST IS ALWAY S DEDUCTIBLE WHILE ARRIVING AT THE ACTUAL INCOME AND AS SUCH UPHOLDING OF THE A DDITION IS ARBITRARY AND UNJUSTIFIED. 3. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS, ARBI TRARY, OPPOSED TO THE FACTS OF THE CASE AND THUS UNTENABLE. FROM THE ABOVE GROUNDS IT WOULD BE CLEAR THAT ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF ADDITION OF R S. 3,10,800/- MADE BY THE A.O. BY DISALLOWING THE PURCHASE COST OF SHARES DEC LARED BY THE ASSESSEE. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE E-FILED RETURN OF INCOME ON 22/09/2015 DECLARING AN INCOME OF RS. 67,31,190/-. LATER ON THE CASE WAS SELECTED FOR COMPLETE SCRUTINY UNDER CASS. THE A. O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT AS PER THE INF ORMATION RECEIVED FROM THE ASST. DIRECTOR OF INCOME TAX (INV)-2, CHANDIGARH VI DE LETTER NO. 852 DATD 26/09/2016, THE ASSESSEE OBTAINED BOGUS LONG TERM C APITAL GAINS (LTCG) AND THAT SHE HAD VOLUNTARILY SURRENDERED THE INCOME FRO M SCRIPS AS INCOME FROM OTHER SOURCES AMOUNTING TO RS. 44,65,200/-. THE A.O . ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY LTCG ON PENNY STOCK CHANNEL NINE E NTERTAINMENT LTD. BE NOT ADDED BACK TO HER TAXABLE INCOME. IN RESPONSE THE A SSESSEE FURNISHED THE WRITTEN SUBMISSION WHICH IS INCORPORATED IN PARA 2. 3 OF THE ASSESSMENT ORDER DT. 30/11/2017, FOR THE COST OF REPETITION THE SAME IS NOT REPRODUCED HEREIN. THE A.O. OBSERVED THAT THE REPLY FILED BY THE ASSESSEE REVEALED THAT THE TOTAL SALE PROCEEDS WERE OF RS. 47,76,000/- WHILE THE ASSESSEE SURRENDERED RS. 44,65,200/- AFTER CLAIMING THE PURCHASE COST OF SHARES. HOWEVER , THE A.O. DID NOT ALLOW THE PURCHASE COST CLAIMED BY THE ASSESSEE AND MADE THE ADDITION OF RS. 3,10,800/-. 3 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO SUSTAINED THE ADDITION BY OBSERVING IN PARA 4.2 OF THE IMPUGNED ORDER AS UNDER: 4.2 I HAVE GONE THROUGH THE FACTS OF THE CASE AND WRITT EN SUBMISSIONS FILED BY THE APPELLANT. IT IS NOTED FROM THE ASSESSMENT ORDER THAT THE APPE LLANT HAS DECLARED THE INCOME FROM TRADING OF BOGUS SCRIP OF M/S HPC B IO SCIENCES LTD. DURING F.Y. 2014-15 AS 'INCOME FROM OTHER SOURCES' AND NOT AS L ONG TERM CAPITAL GAIN OR BUSINESS INCOME SUBSEQUENT TO SURVEY BEING CONDUCTE D ON ITS PREMISES BY THE INVESTIGATION WING, CHANDIGARH. THE SEBI VIDE ITS O RDER WMT/RKA/ISD/54/2015 DATED 29.06.2015 IN RESPECT OF M/S HPC BIO SCIENCES LTD., M/S ALPS MOTOR FINANCE LTD. AND M/S CHANNEL NINE ENTERTAINMENT LTD., HAS H ELD THESE THREE COMPANIES TO BE PENNY STOCK COMPANIES USED FOR MANIPULATIVE TRAD ING ACTIVITIES, PROVIDING ACCOMMODATION ENTRIES AND FOR GENERATING FICTITIOUS LTCG. FROM THE ABOVE, IT IS CLEAR THAT THE APPELLANT HAD TRADED IN PENNY STOCKS WHICH WERE USED FOR MANIPULATIVE TRADING ACTIVITIES AND HENCE THE SALE PROCEEDS FROM THE SAME ARE HELD TO BE BOGUS. THEREFORE, THE ENTIRE TRADE VALUE IS THE UNDISCLOSE D INCOME OF THE APPELLANT IN THE RELEVANT YEAR AND THE AO HAS RIGHTLY ADDED BACK THE PURCHASE COST AS CLAIMED BY APPELLANT TO THE TOTAL INCOME. I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE AO AND THE SAME IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 6. NOW THE ASSESSEE IS IN APPEAL. 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WITHOUT CONFRONTING THE ORDER DT. 29/06/2015 OF THE SEBI ME NTIONED IN THE IMPUGNED ORDER, TO THE ASSESSEE, TREATED THE TRADING OF THE SHARES AS BOGUS. HE REQUESTED THAT THE MATTER MAY BE SET ASIDE TO THE A.O. BECAUS E THE OPPORTUNITY WAS NOT GIVEN TO REBUT THE ORDER, IF ANY, OF THE SEBI AND M OREOVER THE REASONS FOR NOT ALLOWING THE PURCHASE COST WAS NOT GIVEN BY THE A.O , AND THAT THE ASSESSEE PURCHASED THE SHARES THROUGH BANKING CHANNELS AND I PO. 8. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE, THESE FACTS ARE NOT CLEAR AS TO WHETHER THE ASSESSEE PURCHASED THE SHARES THR OUGH IPO AND AS TO WHETHER THE ORDER DT. 29/06/2015 OF THE SEBI WAS CONFRONTED TO THE ASSESSEE. WE 4 THEREFORE, DEEM IT APPROPRIATE TO SET ASIDE THIS IS SUE BACK TO THE FILE OF THE A.O. TO BE ADJUDICATED AFRESH, IN ACCORDANCE WITH LAW AF TER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 10. IN ITA NO. 160/CHD/2019 PERTAINING TO SMT. SHAR MILA MAHESHWARI, PANCHKULA, THE FACTS ARE IDENTICAL AS WERE INVOLVED IN THE CASE OF SMT. SHASHI MAHESWARI IN ITA NO. 159/CHD/2019 WHICH WE HAVE ADJ UDICATED IN THE FORMER PART OF THIS ORDER, THEREFORE, OUR FINDINGS GIVEN I N THE SAID CASE SHALL APPLY MUTATIS MUTANDIS TO THE CASE OF SMT. SHARMILA MAHES WARI. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S ARE ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 26/08/2019 ) SD/- SD/- #$ % .., (SANJAY GARG ) ( N.K. SAI NI) & '(/ JUDICIAL MEMBER ! / VICE PRESIDENT AG DATE: 26/08/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR