DY. CIT -34(1), MUMBAI V. AMIT BURAKIA, MUMBAI

ITA 1590/MUM/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0854 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 22-08-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 16-06-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Principle of natural justice; Additional evidence; Accommodation entries; Set aside; Bogus
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 1590/MUM/2020 Assessment Year: 2015-16 Dy. CIT-34(1), Kautilaya Bhavan, 8 th floor, Room No. 802, BKC, Mumbai-400051. Vs. Amit Burakia, 1203-1204, Gardenia, B-Wing, Vasant Valley, Film City Road, Malad (East), Mumbai-400097. PAN No. ABUPA 6908 N Appellant Respondent Revenue by : Mr. Manoj Sinha, DR Assessee by : Mr. Haridas Bhat, AR Date of Hearing : 23/08/2022 Date of pronouncement : 14/10/2022 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against the order dated 23.01.2020 passed by the Ld. Commissioner of Income-tax (Appeals)-46, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds : 1. "Whether in the facts and circumstances of the case, the Ld.CIT(A) is justified in not upholding the action of the AO in rejecting the Claim exemption transactions in penny Stock shares of PSIT Infrastructure & Services Ltd and assessing the same as assessee's Business income. 2. Whether in the facts and circumstances of the case, the Ld. CIT(A) had failed appreciate that th rejecting the claim exemption u/s 10(38) of Rs. 40716372/ was based on attending circumstances and human probabilities which does not get vitiated if there are compelling reasons to reject the frontage of a transaction based on the s evidence which is nothing more than a mere paper work? 3. Whether in the facts and circumstances of the case, the Ld. CIT(A) ought to have upheld the action of the AO in denying exemption u/s 10(38) of Rs.407163724 and business Supreme Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) & Sumati Dayal v. CIT (1995) 214 ITR 801(SC)? 4. Whether in the facts and circumstances of the case, the Ld.CIT(A) was rather than taking the investigation / enquiries further either by himself or cause to get it done as per section 250(4) of the I T Act, especially ignoring the circumstantial evidences conclusions brought out that the claim of LTCG are part of major scheme of accommodation entries to generate bogus long term capital gains?" "Whether in the facts and circumstances of the case, the Ld.CIT(A) is justified in not upholding the action of the AO in rejecting the Claim exemption u/s 10(38) of Rs 40716372/ transactions in penny Stock shares of PSIT Infrastructure & Services Ltd and assessing the same as assessee's Business income. Whether in the facts and circumstances of the case, the Ld. CIT(A) had failed appreciate that the action of the AO in rejecting the claim exemption u/s 10(38) of Rs. 40716372/ was based on attending circumstances and human probabilities which does not get vitiated if there are compelling reasons to reject the frontage of a transaction based on the s evidence which is nothing more than a mere paper work? Whether in the facts and circumstances of the case, the Ld. CIT(A) ought to have upheld the action of the AO in denying exemption u/s 10(38) of Rs.407163724 and assessing same as business profits by relying on the ratio laid down by the Hon'ble Supreme Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) & Sumati Dayal v. CIT (1995) 214 ITR 801(SC)? Whether in the facts and circumstances of the case, the Ld.CIT(A) was justified deleting the addition made by the AO rather than taking the investigation / enquiries further either by himself or cause to get it done as per section 250(4) of the I T Act, especially ignoring the circumstantial evidences conclusions brought out by the Assessing officer in his order that the claim of LTCG are part of major scheme of accommodation entries to generate bogus long term capital gains?" Amit Burakia ITA No. 1590/M/2020 2 "Whether in the facts and circumstances of the case, the Ld.CIT(A) is justified in not upholding the action of the AO in u/s 10(38) of Rs 40716372/- on transactions in penny Stock shares of PSIT Infrastructure & Services Ltd and assessing the same as assessee's Business Whether in the facts and circumstances of the case, the Ld. e action of the AO in rejecting the claim exemption u/s 10(38) of Rs. 40716372/- was based on attending circumstances and human probabilities which does not get vitiated if there are compelling reasons to reject the frontage of a transaction based on the so called evidence which is nothing more than a mere paper work? Whether in the facts and circumstances of the case, the Ld. CIT(A) ought to have upheld the action of the AO in denying ssessing same as profits by relying on the ratio laid down by the Hon'ble Supreme Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) & Sumati Dayal v. CIT (1995) 214 ITR 801(SC)? Whether in the facts and circumstances of the case, the justified deleting the addition made by the AO rather than taking the investigation / enquiries further either by himself or cause to get it done as per section 250(4) of the I T Act, especially ignoring the circumstantial evidences by the Assessing officer in his order that the claim of LTCG are part of major scheme of accommodation entries to generate bogus long term capital 5. "Whether in the facts and circumstances of the case and in law, the Ld.CIT(A) is correct in deleting 80,00,000/ appellate authority to have ensured that effective enquiry was carried out as held by the Hon'ble Delhi High Court in the case of M/s. Jansampark Advertising & Marketing (P) Lt 525/2014 delivered on 11.03. 2015 6. "The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the Assessing Officer be restored." 7. "The appellant craves leave to add, amend or alter all or any of the grounds 2. Briefly stated, facts of the case are that the assessee return of income for the year under consideration on 31.08.2015 declaring total income of gain on sale of the shares ₹4,07,16,372/- which was claimed as exempt u/s 10(38) of the Income-tax Act, 1961 (in short ‘the Act’). In the assessment completed u/s 143(3) of the Act dated 30.12.2017, the Assessing Officer rejected the claim of the assessee of "Whether in the facts and circumstances of the case and in law, the Ld.CIT(A) is correct in deleting the addition of Rs. 80,00,000/- without fulfilling the obligation of the first appellate authority to have ensured that effective enquiry was carried out as held by the Hon'ble Delhi High Court in the case of M/s. Jansampark Advertising & Marketing (P) Lt 525/2014 delivered on 11.03. 2015 "The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the Assessing Officer be restored." "The appellant craves leave to add, amend or alter all or any of the grounds of appeal" Briefly stated, facts of the case are that the assessee return of income for the year under consideration on 31.08.2015 declaring total income of ₹43,70,070/- including long term capital gain on sale of the shares M/s PSIT Infra Ltd. which was claimed as exempt u/s 10(38) of the tax Act, 1961 (in short ‘the Act’). In the assessment completed u/s 143(3) of the Act dated 30.12.2017, the Assessing Officer rejected the claim of the assessee of “long term c Amit Burakia ITA No. 1590/M/2020 3 "Whether in the facts and circumstances of the case and in law, the addition of Rs. without fulfilling the obligation of the first appellate authority to have ensured that effective enquiry was carried out as held by the Hon'ble Delhi High Court in the case of M/s. Jansampark Advertising & Marketing (P) Ltd. in ITA "The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the Assessing Officer be "The appellant craves leave to add, amend or alter all or any of Briefly stated, facts of the case are that the assessee filed return of income for the year under consideration on 31.08.2015 including long term capital M/s PSIT Infra Ltd. amounting to which was claimed as exempt u/s 10(38) of the tax Act, 1961 (in short ‘the Act’). In the assessment completed u/s 143(3) of the Act dated 30.12.2017, the Assessing long term capital gain” and assessed the income business or profession” 3. On further appeal, the Ld. CIT(A) reverse finding of the Ld. Assessing Officer and directed head ‘capital gain’, subje 4. Aggrieved, the Revenue is in appeal raising the grounds as reproduced above. 5. Before us, the Ld. Departmental Representative (DR) fi application under Rule 29 Rajkumar Kedia i.e. one of the employee working Shri Soumen Sen who was the Director with M/s PSIT Infra Ltd. For ready reference same is reproduced as under: “Kindly refer to the hearing in the above case fixed for today. 2. The issue involved in this case is the tune of Rs. 4,07,16,372/ the assessee claimed the LTCG is M/s PSIT Infra Ltd. The assessment was made after the income under the head “profit and grain business or profession”. On further appeal, the Ld. CIT(A) reverse finding of the Ld. Assessing Officer and directed to assess the said amount under the head ‘capital gain’, subject to exemption u/s 10(38) of the Act. Aggrieved, the Revenue is in appeal raising the grounds as Before us, the Ld. Departmental Representative (DR) fi application under Rule 29 (sic) for admitting statement of Shri r Kedia i.e. one of the employee working Shri Soumen Sen who was the Director with M/s PSIT Infra Ltd. For ready reference reproduced as under: Kindly refer to the hearing in the above case fixed for today. The issue involved in this case is assessee's claim of long term capital gain to of Rs. 4,07,16,372/- being exempt u/s 10(38) of the IT Act. The scrip in which the assessee claimed the LTCG is M/s PSIT Infra Ltd. The assessment was made after Amit Burakia ITA No. 1590/M/2020 4 profit and grain of On further appeal, the Ld. CIT(A) reverse finding of the Ld. the said amount under the ct to exemption u/s 10(38) of the Act. Aggrieved, the Revenue is in appeal raising the grounds as Before us, the Ld. Departmental Representative (DR) filed an (sic) for admitting statement of Shri r Kedia i.e. one of the employee working Shri Soumen Sen who was the Director with M/s PSIT Infra Ltd. For ready reference Kindly refer to the hearing in the above case fixed for today. assessee's claim of long term capital gain to being exempt u/s 10(38) of the IT Act. The scrip in which the assessee claimed the LTCG is M/s PSIT Infra Ltd. The assessment was made after discussing in detail the price movement circumspect way of the transaction carried out by the assessee and reliance was placed on certain legal decisions. 3. During the course of assessment proceedings in another case, it was found that M/s PSIT Infra Ltd. was admitted to be a penny stock used for providing accommodation entry by the operators. It was specifically admitted by the main operator Shri Rajkumar Kedia and one of the employees working under him Shri Soumen Sen who was Director with M/S PSIT 131 of the IT Act during the course of survey action u/s 133A of the I T Act. 4. The above admission juxtaposed with the matching circumstances in the assessee's case and the scrip having been specifically identified providing accommodation entry, there is no two opinion about the fact that the assessee's claim is nothing but laundering of his unaccounted income masquerading an accommodation entry as a genuine LTCG transaction. Copies of the relev statements and other relevant facts specifically of the scrip are bring enclosed herewith for ready reference. 5. In this background, the additional evidence may kindly be admitted and the same may please be considered. 5.1 It is the shares of this co Assessing Officer as penny stock and accordingly he has denied long term capital gain u/s 10(38) of the Act to the assessee. submitted that the statement of Shri Rajkumar Kedia is having bearing on the issue discussing in detail the price movement and the inherent strength of the scrip, the circumspect way of the transaction carried out by the assessee and reliance was placed on certain legal decisions. During the course of assessment proceedings in another case, it was found that Ltd. was admitted to be a penny stock used for providing accommodation entry by the operators. It was specifically admitted by the main operator Shri Rajkumar Kedia and one of the employees working under him Shri Soumen Sen who was Director with M/S PSIT Infra Ltd. in the statement recorded us 131 of the IT Act during the course of survey action u/s 133A of the I T Act. The above admission juxtaposed with the matching circumstances in the case and the scrip having been specifically identified providing accommodation entry, there is no two opinion about the fact that the assessee's claim is nothing but laundering of his unaccounted income masquerading an accommodation entry as a genuine LTCG transaction. Copies of the relev statements and other relevant facts specifically of the scrip are bring enclosed herewith for ready reference. In this background, the additional evidence may kindly be admitted and the same may please be considered.” It is the shares of this company which has been held by the Assessing Officer as penny stock and accordingly he has denied long term capital gain u/s 10(38) of the Act to the assessee. submitted that the statement of Shri Rajkumar Kedia is having bearing on the issue-in-dispute and therefore, same might be Amit Burakia ITA No. 1590/M/2020 5 and the inherent strength of the scrip, the circumspect way of the transaction carried out by the assessee and reliance was placed During the course of assessment proceedings in another case, it was found that Ltd. was admitted to be a penny stock used for providing accommodation entry by the operators. It was specifically admitted by the main operator Shri Rajkumar Kedia and one of the employees working under him Shri Infra Ltd. in the statement recorded us 131 of the IT Act during the course of survey action u/s 133A of the I T Act. The above admission juxtaposed with the matching circumstances in the as an instrument for providing accommodation entry, there is no two opinion about the fact that the assessee's claim is nothing but laundering of his unaccounted income masquerading an accommodation entry as a genuine LTCG transaction. Copies of the relevant statements and other relevant facts specifically of the scrip are bring enclosed In this background, the additional evidence may kindly be admitted and the mpany which has been held by the Assessing Officer as penny stock and accordingly he has denied long term capital gain u/s 10(38) of the Act to the assessee. The Ld. DR submitted that the statement of Shri Rajkumar Kedia is having ispute and therefore, same might be admitted as additional evidence and matter may be restored back to the Ld. Assessing Officer for deciding afresh. The Ld. Counsel of the assessee also did not object seriously for restoring the matter to the AO but requested that might be provided if same 6. We have heard rival submission of the parties on the issue dispute of admissibility of additional evidence. The statement by Shri Rajkumar Kedia is in relation to the shares of PSIT Infra Ltd. which the assessee has claimed to have consideration and shown long term capital gain Therefore, in the facts bearing on the issue appropriate to restore the issue to the file of the Ld. Assessing Officer for deciding afresh. said statement then following the principles of assessee should be provided opportunity of cross admitted as additional evidence and matter may be restored back to the Ld. Assessing Officer for deciding afresh. The Ld. Counsel of the assessee also did not object seriously for restoring the matter to the sted that cross-examination of Shri Rajkumar Kedia same is relied upon by the Assessing Officer. We have heard rival submission of the parties on the issue dispute of admissibility of additional evidence. The statement by ajkumar Kedia is in relation to the shares of PSIT Infra Ltd. which the assessee has claimed to have sold during the year under consideration and shown long term capital gain n the facts of the case, the additional evidence is havi the issue-in-dispute before us. Accordingly, we restore the issue to the file of the Ld. Assessing for deciding afresh. If the Assessing Officer rely solely said statement then following the principles of natural justice, the assessee should be provided opportunity of cross- Amit Burakia ITA No. 1590/M/2020 6 admitted as additional evidence and matter may be restored back to the Ld. Assessing Officer for deciding afresh. The Ld. Counsel of the assessee also did not object seriously for restoring the matter to the examination of Shri Rajkumar Kedia the Assessing Officer. We have heard rival submission of the parties on the issue-in- dispute of admissibility of additional evidence. The statement by ajkumar Kedia is in relation to the shares of PSIT Infra Ltd. during the year under consideration and shown long term capital gain on the same. , the additional evidence is having Accordingly, we feel it restore the issue to the file of the Ld. Assessing rely solely on the natural justice, the -examination of the said witness of the Revenue. assessee shall be afforded 7. In the result, the appeal filed by the statistical purposes. Order pronounced in the open Court in Sd/- (KULDIP SINGH JUDICIAL MEMBER Mumbai; Dated: 14/10/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// of the Revenue. It is needless to mention that afforded adequate opportunity of being In the result, the appeal filed by the Revenue is allowed for nounced in the open Court in 14/10/2022. Sd/ KULDIP SINGH) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai Amit Burakia ITA No. 1590/M/2020 7 needless to mention that of being heard. Revenue is allowed for /10/2022. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Sr. Private Secretary) ITAT, Mumbai