SHRI BHIM SAI JAIN , BALLABGARH FARIDABAD V. ITO,WARD 1(1)FARIDABAD , HARYANA FARIDABAD

ITA 1640/DEL/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0736 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-07-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 08-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY K. GUPTA
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘SMC’ NEW DELHI SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA No.1640/Del/2021 Assessment Year: 2014-15 Shri Bhim Sain Jain, Prop. Of M/s. Gomti Food Products, Ballabgarh, PIN:121004 Vs. ITO, Ward-1(1), Ballabgarh, (Haryana) PAN :ABUPJ6954B (Appellant) (Respondent) ORDER This is an appeal by the assessee against order dated 30.09.2021 passed by National Faceless Appeals Centre (NFAC), Delhi for the assessment year 2014-15. 2. The dispute in the present appeal is confined to addition of an amount of Rs.23,70,761 as unexplained cash credit under Section 68 of the Income-Tax Act,1961. Appellant by Shri Vijay K. Gupta, Adv. Respondent by Shri Om Parkash, Sr. DR Date of hearing 19.07.2022 Date of pronouncement 14.10.2022 2 ITA No.1640/Del./2021 3. Briefly, the facts are, the assessee is a resident individual. For the assessment year under dispute, assessee had filed his return of income on 29.09.2014 declaring income of Rs.17,85,350. In the return of income so filed, the assessee had offered long term capital gain of Rs.23,25,961 from sale of shares of M/s. Pawansut Holdings Ltd. At the same time, he claimed such income to be exempt under Section 10(38) of the Act. 4. In course of assessment proceedings, the assessing officer called upon the assessee to furnish the details relating to sale of shares of Pawansut Holdings Ltd. After verifying the material available on record, the assessing officer ultimately concluded that the so called share transaction relating to sale of shares of Pawansut Holdings Ltd. is a sham transaction aimed only to bring unaccounted money in the guise of exempted long term capital gain. Accordingly, he added back the amount of Rs.23,70,761 to the income of the assessee as unexplained cash credit under Section 68 of the Act. The addition so made was upheld by learned Commissioner (Appeals). 5. Against the order of first appellate authority, the assessee preferred an appeal before the Tribunal. While deciding the appeal, 3 ITA No.1640/Del./2021 the Tribunal restored the issue to the file of the assessing officer to decide assessee’s claim of long term capital gain after verifying the period of holding of shares by the assessee. While giving effect to the order of the Tribunal, the assessing officer repeated the addition made earlier by alleging that the assessee did not furnish audited balance sheet to establish the period of holding of shares. The addition was sustained by Commissioner (Appeals), as well. 6. I have considered rival submissions and perused the material available on record. 7. As could be seen, while deciding assessee’ appeal contesting the addition of long term capital gain as unexplained cash credit under Section 68 of the Act, the Tribunal in ITA No.5576/Del/2018 dated 11.01.2019 restored the issue to the assessing officer with following observations: “11.1 It is an admitted fact that the 12700 shares of M/s Pawansut Holdings Ltd. were sold on 10th March, 2014 for a total consideration of Rs.23,74,138/-. The shares were sold through recognized stock exchange and STT has been paid. The amount has been received by cheque. It is also an admitted fact that the shares were dematerialized prior to its sale. Thus, the sale of shares is not in dispute and, therefore, the amount cannot be added u/s 68 of the IT Act. However, the question that arises in the instant case is regarding the date of purchase of the 4 ITA No.1640/Del./2021 shares. It is the allegation of the Assessing Officer that the shares were purchased off market and the payment has been made in cash. Although the assessee has filed a voluminous paper book, however, the balance sheet or statement of affairs for the year ending 31st March, 2013 has not been filed. Therefore, it is not discernible from the records as to whether the assessee has shown such purchase of shares in the balance sheet or statement of affairs as on 31.03.2012. If the assessee has shown the shares in the balance sheet or statement of affairs as on 31st March, 2013, then, it can be safely presumed that the shares were purchased in financial year 2012-13. Since the shares were sold on 10th March, 2014, therefore, the shares can be held to be for a period of more than 12 months and accordingly exemption u/s 10(38) of the IT Act can be allowed to the assessee. Since the balance sheet or statement of affairs for the year ending 31st March, 2013 is not available in the paper book, therefore, considering the totality of the facts ITA No.5576/Del/2018 of the case and in the interest of justice, I deem it proper to restore the matter to the file of the Assessing Officer for the limited purpose of verifying the balance sheet or statement of affairs of the assessee as on 31st March, 2013 to find out if the shares are appearing in the balance sheet or statement of affairs of the assessee as on 31st March, 2013 to allow the claim of the long-term capital gain u/s 10(38) of the IT Act. In absence of the same he can also ask the assessee to prove to his satisfaction by any other evidence that the shares were in fact purchased during F.Y. 2012-13. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.” 8. A reading of the aforesaid observations of the Tribunal would clearly reveal that, in so far as, the issue whether the long term capital 5 ITA No.1640/Del./2021 gain can be added under Section 68 of the Act, the Tribunal has given a categorical finding that the long term capital gain offered by the assessee cannot be added under Section 68 of the Act. The only aspect which the Tribunal directed the assessing officer to verify is, whether the gain derived by the assessee from sale of shares qualifies as long term capital gain. For this purpose, the Tribunal had directed the assessing officer to verify the balance sheet of the assessee or statement of affairs of the assessee as on 31.03.2013. The aforesaid being the specific direction of the Tribunal, the departmental authorities cannot again make the addition under Section 68 of the Act. 9. As regards the issue, whether the gain derived from sale of shares can be treated as long term capital gain, it is observed, before the assessing officer, the assessee had furnished personal balance sheet to demonstrate that the shares were held as on 31.03.2013. However, the assessing officer has disbelieved the claim of the assessee on the ground that the balance sheet is not audited. This, in my view, is unacceptable. While restoring the issue, the Tribunal has clearly directed that the assessee can prove the period of holding of 6 ITA No.1640/Del./2021 shares by furnishing either balance sheet or statement of affairs. Nowhere, the Tribunal has directed the assessee to furnish any audited balance sheet. Therefore, the assessing officer could not have insisted upon an audited balance sheet to accept assessee’s claim. 10. In view of the aforesaid, I delete the addition made by the assessing officer. 11. In the result, the appeal is allowed. Order pronounced in the open court on 14 th October, 2022. Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Dated: 14 th October, 2022. Mohan Lal Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi