Vinod Premjibhai Gangani, Surat V. Asstt. CIT (OSD), Ward-3(2)(3), Surat, Surat

ITA 17/SRT/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3176 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-03-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 07-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Earning of tax free income; Condonation of delay; Bogus
• Section: 68

Judgement Text

आयकरअपीलीयअिधकरण,सुरतɊायपीठ,सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER आ.अ.सं./ITA No.17/SRT/2024 (AY: 2015-16) (Physical Hearing) Vinod Premjibhai Gangani, 30-A & B, Kalakunj Society, Varachha Road, Surat – 395006 [PAN: AHLPG6816G] Vs The ACIT (OSD), Ward - 3(2)(3), Surat अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओरसे /Appellant by Shri Rajesh Upadhyay, AR राजˢ की ओरसे /Respondent by Shri Vinod Kumar, Sr. DR अपील पंजीकरण/Appeal instituted on 08.01.2024 सुनवाई की तारीख/Date of hearing 13.03.2024 उद्घोषणाकीतारीख/Date of pronouncement 28.03.2024 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [for short to as “NFAC/Ld. CIT(A)”], dated 02.06.2023 for the assessment year 2015-16. The assessee has raised following grounds: “1. Ld. CIT(A), NFAC, Delhi has erred in law and on fact to upheld AO’s addition of Rs.46,12,790/- made on account of disallowance of appellant’s claim of exempt income u/s 10(38) of the IT act being LTCG on listed company’s shares of Sunrise Asian Ltd. He further erred in making such addition u/s 68 of the IT Act.” 2. Perusal of record shows that impugned order passed by NFAC/Ld.CIT(A) on 02.06.2023, however, the appeal filed by assessee on 08.01.2024. Thus, there is delay of 160 days in filing appeal before Tribunal. The Ld. Authorized Representative (ld. AR) for the assessee submitted that he has ITA.17/SRT/2024 (AY 15-16) Vinod Premjibhai Gangani 2 filed affidavit of assessee for condonation of delay in filing appeal. The Ld. AR for the assessee submits that regular tax matter of assessee is being handled by Shri Subashbhai Shah and the appeal matter by him. As now-a- days, almost all the income tax proceedings are conducted through electronic mode in a faceless regime, so the communication of order of NFAC/Ld.CIT(A) on the ITBA portal was not in the knowledge of present Authorized Representative as the regular Chartered Accountant (CA) is frequently changing password for the purpose of safety and security of their electronic sets. The Ld. AR for the assessee submits that order of NFAC/Ld.CIT(A) came to his notice only in the first week of January, 2024 when his office clerk obtained new password from regular CA of assessee on log in ITBA portal, they realized that NFAC/Ld.CIT(A) has already passed order on 02.06.2023 in the present appeal. On coming to know about passing the impugned order, the present appeal was filed immediately before Tribunal. The Ld. AR for the assessee submits that delay in filing appeal occurred due to frequent changing of password by regular CA of assessee and there is no wilful or deliberate negligent on the part of assessee in filing appeal belatedly. The Ld. AR for the assessee submits that delay may be condoned and the assessee is not going to be benefited by filing appeal belatedly. 3. On the other hand, Ld. Senior Departmental Representative (Ld. Sr. DR) for the Revenue submits that he has no objection if the Bench is convenient with reasons explained by Ld. AR for the assessee, otherwise the reasons explained seems to be self-serving. ITA.17/SRT/2024 (AY 15-16) Vinod Premjibhai Gangani 3 4. Considering the contention of both the parties, we find that there is 160 days delay in filing appeal. The assessee is not likely to get any benefit in filing the appeals belatedly, rather there is always chance that such delay not be condoned. Considering the submission of Ld. AR for the assessee, wherein he has fairly accepted that he could not logged on the ITBA portal due to frequent changing in password by regular CA of assessee. We find that assessee has reasonably explained the cause of delay of 160 days, hence, the delay in the appeal is condoned. Now adverting the merits of the case. 5. Rival submissions of both the parties perused on record. The Ld.AR of the assessee and Ld. Senior Departmental Representative (Ld. Sr. DR) for the Revenue submits that grounds of appeal raised by the assessee in the present appeal is identical with the case of Sanjaykumar Damjibhai Gangani vs ACIT (OSD), in ITA Nos.15 & 16/SRT/2024, which is heard on 11.03.2024. Both the parties agreed the decision in ITA Nos.15 & 16/SRT/2024 may be followed in the present appeal as the assessee in the present appeal has shown capital gain and on similar script as involved in case of Sanjaykumar Damjibhai Gangani. The grounds of appeal and facts are similar except variation of disallowance of long term capital gain. 6. We have considered the submissions of both the parties and have gone through the order of lower authorities as well as facts of the appeal in ITA Nos. 15 & 16/SRT/2024. We find that fact of the present case is identical to the facts in ITA Nos.15 & 16/SRT/2024. We find that in ITA Nos. 15 & 16/SRT/2024, today we have passed the following order; ITA.17/SRT/2024 (AY 15-16) Vinod Premjibhai Gangani 4 9. We have heard the submission of Ld.AR for the assessee and Ld. Senior Departmental-Representative (Ld. Sr-DR) for the Revenue. The Ld.AR for the assessee submits that assessee has purchased share of Conart Traders Ltd. having face value at Rs.10/- at a premium of Rs.10/-. The assessee purchased 10,000 share of Conart Traders Ltd. and subsequently Conart Traders Ltd. was amalgamated with Sunrise Asian Ltd. Such fact is not in dispute and share of assessee was transferred to demat account. During the assessment the assessee filed detailed submissions and the evidences to prove the transaction, but the Assessing Officer has not considered the submission of assessee and made addition with pre-determined notions. The Ld. CIT(A) confirmed the action of Assessing Officer without appreciation of facts in a single sentence. The Ld. AR for the assessee submits that assessee furnished completed details about LTCG earned on sale of share held more than 12 months and payment made through banking channel. The assessee has paid security transactions tax (STT) and surplus earned on such sale was claimed as exempt income under section 10(38) of the Act. The sale of shares was made through BSE and all necessary evidence to substantiate the genuineness of such transactions were furnished before lower authorities. The Assessing Officer has not given any finding on the evidence filed by the assessee. The Assessing Officer mainly acted on the report of Investigation Wing, Kolkata, copy of such Investigation Wing was never supplied to assessee. The sale transactions were received through banking channel though assessee paid security transaction tax. The Ld. AR for the assessee further submits that assessee made transaction through well-known share broker. There is no allegation of assessing officer or adverse finding against the broker of assessee or against the assessee, in alleged price manipulation and no adverse materials were found. The Ld. AR for the assessee submits that Assessing Officer has made addition without giving any adverse finding on the evidences furnished by the assessee or bringing any adverse materials against evidence furnished by assessee and assessee has fully discharged her onus in proving the ITA.17/SRT/2024 (AY 15-16) Vinod Premjibhai Gangani 5 genuineness of such transaction. To support his submission, Ld. AR for the assessee relied upon the following decisions:  Damodar Jajoo vs ITO in ITA No. 183-184/Srt/2021 dated 09/12/2022,  Divyaben Prafulchand Vs ITO in ITA No. 73/Srt/2013 dated 27/07/2013,  PCIT Vs Indravadan Jain (HUF) ITA No. 454 of 2018 ( Bombay High Court) and  ITO Vs Indravadan Jain (HUF) in ITA No. 4861 & 5168/Mum/2018 dated 27.95.2016,  CIT vs. Himani M. Vakil [2014] 41 taxmann.com 425 (Guj)/[2014] 221 Taxman 140 (Guj)(Mag.)[25-09-2012]  PCIT vs. Parasben Kasturchand Kochar [2021] 130 taxmann.com 177 (SC)/[2021] 282 Taxman 301 (SC)[02-08-2021],  PCIT vs. Parasben Kasturchand Kochar (2021) 130 taxmann.com 176 (Guj),  Parasben Kasturchand Kochar Mehtea Lodha & Co. vs. ITO in ITA No.549/AHD/2018 dated 20.02.2020, 10. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities and submits that Assessing Officer was having information that the company, the share scrip of which was purchased by assessee was indulging in providing accommodation entries and assessee has shown abnormal profit within a short span of time. The Ld. Sr-DR for the Revenue submits that assessee failed to disclose how she came to know about such company provided higher profit on sale of their shares and all transactions shown by assessee are nothing but a bogus penny stock share transaction. 11. We have considered the rival submissions of both the parties nad have gone through the orders of lower authorities carefully. We have also deliberated on various case laws relied by the ld AR for the assessee as well as by ld CIT(A) in his impugned order. We find that the Assessing Officer doubted the transaction of assessee on the basis of report of Investigation Wing Kolkata. We find that merely because there was allegation and investigation was done by SEBI against the company and assessee cannot be said to have enter into ingenuine transactions. So far as assessee is concerned, she has no control over the activities of the brokers or price manipulation. We further find that during assessment the assessee has furnished complete evidence including contract note of shares, demat details, detail of bonus shares. However, ITA.17/SRT/2024 (AY 15-16) Vinod Premjibhai Gangani 6 no adverse evidence was brought against such evidence. Nor the assessing officer made adverse comment on such evidences. There is no allegation of assessing officer that the broker through whom the assessee made transaction, was involved in the price manipulation or in providing entry of penny stock. We find that Hon'ble jurisdictional High Court in the case of Himani M. Vakil (supra) held that where assessee duly proved genuineness of sale transaction by bringing on record contract notes of sale and purchase, bank statement of broker and demat account showing transfer in and out of shares, Assessing Officer was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit. We further find that Hon'ble jurisdictional High Court in the case of Parasben Kasturchand Kochar (supra) also held that when assessee discharged his onus by establishing that transactions were fair and transparent and all relevant details with regard to transfer furnished by Income Tax Authority and the Tribunal have also took the notice of fact that the shares remained in the account of assessee, the assessee also furnished demat account and details of bank transaction about the sale and purchase of shares, the addition was deleted. 12. We further that Hon'ble Bombay High Court in the case of PCIT Vs. Indravadan Jain, HUF (supra) in Income Tax Appeal No.454 of 2018 dated 12.07.2023 also held that when Assessing Officer nowhere alleged that transactions made by assessee with a particular broker or share broker was bogus, merely because investigation was done by SEBI against the broker or its activities, the assessee cannot be said to have entered into ingenuine transaction. We find that assessee made sale of shares through BSE and paid security transaction tax and there is no allegation against the share broker through whom assessee has made sales that they were indulging any price manipulation. Therefore, we do not find any justification in treating the LTCG as unexplained cash credit in absence of any cogent evidence. 13. So far as reliance in case of case of PCIT vs. Swati Bajaj (supra) by ld CIT(A) is concerned, we find We find that Hon'ble jurisdictional High Court in the case of Himani M. Vakil (supra) held that when the assessee proved genuineness of sale transaction by bringing on record ITA.17/SRT/2024 (AY 15-16) Vinod Premjibhai Gangani 7 contract notes of sale and purchase, bank statement of broker and demat account showing transfer in and out of shares, Assessing Officer was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit. Thus, the decision of jurisdictional high Court is binding precedent in the territory of Gujarat. In the result, the addition of undisclosed income under section 68 is deleted. In the result, the ground of appeal raised by the assessee is allowed. 14. In the result, assessee’s appeal No.15/SRT/2024 is allowed. 7. Considering the decision of this bench on identical set of facts and taking consistent view, the appeal of the assessee is allowed with similar observation. In the result, the grounds of appeal raised by the assessee are allowed. 8. In the Result, appeal of the assessee is allowed. Order pronounced in the open court on 28/03/2024. Sd/- Sd/- (Dr A. L. SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 28/03/2024 SAMANTA Copy to: 1. Appellant- 2. Respondent- 3. CIT 4. DR 5. Guard File True copy/ By order // TRUE COPY // Sr. PS/PS/Assistant Registrar, ITAT, Surat True copy///