Jitender Kumar Gupta , Hyderabad V. Asst. Commissioner of Income Tax, Circle-7(1), Hyderabad

ITA 1882/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4332 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-04-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 27-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KANIKA AGARWALDR
• Keywords: Unexplained investment; Principle of natural justice; Penny stocks
• Section: 69B; 147; 68; 69; 148

Judgement Text

ITA NO 1882 OF 2019 JITENDER KUMAR GUPTA HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1882/HYD/2019 ASSESSMENT YEAR: 2011-12 SRI JITENDER KUMAR GUPTA (HUF), HYDERABAD PAN:AABHJ7446L VS. A.C.I.T CIRCLE 7(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI SIDDHARTH MANTRI REVENUE BY : SMT. KANIKA AGARWAL,DR DATE OF HEARING: 05/04/2021 DATE OF PRONOUNCEMENT: 27/05/2021 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12 AGAIN ST THE ORDER OF THE CIT (A)-3, HYDERABAD, DATED 20.11. 2019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HU F HAD FILED HIS RETURN OF INCOME FOR THE A.Y 2011-12 ON 3 0.12.2011 DECLARING AN INCOME OF RS.5,40,992/- COMPRISING OF INCOME FROM OTHER SOURCES RS.4,14,992 AND INCOME FROM HOUSE PRO PERTY RS.1,26,000/- AND CLAIMED CHAPTER VIA DEDUCTION OF RS.1,00,000/-. 3. MEANWHILE THE ASSESSING OFFICER HAD RECEIVED INFORMATION FROM THE INVESTIGATION WING, KOLKATA TH AT THE ASSESSEE HAS PURCHASED 70,000 SHARES OF THE FOLLOWI NG PENNY SCRIPTS FOR A TOTAL VALUE OF RS.12,98,500/- DURING THE FINANCIAL YEAR 2010-11 RELEVANT TO THE A.Y 2011-12: A) M/S. GOLDEN BULL RESEARCH & GROWTH LTD ITA NO 1882 OF 2019 JITENDER KUMAR GUPTA HYDERABAD PAGE 2 OF 5 B) M/S. REGENCY TRUST LTD C) M/S. GLOBAL CAPITAL MARKETS LTD 3.1 AS PER THE REPORT OF THE INVESTIGATION WING, KO LKATA, THE ABOVE PENNY STOCKS ARE USED FOR GENERATING BOGU S LTCG/STCL AND BUSINESS LOSS. IN VIEW OF THE SAME, T HE ASSESSMENT WAS REOPENED ON 29.03.2018 BY ISSUANCE OF NOTICE U/S 148 OF THE ACT AND WAS SERVED ON THE ASSESSEE A ND THE ASSESSEE RESPONDED BY STATING THAT THE SHARES WERE PURCHASED FROM THE APPROVED BROKER AND ALSO EXPLAINED THE SOU RCES OF INVESTMENT. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED AND THEREFORE, THE TOTAL VALUE OF SHARES OF RS.12,98,50 0/- PURCHASED BY THE ASSESSEE AS PENNY STOCKS WERE TREATED AS UNE XPLAINED INVESTMENT U/S 69B OF THE ACT ACCORDINGLY ADDED TO THE INCOME RETURNED BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDERS OF THE ASSESSING OFFICER AND THE ASSESSEE IS IN SECOND APP EAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX, (APPEALS)-3, HYDERABAD IN SUSTAINING THE ADDITIONS OF RS.12,98,500/- AS UNEXPLAINED INVESTMENT U/S 69B OR U/S 69 IS WHOLLY UNSUSTAINABLE IN LAW AND ON FACTS. 2. THE CIT (A) FAILED TO NOTE THAT THE SOURCE OF IN VESTMENT OF RS. 12,98.500/- WERE PROPERLY EXPLAINED AND THE SAME WAS ACKNOWLEDGED BY THE A.O IN THE ORDER, THEREFORE THE CIT(A) OUGHT TO HAVE HELD THAT THERE WAS NO UNEXPLAINED INVESTMENT AS PROVIDED U/ S 69B OR U/ S 69 AND THEREFORE ERRED IN CONFIRMING THE ADDITION OF R S. 12,98,500/-. 3. THE CIT (A) FAILED TO NOTE THAT THE ADDITION WAS MADE IN PURSUANCE TO REOPENING OF THE CASE U/ S 148, HEN CE IT WAS MANDATORY' ON PART OF A.O TO PROVIDE REASONS FO R REOPENING THE CASE, WHICH HE FAILED AND THEREFORE T HE CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSMENT U/ S 147 WITHOUT PROVIDING THE REASONS FOR REOPENING AND WIT HOUT AFFORDING THE OPPORTUNITY TO THE ASSESSEE TO FILE H IS OBJECTIONS IF ANY, WOULD BE UNSUSTAINABLE IN LAW. 4. THE CIT (A) FAILED TO NOTE THAT MERELY INVESTMEN T IN A DUBIOUS COMPANY DOES NOT MAKE THE INVESTMENT UNEXPLAINED IF OTHERWISE THE SOURCES OF INVESTMENTS ARE ITA NO 1882 OF 2019 JITENDER KUMAR GUPTA HYDERABAD PAGE 3 OF 5 PROPERLY EXPLAINED. THEREFORE THE CIT (A) OUGHT TO HAVE DELETED THE ADDITION WHICH WAS WRONGLY MADE ON ABOV E PREMISE. 5. THE CIT (A) HAS WRONGLY BASED HIS ORDER ON FOLLO WING DECISIONS: A. SUMATI DAYAL V CIT (80 TAXMAN 89) (SC). B. BIMALCHAND [AIN L/H SHANTI DEVI BIMALCHAND JAIN V CIT (BOMBAY HIGH COURT, ITA NO.18/2017. C. SRI ABHIMANYU SOIN V ACI (CHANDIGARH BENCH OF IT AT - ITA NO.951/2016). D. ITO V SHAMIM M BHARWANI (ITAT, MUMBAI - ITA NO 4906/2011). THE ABOVE CASES WERE DECIDED IN RELATION TO UNEXPLA INED CREDITS U/ S 68 OR CLAIM OF EXEMPTIONS U/ S 10(38). AS THE RELEVANT FACTS OF THE ABOVE CASES ARE ENTIRE LY DIFFERENT FROM THE FACTS IN CASE OF APPELLANT, THER EFORE THE CIT (A) OUGHT TO HAVE DIFFERENTIATED THE FACTS AND SHOULD NOT HAVE PASSED THE ORDER ON IRRELEVANT FACTS AND THEREFORE ERRED IN SUSTAINING THE ADDITION OF RS. 12,98,500/- U/ S 69 6. THE CIT (A) HAS PASSED ORDER BASED ON WRONG UNDERSTANDING THAT THE APPELLANT HAS CLAIMED EXEMPT ION U/ S 10(38), WHEREAS THE APPELLANT HAS NOT CLAIMED ANY EXEMPTION U/S 10(38) AND THEREFORE ERRED IN SUSTAIN ING ADDITION OF RS.12,98,500/ - U/S 69. 7. THE CIT(A) HAS WRONGLY PRESUMED THAT THE DISALLOWANCE U/ S 69B IS A TYPOGRAPHICAL ERROR ON T HE PART OF A.O AND THE SAME SHOULD BE U/ S 69, AS NO S UCH CONFIRMATION OF A.O IS THERE ON RECORD. 8. THE ORDER OF CIT (A) IS AGAINST THE PRINCIPLES O F NATURAL JUSTICE AS NO OPPORTUNITY OF HEARING WAS GIVEN. 9. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES WHILE THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT SIMILAR ISSUE HAD ARISEN IN THE CASE OF SHRI ITA NO 1882 OF 2019 JITENDER KUMAR GUPTA HYDERABAD PAGE 4 OF 5 NARENDER KUMAR GUPTA (HUF) IN ITA NO.1084/HYD/2019 VIDE ORDERS DATED 22.04.2021 WHEREIN THE TRIBUNAL HAS HE LD AS UNDER: 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN MY ATTENTION TO PAGE 5 OF THE PAPER BOOK FILE D BY THE ASSESSEE WHEREIN VIDE LETTER DATED 13.1.2018, THE A SSESSEE HAD REQUESTED THE ASSESSING OFFICER TO PROVIDE HIM WITH A COPY OF THE REASONS FOR REOPENING OF THE CASE U/S 1 47 OF THE ACT. HE ALSO DREW MY ATTENTION TO PAGE 8 OF THE PAP ER BOOK WHEREIN, VIDE LETTER DATED 19.11.18, THE ASSESSEE H AD INFORMED THE ASSESSING OFFICER THAT THE RETURN HAS BEEN UPLOADED PURSUANT TO NOTICE U/S 148 ON 30.4.2018 AN D THAT THERE WAS NO SALE OF IMMOVABLE PROPERTY DURING THE FINANCIAL YEAR 2010-11 AND ALSO REQUESTED FOR SUPPL Y OF REASONS FOR REOPENING OF THE ASSESSMENT U/S 148 OF THE ACT. THERE IS NO MENTION OF ANY LETTERS NOR THERE WAS AN Y MENTION OF SUPPLYING THE REASONS FOR REOPENING OF T HE ASSESSMENT TO THE ASSESSEE. THOUGH A SPECIFIC GROUN D WAS TAKEN BEFORE THE CIT (A), HE HAS NOT HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE C ASE OF GKN DRIVESHAFTS (INDIA) LTD VS INCOME TAX OFFICER A ND ORS REPORTED IN (2002) SUPP(4) SCR 359 ON 25 NOVEMBER, 2002, HELD THAT W HERE A NOTICE U/S 148 IS ISSUED AND THE ASSESSEE, A FTER FILING OF THE RETURN OF INCOME IN RESPONSE TO SUCH NOTICE, REQUESTS THE ASSESSING OFFICER TO SUPPLY THE REASON S FOR REOPENING, THE ASSESSING OFFICER IS BOUND TO SUPPLY THE REASONS FOR REOPENING THE ASSESSMENT AND ONLY AFTER DISPOSAL OF THE OBJECTIONS, IF ANY, RAISED BY THE A SSESSEE, CAN THE ASSESSING OFFICER PROCEED TO REASSESS THE I NCOME OF THE ASSESSEE. IN THIS CASE, IT IS CLEAR THAT THE AS SESSING OFFICER HAS NOT FOLLOWED THE DUE PROCEDURE AS MANDA TED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF GKN DRIVESHAFTS (INDIA) LTD (CITED SUPRA) . 6. IN VIEW OF THE SAME, I DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE ASSESSING OFFIC ER WITH A DIRECTION TO SUPPLY THE REASONS FOR REOPENING OF TH E ASSESSMENT TO THE ASSESSEE AND ONLY AFTER DISPOSAL OF THE OBJECTIONS, IF ANY, RAISED BY THE ASSESSEE, THE AS SESSING OFFICER SHALL PROCEED TO RECOMPUTE THE INCOME OF TH E ASSESSEE IN ACCORDANCE WITH LAW. NEEDLESS TO MENTIO N THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF H EARING. 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. RESPECTFULLY FOLLOWING THE SAME, THIS APPEAL OF THE ASSESSEE IS ALSO REMITTED TO THE FILE OF THE ASSESS ING OFFICER WITH A DIRECTION TO SUPPLY THE ASSESSEE, THE REASONS FOR R EOPENING OF THE ASSESSMENT AND ONLY AFTER DISPOSAL OF THE OBJECTION S, IF ANY, RAISED ITA NO 1882 OF 2019 JITENDER KUMAR GUPTA HYDERABAD PAGE 5 OF 5 BY THE ASSESSEE TO THE REOPENING, THE ASSESSING OFF ICER SHALL PROCEED TO RECOMPUTE THE INCOME OF THE ASSESSEE IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSEE SHA LL BE GIVEN A FAIR OPPORTUNITY OF HEARING. 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MAY, 2021. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 27 TH MAY, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 SRI JITENDER KUMAR GUPTA (HUF) C/O MADHU MANTRI & ASSOCIATES, C.A 3-5-873, C-103 MATRUSHREE APARTMENTS, HYDERGUDA, HY DERABAD 2 ACIT , CIRCLE 7(1) SIGNATURE TOWERS, KONDAPUR, HYDERABAD 3 CIT (A)-3, HYDERABAD 4 PR. CIT -3, HYDERABAD 5 DR, IT AT HYDERABAD BENCHES 6 GUARD FILE BY ORDER