Smt. Kumari Nithu Agarwal, Bengaluru V. Income Tax Officer, Ward- 1(2)(1), Bangalore

ITA 1903/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9004 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-11-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 04-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH G R
• Keywords: Principle of natural justice; Benefit of exemption; Set aside
• Section: 13; 68; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA NO. 1 9 0 3 / BANG /201 9 ASSESSMENT YEAR : 20 1 4 - 1 5 MS. NITHU AGARWAL, NO.4925, 11 TH FLOOR HIGH POINT-4, PALACE ROAD, BENGALURU 560 PAN : AA H P G 0002 B VS. THE INCOME TAX OFFICER, WARD 1(2)(1), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. RAVISHANKAR, ADVOCATE REVENUE BY : SHRI. GANESH G. R, STANDING COUNSEL DATE OF HEARING : 2 1 . 11 .201 9 DATE OF PRONOUNCEMENT : 14 . 0 1 .20 20 O R D E R THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-2, BENGALURU, DATED 03.06.2019, FOR THE ASSESSMENT YEAR 2014-15. THE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL ARE AS UNDER:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN SO FAR AS IT IS AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY AND WEIGHT OF EVIDENCE, NATURAL JUSTICE, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE APPELLANT DENIES HERSELF LIABLE TO BE ASSESSED TO TAX ON A TOTAL INCOME OF RS.18,69,660/- AS DETERMINED BY THE LEARNED ASSESSING OFFICER AS AGAINST THE TOTAL INCOME OF RS.3,31,660/- AS DECLARED BY THE APPELLANT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW IN NOT HOLDING THAT THE APPELLANT WAS ELIGIBLE TO CLAIM THE BENEFIT OF EXEMPTION IN RESPECT OF THE LONG TERM CAPITAL GAIN ON SALE OF SHARES A SUM OF RS. 14,77,730/- UNDER SECTION 10 (38) OF THE ACT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 1903/BANG/2019 PAGE 2 OF 6 4. THE AUTHORITIES BELOW ERRED IN LAW IN HOLDING THAT SECTION 68 OF THE ACT WAS APPLICABLE TO THE IMPUGNED CASE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LEARNED CIT(A) ERRED IN LAW IN UPHOLDING THE ADDITION UNDER SECTION 68 OF THE ACT A SUM OF RS. 15,28,000/- BEING SALE CONSIDERATION RECEIVED BY THE APPELLANT ON SALE OF SHARES ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT SECTION 68 CANNOT BE INVOKED AS THE ASSESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNTS AND ACCORDINGLY NO CREDIT COULD HAVE BEEN FOUND IN THE BOOKS ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW IN UPHOLDING THE VIEW, THAT THE AO WAS JUSTIFIED IN QUESTIONING THE GENUINENESS OF THE SHARE TRANSACTION, WITHOUT ANY CORROBORATING EVIDENCE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN LAW IN DENYING THE EXEMPTION GRANTED BY THE STATUTE ON MERE SUSPICION ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. THE AUTHORITIES BELOW ERRED IN HOLDING THAT THE TRANSACTION OF SALE OF EQUITY SHARES IS A BOGUS TRANSACTION, BASED ONLY ON SURMISES AND CONJECTURES WITHOUT ANY EVIDENCE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 10.THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT HAS SOLD THE SHARES THROUGH RECOGNIZED STOCK EXCHANGE AND THE TRANSACTION WAS SUPPORTED BY CONTRACT NOTES, BANK STATEMENT, DEMAT STATEMENTS AND THEREFORE THE EXEMPTION OUGHT TO HAVE BEEN GRANTED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 11.THE LEARNED CIT(A) WAS NOT JUSTIFIED IN LAW IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER, WHO RELIED SOLELY ON THE FINDINGS OF THE INVESTIGATION DEPARTMENT, HENCE THE ORDERS PASSED ARE BAD IN LAW AND NOT SUSTAINABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 12.THE AUTHORITIES BELOW ALSO FAILED TO CONSIDER THE UNIMPEACHABLE MATERIAL ON RECORD SUBSTANTIATING THE CLAIMS MADE BY THE APPELLANT AND CONSEQUENTLY PASSED A PERVERSE ORDER ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 1903/BANG/2019 PAGE 3 OF 6 13. THE LEARNED CIT(A) ERRED IN LAW IN NOT SETTING ASIDE THE ORDER OF THE AO, SINCE NO OPPORTUNITY TO CROSS EXAMINE WAS PROVIDED TO THE APPELLANT AND HENCE THE ORDER PASSED WAS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND CONSEQUENTLY THE ASSESSMENT ORDER PASSED WAS BAD IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 14.THE APPELLANT DENIES THE LIABILITY TO PAY INTEREST UNDER SECTION 234A, 234B' AND 234C OF THE ACT IN VIEW OF THE FACT THAT THERE IS NO LIABILITY TO ADDITIONAL TAX AS DETERMINED BY THE ASSESSING OFFICER. WITHOUT PREJUDICE, THE RATE, PERIOD . AND ON WHAT QUANTUM THE INTEREST HAS BEEN LEVIED ARE NOT IN ACCORDANCE WITH THE LAW AND ARE NOT DISCERNABLE FROM THE ORDER AND HENCE DESERVES TO BE CANCELLED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 15.THE APPELLANT CRAVES LEAVE OF THIS HON'BLE TRIBUNAL, TO ADD, ALTER, DELETE, AMEND OR SUBSTITUTE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL AS MAY BE NECESSARY AT THE TIME OF HEARING. 16.FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE AND EQUITY. 2. IN THE COURSE OF HEARING, IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT AS PER GROUND 13 RAISED BEFORE THE TRIBUNAL, THE GRIEVANCE OF THE ASSESSEE IS THAT NO OPPORTUNITY TO CROSS-EXAMINE THE CONCERNED PERSON WAS PROVIDED TO THE ASSESSEE BY THE AO AND HENCE, THE ORDER PASSED BY THE AO IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THEREFORE, THE ASSESSMENT ORDER SHOULD BE HELD TO BE BAD IN LAW. HE PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF SHRI. RAMESH KUMAR SHAH VS. ACIT IN ITA NO.595/BANG/2018 DATED 05.12.2018. HE SUBMITTED A COPY OF THIS TRIBUNAL ORDER AND POINTED OUT THAT IN THIS CASE ALSO, THE ASSESSEE HAS MADE A REQUEST TO THE AO FOR CROSS- EXAMINATION OF THE DEPONENTS WHOSE STATEMENTS WERE THE BASIS OF THE ADDITION MADE BY THE AO AND THE ASSESSEE ALSO ASKED FOR THE REPORT OF THE INVESTIGATION DIRECTORATE, KOLKATA, FOR REBUTTAL. BUT BOTH THESE WERE NOT PROVIDED BY THE AO. IN THAT CASE UNDER SIMILAR FACTS, THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF THE AO TO READJUDICATE THE ISSUE AFRESH AFTER MAKING AVAILABLE TO THE ASSESSEE FOR REBUTTAL ALL DOCUMENTS INCLUDING STATEMENTS, INVESTIGATION REPORTS, ITA NO. 1903/BANG/2019 PAGE 4 OF 6 ETC., RELIED UPON BY THE REVENUE FOR MAKING THE ADDITION / DISALLOWANCES AND AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE FOR CROSS-EXAMINATION OF THE PERSONS WHOSE STATEMENTS ARE BEING RELIED UPON. HE SUBMITTED THAT IN THE PRESENT CASE ALSO, THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION WITH SIMILAR DIRECTIONS. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT IN PARA NO.8.7 OF HIS ORDER AVAILABLE ON PAGE NO.5 OF THE ORDER OF THE CIT(A), IT IS NOTED BY THE LEARNED CIT(A) THAT THIS WAS THE CLAIM OF THE ASSESSEE BEFORE HIM THAT THE ASSESSEE OUGHT TO HAVE BEEN GRANTED CROSS-EXAMINATION AND HENCE, THE ASSESSMENT ORDER IS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. HENCE, IN MY CONSIDERED OPINION, UNDER THESE FACTS, THE TRIBUNAL ORDER CITED BY THE LEARNED AR OF THE ASSESSEE IS SQUARELY APPLICABLE. PARA NO.3.5 OF THIS TRIBUNAL ORDER IS REPRODUCED HEREIN BELOW FOR READY REFERENCE: 3.5 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL DECISIONS CITED AND THE ORDERS OF THE AUTHORITIES BELOW. TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE SPECIFICALLY REQUESTED FOR CROSS-EXAMINATION OF THE DEPONENTS WHOSE STATEMENTS WERE THE BASIS OF ADDITION BY THE AO AND ALSO THE REPORT OF THE INVESTIGATION DIRECTORATE, KOLKATA FOR REBUTTAL; FROM THE JUDICIAL DECISIONS CITED, WE FIND THAT THE ISSUE FOR CONSIDERATION IS SQUARELY COVERED BY THE ORDERS OF THE BENGALURU ITAT IN THE CASES OF ARVIND KUMAR MOOLCHAND (SUPRA) AND PUKHRAJ HASMUKHLAL (SUPRA). FOLLOWING THE AFORESAID ORDERS (SUPRA), WE SET ASIDE THE ORDERS OF THE AO AND RESTORE THE MATTER OF TREATMENT OF PROFIT DECLARED ON SALE OF SHARES, CLAIMED AS EXEMPT U/S 10(38) OF THE ACT, TO THE FILE OF THE AO TO RE-ADJUDICATE THE ISSUE AFRESH; AFTER MAKING AVAILABLE TO THE ASSESSEE FOR REBUTTAL ALL DOCUMENTS; INCLUDING STATEMENTS, INVESTIGATION REPORTS, ETC., RELIED UPON BY REVENUE FOR MAKING THE ADDITIONS/DISALLOWANCES AND PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE FOR CROSS-EXAMINATION OF PERSONS WHOSE STATEMENTS ARE BEING RELIED UPON. IT IS ACCORDINGLY ORDERED. CONSEQUENTLY, GROUND NO. 2 IS DISPOSED OF AS ABOVE. ITA NO. 1903/BANG/2019 PAGE 5 OF 6 4. RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, SINCE NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LEARNED DR OF THE REVENUE, I SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ENTIRE MATTER BACK TO THE FILE OF AO TO READJUDICATE THE MATTER AFRESH, AFTER MAKING AVAILABLE TO THE ASSESSEE FOR REBUTTAL ALL DOCUMENTS INCLUDING STATEMENTS, INVESTIGATION REPORTS, ETC., RELIED UPON BY THE REVENUE IN MAKING THE ADDITIONS / DISALLOWANCES AND AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE FOR CROSS-EXAMINATION OF THE PERSONS WHOSE STATEMENTS ARE BEING RELIED UPON. ACCORDINGLY, GROUND NO.13 IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN VIEW OF THIS DECISION, OTHER GROUNDS RAISED ON MERITS ARE RENDERED ACADEMIC AT THE PRESENT STAGE AND THEREFORE, NOT REQUIRED TO BE ADJUDICATED AT THIS JUNCTURE. 6. IN THE RESULT, ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- ( PAVAN KUMAR GADALE ) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE. DATED: 14 TH JANUARY, 2020. /NS/* ITA NO. 1903/BANG/2019 PAGE 6 OF 6 COPY TO: 1. APPELLANT S 2. RESPON DENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.