ITO 34 (1)(6), MUMBAI V. SHRI ANURAG SHIVCHARAN AGARWAL, MUMBAI

ITA 197/MUM/2020

AI Insights

The case involves an appeal by the Income Tax Officer (ITO) against the decision of the CIT(A) which favored the assessee, Anuraag Shivcharan Agarwal, in a dispute concerning the tax treatment of gains from the sale of shares in M/s. JMD Telefilms Ltd. The ITO had added the gains as unexplained income under section 68 of the Income Tax Act, 1961, suspecting the transactions to be accommodation entries. However, the CIT(A) found that the shares were held for over eight years and sold at moderate prices, thus allowing the LTCG exemption. The Tribunal dismissed both the revenue's appeal and the assessee's cross-objection regarding the reopening of the assessment under section 147, leaving the legal issue open but not adjudicated due to the decision on merits.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 300086 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 22-11-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 06-01-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SIMONI CHAUHAN
• Section: 147; 68; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM आयकर अपील सं/ I.T.A. No.197/Mum/2020 (निर्धारण वर्ा / Assessment Year: 2009-10) ITO-34(1)(6) Room No. 726, Kautilya Bhawan, G Block, BKC, Bandra East, Mumbai- 400051. बिधम/ Vs. Anuraag Shivcharan Agarwal B-607/608, Lok Tirth Bldg, Marve Road, Malad West, Mumbai-400064. Cross Objection No. 145/Mum/2021 Arising out of I.T.A. No.197/Mum/2020 (निर्धारण वर्ा / Assessment Year: 2009-10) Anuraag Shivcharan Agarwal B-607/608, Lok Tirth Bldg, Marve Road, Malad West, Mumbai-400064. बिधम/ Vs. ITO-34(1)(6) Room No. 726, Kautilya Bhawan, G Block, BKC, Bandra East, Mumbai- 400051. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : ADDPA1846Q (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) सुनवाई की तारीख / Date of Hearing: 23/11/2022 घोषणा की तारीख /Date of Pronouncement: 29/12/2022 आदेश / O R D E R PER ABY T. VARKEY, JM: These are revenue appeal and cross-objection preferred by assessee against the order of the Ld. CIT(A)-46, Mumbai dated 23.10.2019 for AY. 2009-10. 2. The grounds of appeal of the revenue is against the action of the Ld. CIT(A) deleting the addition of Rs.11,67,597/- made by AO holding that the purchase and sale transaction in the shares of M/s. Assessee by: Ms. Simoni Chauhan Revenue by: Shri Mahender Ahuja ITA No.197/Mum/2020 C.O. 145/Mum/2021 A.Y. 2009-10 Anurag Shivcharan Agarwal 2 JMD Telefilms Ltd. was accommodation entry and treating the same as unexplained gain/income from sale of penny-stock. 3. Brief facts are that the assessee had filed the return of income for AY. 2009-10 on 30.07.2009 declaring total income at Rs.4,08,330/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter “the Act”). Later, the AO received an information that the assessee had carried out transactions of a penny-stock and the assessee is one of the beneficiary. According to the AO, the assessee has sold shares of M/s.JMD Telefilms Ltd. at Rs 13,03,070/- in the year under consideration. And therefore, according to the AO, the assessee has received accommodation entry as per the information received from DCIT, OSD (Inv.-II) related to transaction of Penny-stock. And therefore he disallowed the claim of exemption on Long Term Capital Gain (LTCG) transaction of Rs.11,67,597/- which was added u/s 68 of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) which was decided in favour of the assessee by allowing the appeal. Aggrieved, the revenue is before us by preferring the appeal whereas the assessee have filed the cross-objection raising the legal ground against the reopening carried out by the AO u/s 147 of the Act which was not adjudicated by Ld. CIT(A), since the assessee got relief in the quantum assessment. 4. Having heard both the parties and perused the records. We note that the Ld. CIT(A) has found that the assessee had purchased 65,000 shares of Rs.10 each of M/s.JMD Telefilms Ltd. which was earlier known as M/s. Avtar Finance & Management Consultants Ltd on ITA No.197/Mum/2020 C.O. 145/Mum/2021 A.Y. 2009-10 Anurag Shivcharan Agarwal 3 29.09.2001 i.e. AY. 20002-03. According to the Ld. CIT(A), this fact of assessee purchasing these shares was supported by annual return for year ending 31.03.2002 of the company M/s. Avtar Finance & Management Consultants Ltd. The assessee also brought to the notice of the Ld. CIT(A) that the shares after being purchased were Demated on 26.05.2007; and the assessee had sold 45,560 shares on 13.01.2009 for net consideration of Rs.8,68,810/- (sale price of Rs.19.06 per share) and the balance shares i.e. 19,440 shares of M/s. JMD Telefilms Ltd. were sold on 03.02.2009 for net consideration of Rs.4,28,788/- (sale price of Rs.22.05 per share). Thus the total net consideration received in AY. 2009-10 on sale of 65,000 of JMD Telefilms Ltd was to the tune of Rs.12,97,597/-. The Ld. CIT(A) has noted that the assessee has held the shares of M/s. JMD Telefilms Ltd. for more than eight (8) years. The Ld. CIT(A) acknowledges that evidence of this fact has been furnished before him. And based on the aforesaid fact that the assessee had purchased the shares as early as on 29.09.2001; and held it for more than eight (8) years before selling the same and sold the same when price increased moderately of Rs.19.06 & Rs.22.05 shares, he was of the opinion that the said sale transaction cannot be disallowed only on the plea that it is a penny-stock. I concur with the aforesaid reason of Ld. CIT(A) that the assessee having held the shares from year 2001, and sold the same in this assessment order after holding for a period of months eight (8) years and also had sold the same when price increased moderately of Rs.19.06 & Rs.22.05 per share. The action of the Ld. CIT(A) accepting the claim of assessee cannot be held it to be unreasonable in the facts and circumstance of ITA No.197/Mum/2020 C.O. 145/Mum/2021 A.Y. 2009-10 Anurag Shivcharan Agarwal 4 the case as discussed supra. And therefore I decline to interfere in the impugned action of the Ld. CIT(A) and uphold the action of the Ld. CIT(A) and dismiss the revenue appeal. 5. The Ld. CIT(A) has also not decided the legal issue of reopening because he deleted the addition on merits. Since I concur with the action of Ld. CIT(A) on merit, I am not inclined to look into the legal issue raised by the assessee against the reopening. Therefore, I am inclined to dismiss the Cross-objection (CO) of the assessee and, however the issue is left open. 6. In the result, the appeal of the revenue as well as cross-objection of the assessee are dismissed. Order pronounced in the open court on this 29/12/2022. Sd/- (ABY T. VARKEY) JUDICIAL MEMBER Mumbai; Dated 29/12/2022. Vijay Pal Singh, (Sr. PS) आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. ववभागीय प्रवतवनवि, आयकर अपीलीय अविकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यावपत प्रवत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai