Income Tax Officer-1(3), Kanpur V. Smt. Rashmi Tiberewal, Kanpur

ITA 208/LKW/2020

AI Insights

The case involves an appeal by the Department against the order of the Commissioner of Income Tax Appeal-1, Kanpur, which had deleted an addition made by the Assessing Officer regarding alleged bogus long-term capital gains. The Assessing Officer had added Rs.8,94,472 as income under Section 69A of the Income Tax Act, 1961, suspecting the transactions to be non-genuine. The First Appellate Authority reversed this addition, noting the lack of direct evidence linking the assessee to any manipulation for generating bogus capital gains. The Department's appeal to the Tribunal was dismissed due to a significant delay in filing, which was not sufficiently justified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123083 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-09-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 01-06-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Period of limitation; Tax effect; Time period of passing order; Condonation of delay; Penny stocks; Capital Gains; Bogus
• Section: 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “SMC”, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.208/LKW/2020 A.Y. 2015-16 Smt. Rashmi Tiberwal, 56/57, Kahoo Kothi, Kanpur PAN AAGPT 8196C Vs. Income Tax Officer-1(3), Kanpur (Respondent) (Appellant) None present for the assessee Appellant by Shri Sanjeev Krishna Sharma, Addl.CIT( DR) Respondent by 12/09/2023 Date of hearing 27 /09/2023 Date of pronouncement O R D E R This appeal has been preferred by the Department against the order dated 30.11.2018 passed by the ld. Commissioner of Income Tax Appeal-1, Kanpur [hereinafter called the ‘CIT(A)] for A.Y. 2015- 16. 2. The brief facts of the case are that the return of income for the captioned year was filed declaring total income at Rs.4,130/-. The assessee’s case was selected for scrutiny under the CASS guidelines for the reason ‘suspicious long term capital gain on shares [input 2 ITA No. 208/Lkw/2020 from investigations wing]’. The assessee was required to furnish details of long term capital gains and the assessee submitted that the amount of long term capital gains claimed as exempt was to the tune of Rs.8,94,472/-. It was the assessee’s submission that 2500 shares of M/s. CCL International had been purchased on 23.11.2013 through online mode and these shares was sold on 15.01.2015. The Assessing Officer observed that, as per the information available with his office, the assessee was indulging in non genuine and bogus capital gains from transactions of purchase and sales of shares. The Assessing Officer was of the opinion that M/s. CCL International was only a penny stock company wherein, 2500 shares had been purchased at Rs.92.66 per share and were sold at Rs.450.45 per share. The Assessing Officer proceeded to make an addition of Rs.8,94,472/- in terms of Section 69A of the Income Tax Act, 1961 (hereinafter called ‘the Act’) and completed the assessment at Rs.8,98,602/-. 3. Aggrieved, the assessee preferred an appeal before the ld. First Appellate Authority. Deleting the addition, the ld. First Appellate Authority observed that the Assessing Officer had not brought out any part of the report from the Investigation Wing in which, the 3 ITA No. 208/Lkw/2020 assessee had been investigated or was found to be part of any arrangement for the purpose of generating bogus long term capital gains. It was further observed by the ld. First Appellate Authority that nothing had been brought on record by the Assessing Officer to show that the persons investigated by the Investigation Wing had named the assessee as being in collusion with them. It was further observed that in absence of any finding specifically against the assessee, the assessee cannot be held to be linked to the wrong acts of any third persons investigated. With these observations, the ld. First Appellate Authority deleted the addition. 4. Aggrieved, the Department has now approached this Tribunal challenging the deletion by raising the following grounds of appeal: “1. The Ld. Commissioner of Income Tax (Appeals)-1, Kanpur has erred in law and on facts in deleting the addition of Rs.08,94,472/- without going in to the merits of the case and ignoring the finding recorded by the assessing officer in assessment order that the sale of shares in this case is not a natural phenomenon but an arrangement of dubious design of providing accommodation entry of Long term capital gain to entroduce unaccounted own money as exempt income in the form of LTCG on sale of shares and the assessee being fully aware of it is also a part of manipulation. 2. The Ld. Commissioner of Income Tax (Appeals)-1, Kanpur has erred in law and on facts that the issue involved accommodation entry of tax free bogus LTCG All these persons/groups either have taken entries of tax-free bogus LTCG through a racket which is running this scam in a very 4 ITA No. 208/Lkw/2020 organized way all over the country. This racket takes cash and gives cheques against the manipulated consideration for sale of penny stocks for which CBDT's circular No.23 of 2019 dated 06.09.2019 and subsequent OM dated 16.09.2019 mandate that the appeals may be filed on merits in case of the assessee claiming bogus LTCG/STCL through penny Mock 3. That the order of the Ld. Commissioner of Income Tax (Appeals)-1, Kanpur has erroneous, unjust and bad of law be vacated and the order dated 30.12.2017 passed u/s 143 (3) of the I.T. Act of the Assessing officer be resorted. 4. That the appellant craves leave to modify any of the grounds of appeal mentioned above and/or to add any fresh grounds as and when it is required to do so.” 5. None was present on behalf of the assessee-respondent when the appeal was called out for hearing. However, looking into the facts of the case, I deem it appropriate to hear the appeal ex-parte qua the assessee-respondent. 6. At the outset, it is seen that the present appeal filed by the Department is time barred by 479 days. In this regard, the Department has filed a delay condonation application seeking condonation of the delay by referring to the Circular No.23/2019 dated 06.09.2019 wherein, the Central Board of Direct Taxes has instructed that notwithstanding anything contained in any Circular issued u/s.268A of the Act specifying monetary limits for filing of Departmental appeals before the ITAT, High Courts and 5 ITA No. 208/Lkw/2020 SLPs/appeals before the Hon'ble Apex Court, appeals may be filed on merits as an exception to the above said Circular, where the Board, by way of special order, directs filing of appeals on merit in cases involved in organized tax evasion activity. It has been submitted in the application for condonation of delay that the order of the ld. First Appellate Authority in this case had been received on 11.12.2018 and the last date of filing of the Departmental appeal was 09.02.2019. It has been further submitted that earlier, no appeal was preferred before the ITAT as tax effect involved was only Rs.3,66,120/-, and that, however, in view of Circular No.23/2019 dated 06.09.2019 and O.M. dated 16.09.2019, the Department had decided to file the present appeal and, therefore, the delay ought to be condoned. It has also been mentioned that this appeal was filed on 02.06.2020 as there was an unexpected lockdown due to the COVID-19 situation from 24.03.2020, which caused further delay in filing of the appeal. 7. It is undisputed that the appeal was filed by the Department on 02.06.2020. It is also undisputed that the order appealed against was received by the Department on 11.12.2018 and, therefore, the last date for filing the Departmental Appeal before the ITAT was 09.02.2019. 6 ITA No. 208/Lkw/2020 Circular No. 23 of the CBDT is dated 06.09.2019 and the OM is dated 16.09.2019. Therefore, the Circular based on which the Department has filed this appeal was issued almost seven months after the expiry of the limitation period for filing of the appeal. It is further seen that even after the issuance of the Circular and OM, the present Departmental appeal was filed on 02.06.2020 i.e. almost more than nine months after the issuance of the said Circular. Even if the Department is given the benefit of relaxation in the limitation in view of the order of the Hon'ble Apex Court in suo moto Writ Petition (Civil) No.03/2020, the period from date of issue of Circular till March, 2020 is almost six months which could not be suitably explained. Therefore, I am unable to consider the prayer of the Department to condone the delay and I dismiss the appeal as being unadmitted, being barred by limitation. 8. Accordingly, the appeal of the Department stands dismissed. (Order pronounced in the open court on 27 /09/2023) Sd/- (SUDHANSHU SRIVASTAVA) JUDICIAL MEMBER Aks – Dtd. 27 /09/2023 7 ITA No. 208/Lkw/2020 Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) Departmental Representative (5) Guard File Assistant Registrar