Rashmi Singhania, Kolkata V. ITO, Ward-2(4), Jamshedpur

ITA 208/RAN/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2789 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 07-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K SINGHANIA
• Keywords: Earning of tax free income; Set aside; Capital Gains
• Section: 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI E-COURT AT KOLKATA BEFORE SRI SANJAY GARG, JUDICIAL MEMBER I.T.A. NO.208/RAN/2019 ASSESSMENT YEAR: 2014-15 RASHMI SINGHANIA..... ...........APPELLANT C/O. S. SINGHANIA & CO. 7 TH FLOOR, ROOM NO.3, 2, GANESH CHANDRA AVENUE, KOLKATA-700013. [PAN: ASWPS1056N] VS. ITO, WARD-2(4), JAMSHEDPUR..................RESPONDENT APPEARANCES BY: SHRI R. K. SINGHANIA, ADVOCATE,APPEARED ON BEHALF OF THE APPELLANT. SMT. CHINMAYA AURANGABADKAR, JCIT, DR, APPEARED ON BEHALF OF THE RESPONDENT. DATE OF CONCLUDING THE HEARING :MARCH 24, 2021 DATE OF PRONOUNCING THE ORDER : APRIL 30, 2021 ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 01.02.2019 OF THE COMMISSIONER OF INCOME TAX (APPEALS), JAMSHEDPUR [HEREINAFTER AS CIT(A)]. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED INCONFIRMING THE ADDITION OF RS. 17,72,000/- MADE BY THE A.O. ON ACCOUNT OF ALLEGED BOGUS LONGTERM CAPITAL GAIN. 2. FOR THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED THE CLAIM OF EXEMPTION MADE U/S 10(38) CLAIMED INRESPECT OF THE LTCG AMOUNTING TO RS. 17,72,000/- ARISING OUT OF SHARE TRANSACTIONS, WHICH WASWRONGLY DENIED TO THE ASSESSEE BY THE A.O. 3. THE ASSESSEE IS A REGULAR INVESTOR IN STOCK MARKET SINCE MORE THAN 20 YEARS AND COMPLIED KYCFORMALITIES WITH STOCK BROKER ON 04.07.2015. A CERTIFICATE OBTAINED FROM STOCK BROKER IN THISRESPECT HAD BEEN PROVIDED TO LD. CIT(A). 4. FOR THAT THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT THE GENUINITY OF SHARES TRANSACTION WASPROVED BY THE ASSESSEE BY SUBMITTING THE RELEVANT DOCUMENTS, PAYMENTS WERE MADE ANDRECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND SALE TRANSACTIONS WERE MADE DONE THROUGH AREGISTERED MEMBER OF STOCK EXCHANGE ON THE ONLINE SYSTEM OF THE RECOGNIZED STOCK EXCHANGE. 5. FOR THAT THE LD. CIT(A) GROSSLY ERRED IN IGNORING THE PLETHORA OF JUDICIAL DECISIONS CITED BEFORE HIM, WHICH APPLIED ON ALL FOURS TO THE CASE AT HAND, INCLUDING THAT OF THE JURISDICTIONAL HIGHCOURT AND ITAT BENCHES. I.T.A. NO.208/RAN/2019 RASHMI SINGHANIA ASSESSMENT YEAR: 2014-15 2 6. FOR THAT THE ASSESSEE HAS ALSO MADE A LOSS OF RS.21,71,801 AS LONG TERM CAPITAL LOSS IN THE SAME FINANCIAL YEAR 13-14. THE ASSESSEE HAS NOT CLAIMED THE CARRY FORWARD OF THIS CAPITAL LOSSAND HAS ADJUSTED WITH THE LONG TERM CAPITAL GAIN EARNED, HENCE CARRY FORWARD OF NET CAPITALLOSS AMOUNTS TO RS. 3,42,499 WHICH HAS BEEN SHOWN IN THE RETURN FILED. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 2. THE SOLE ISSUE RAISED THROUGH THE ABOVE GROUNDS OF APPEAL ISREGARDING THE VALIDITY OF ADDITION OF RS.17,72,000/- ADDED INTO THE INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED BOGUS LONG-TERM CAPITAL GAINS. 3. I HAVE HEARD THE RIVAL CONTENTIONS OF THE RESPECTIVE PARTIES AND ALSO GONE THROUGH THE RECORDS. THE ASSESSEE, IN THE APPEAL, HAS PLEADED THAT THOUGH THE ASSESSING OFFICER HAD DECLARED THE LONG-TERM CAPITAL GAINS OF RS.17,72,000/- AS BOGUS AND ADDED THE SAID AMOUNT INTO THE INCOME OF THE ASSESSEE, HOWEVER, HE HAS TOTALLY OVERLOOKED THE LONG-TERM CAPITAL LOSS BOOKED DURING THE YEAR OF RS.21,71,801/-. THE ASSESSEE HAS SET OFF THE AFORESAID CAPITAL GAIN OF RS.17,72,000/- AGAINST THE LOSS OF RS.21,71,801/- AND HAS RETURNED THE NET CAPITAL LOSS AMOUNTING TO RS.3,42,499/-. HOWEVER, THE ASSESSING OFFICER TREATED THE LONG-TERM CAPITAL GAINS SHOWN BY THE ASSESSEE OF RS.17,72,000/- AS BOGUS AND ADDED THE SAME INTO THE INCOME OF THE ASSESSEE U/S 69A OF THE INCOME TAX ACT AS INCOME FROM UNEXPLAINED SOURCES. 4. THE MAIN REASON ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION IS THAT THE ASSESSEE HAS SHOWN THE AFORESAID LONG-TERM CAPITAL GAINS FROM THE SHARE TRANSACTIONS MADE IN RESPECT OF SHARES OF KAILASH AUTO FINANCE LTD. AS PER THE INFORMATION AVAILABLE WITH THE ASSESSING OFFICER, THE SAID KAILASH AUTO FINANCE LTD. WAS INVOLVED IN BOGUS ENTRIES AND THEREBY PROVIDING BOGUS LONG-TERM CAPITAL GAINS/LOSSES TO THE INVESTORS. ON BEING ASKED TO EXPLAIN IN THIS RESPECT, THE ASSESSEE FURNISHED DETAILED SUBMISSIONS WHEREIN IT HAS BEEN PLEADED THAT THE ASSESSEE HAS NOT DIRECTLY MADE INVESTMENTS IN THE SAID KAILASH AUTO FINANCE LTD. THE ASSESSEE, IN FACT, HAD PURCHASED 50000 SHARES OF M/S CAREFUL PROJECTS ADVISORY LTD. WHICH WAS LATER ON TAKEN OVER/MERGED IN KAILASH AUTO FINANCE LTD. BY THE ORDERS OF THE HIGH COURT. THE ASSESSEE HAD MADE INVESTMENT IN THE EQUITY SHARES OF M/S CAREFUL PROJECTS ADVISORY LTD. I.T.A. NO.208/RAN/2019 RASHMI SINGHANIA ASSESSMENT YEAR: 2014-15 3 OUT OF HIS BANK ACCOUNT BY WAY OF CHEQUES. IT WAS ALSO PLEADED THAT THE ASSESSEE WAS IN THE ACTIVITY OF SHARE TRANSACTIONS FOR MORE THAN 15 YEARS AND HAS MADE SEVERAL LOSSES DURING THE YEARS. THE INVESTMENTS MADE IN THE SHARES OF M/S CAREFUL PROJECTS ADVISORY LTD. WAS ONLY OF RS.50,000/- WHICH WAS ONLY 1.13% OF THE TOTAL INVESTMENT MADE BY THE ASSESSEE AS ON 31.03.2012. THE ASSESSEES INVESTMENTS DURING THE YEAR IN SECURITIES WERE AT RS.44,38,115/- AND THAT THE INVESTMENT IN M/S CAREFUL PROJECTS ADVISORY LTD. WAS VERY MEAGRE AS COMPARED TO THE TOTAL INVESTMENTS MADE BY THE ASSESSEE. THE ASSESSEE FURNISHED ALL THE DETAILS INCLUDING CONTRACT NOTES ETC. TO THE ASSESSING OFFICER TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE, DURING THE YEAR, HAS NOT CLAIMED ANY TAX EXEMPT INCOME RATHER THE LONG-TERM CAPITAL GAINS HAVE BEEN SET OFF AGAINST THE CAPITAL LOSSES AND THAT THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO INTRODUCE ANY UNACCOUNTED MONEY DURING THE YEAR. EVEN THE LONG TERM CAPITAL LOSSESS HAVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER. EVEN THE ASSESSEE HAS RETURNED THE LOSSES DURING THE YEAR,ALL THE TRANSACTIONS WERE MADE THROUGH BANKING CHANNELS AND ALL THE NECESSARY DETAILS,WHATEVER, CALLED UPON BY THE ASSESSING OFFICER WERE SUBMITTED BY THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER, WITHOUT CONSIDERING THE REPLY ANDEVIDENCES FURNISHED BY THE ASSESSEE, HAS MADE THE ADDITIONS MERELY ON THE BASIS OF SOME GENERAL INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT THE KAILASH AUTO FINANCE LTD. WAS INVOLVED IN SOME BOGUS TRANSACTIONS. HOWEVER, THERE WAS NO DISCUSSION BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER REGARDING BOGUS TRANSACTION ENTERED INTO THE NAME OF THE ASSESSEE. THE ASSESSING OFFICER EVEN HAS NOT POINTED OUT ANY DEFECT IN THE EVIDENCES AND DETAILS FURNISHED BY THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION DONE BY THE ASSESSEE IN THE SHARES. 5. EVEN THE LD. CIT(A) WHO HAS REPRODUCED THE REPLY OF THE ASSESSEE IN THE IMPUGNED ORDER AND THEREAFTER, UPHELD THE ORDER OF THE ASSESSING OFFICER IN A MECHANICAL MANNER WITHOUT ANY DISCUSSION AS TO WHY HE WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE. THE ADDITIONS, IN THIS CASE, APPEAR TO BE MADE ON ASSUMPTIONS AND PRESUMPTIONS BASIS WITHOUT ANY MATERIAL BEING BROUGHT ON RECORD SHOWING ANY DEFECT OR DISCREPANCY IN THE EVIDENCES FURNISHED BY THE ASSESSEE AND EVEN WITHOUT BRINGING ON RECORD ANY RELIABLE MATERIAL TO I.T.A. NO.208/RAN/2019 RASHMI SINGHANIA ASSESSMENT YEAR: 2014-15 4 SHOW THAT THE ASSESSEES LONG-TERM CAPITAL GAINS WHICH HAVE BEEN SET OFF AGAINST LONG- TERM CAPITAL LOSS, WAS NOT GENUINE. 6. IN VIEW OF THE ABOVE, I DO NOT FIND JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN MAKING/CONFIRMING THE IMPUGNED ADDITIONS AND THE SAME ARE ACCORDINGLY SET ASIDE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.04.2021. SD/- [SANJAY GARG] JUDICIAL MEMBER DATED:30.04.2021. RS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- RASHMI SINGHANIA 2. THE RESPONDENT- ITO, WARD-2(4), JAMSHEDPUR 3. THE CIT CONCERNED- 4. THE CIT(A) - 5. THE DR - 6. GUARD FILE BY ORDER SR. P.S., ITAT, KOLKATA