Shri Kantilal (HUF), Bengaluru V. Income Tax Officer Ward- 5(2)(1), Bengaluru

ITA 2093/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9947 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-11-2018
• Assessment Year: 2015-2016
• Appeal Filed On: 26-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KABILA
• Keywords: Unexplained cash credit; Income from undisclosed sources; Opportunity of being heard; Principle of natural justice; Set aside; Capital Gains
• Section: 68; 143(3); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH (SMC) : BANGALORE BEFORE SHRI JASON P BOAZ , ACCOUNTANT MEMBER ITA NO. 2093 /BANG/201 8 ASSESSMENT YEAR : 20 1 5 - 1 6 SHRI. KANTILAL (HUF), #28, 2 ND FLOOR, ADITYA MANSION, SAAJAN RAO ROAD, V. V. PURAM, BANGALORE 560 004. PAN : AJQPS 4718 Q VS. THE INCOME TAX OFFICER, WARD - 5(2)(1), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SMT. SOUMYA, ADVOCATE REVENUE BY : SMT. KABILA, JCIT DATE OF HEARING : 2 7 . 11 .201 8 DATE OF PRONOUNCEMENT : 5 . 1 2 .201 8 O R D E R PER JASON P BOAZ, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-5, BANGALORE DATED 15.02.2018 FOR ASSESSMENT YEAR 2015-16. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE, A HUF, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2015-16 ON 20.02.2016 DECLARING INCOME OF RS.2,63,000/- FROM OTHER SOURCES AND CAPITAL GAINS OF RS.15,82,626/- CLAIMED AS EXEMPT U/S 10(38) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS ITA NO. 2093/BANG/2018 PAGE 2 OF 5 CONCLUDED U/S 143(3) OF THE ACT VIDE ORDER DATED 26.12.2017, WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT RS.18,45,626/- IN VIEW OF THE SALE PROCEEDS OF RS.15,82,626/- DECLARED BY THE ASSESSEE, ARISING ON ACCOUNT OF SALE OF 5000 SHARES OF M/S. MAHAVEER ADVANCED PHARMA LTD., BEING HELD TO BE UNEXPLAINED CASH CREDITS U/S 68. ON APPEAL, THE CIT(A)-5, BANGALORE, DISMISSED THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 15.02.2018. 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-5, BANGALORE, DATED 15.02.2018 FOR ASSESSMENT YEAR 2014-15, THE ASSESSEE HAS PREFERRED THIS APPEAL WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) ERRED IN PASSING THE ORDER IN THE MANNER WHICH HE DID. 2. THE LEARNED CIT(A) ERRED IN PASSING THE ORDER WITHOUT GIVING THE PROPER OPPORTUNITY TO 'THE APPELLANT. 3. THE LEARNED CIT(A) ERRED IN APPLYING THE PROVISIONS OF SEC 68_ OF THE ACT BY DENYING THE EXEMPTION CLAIMED UNDER SECTION 10(38) OF THE ACT IN RESPECT OF PROFIT ON SHARE AS DECLARED BY THE APPELLANT. 4. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE TRANSACTIONS WERE GENUINE AND WERE FULLY SUPPORTED BY DOCUMENTS AND FINANCIAL TRANSACTIONS AND ACCORDINGLY HE OUGHT TO HAVE ACCEPTED THE EXPLANATION OFFERED BY THE APPELLANT AND EVIDENCE PROVIDED BY THE APPELLANT REFRAINED FROM MAKING THE IMPUGNED ADDITION. 5. THE LEARNED CIT(A) OUGHT TO HAVE PROVIDED THE MATERIALS COLLECTED ADVERSE TO THE APPELLANT FOR HIS REBUTTAL AND ALSO TO AFFORD OPPORTUNITY TO CROSS EXAMINE OF THOSE PERSONS WHO HAD GIVEN ADVERSE INFORMATION. 6. THE LEARNED CIT(A) HAVING FAILED TO DO SO THE IMPUGNED ADDITION WAS AGAINST THE LAW AND OPPOSED TO THE PRINCIPLES OF NATURAL JUSTICE AND LIABLE TO BE DELETED. 7. THE LEARNED CIT(A) ERRED IN LEVYING INTEREST UNDER SECTION 234A, 234B, AND 234D OF THE ACT. 8. WITHOUT PREJUDICE THE ADDITION AS MADE IS ARBITRARY EXCESSIVE AND UNREASONABLE AND LIABLE TO BE DELETED. ITA NO. 2093/BANG/2018 PAGE 3 OF 5 9. 'FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 3.2 DURING THE COURSE OF HEARING, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT ON SIMILAR FACTS AND CIRCUMSTANCES, THE MATTER FOR CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF THE ITAT, KOLKATA BENCH IN ITS ORDER IN ITA NO. 2394/KOL/2017 IN THE CASE OF PRAKASH CHAND BUTORIA. IT IS SUBMITTED THAT IN THE CITED CASE (SUPRA) ALSO, THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME CLAIMING INCOME ON SALE OF SHARES AS EXEMPT U/S 10(38) OF THE ACT. THE ASSESSING OFFICER (AO) TREATED THE RECEIPT OF SALE CONSIDERATION AS UNACCOUNTED INCOME AND MADE AN ADDITION U/S 68 OF THE ACT. ON APPEAL, THE CIT(A) UPHELD THE AOS ORDER. HOWEVER, ON FURTHER APPEAL, THE ITAT, KOLKATA BENCH ALLOWED THE ASSESSEES APPEAL OBSERVING THAT THE ADDITION WAS UNSUSTAINABLE SINCE THE AO MADE THE ADDITION IN A ROUTINE AND MECHANIZED MANNER, MERELY ON SUSPICIONS BASED ON REPORT OF ENQUIRIES MADE BY THE INVESTIGATION DIRECTORATE OF DIT, KOLKATA, WITHOUT BRINGING THE SAME ON RECORD OR CONFRONTING THE ASSESSEE WITH OR SUPPLYING THE ASSESSEE COPIES OF THE DOCUMENTS RELIED UPON FOR MAKING THE ADDITION AND PROVIDING IT OPPORTUNITIES FOR REBUTTAL. IT IS PRAYED THAT IN VIEW OF THE ABOVE, THE ORDERS OF THE AUTHORITIES BELOW BE SET ASIDE AND THE ASSESSEES APPEAL BE ALLOWED. 3.3 PER CONTRA, THE LEARNED DR FOR REVENUE SUBMITTED THAT ON SIMILAR FACTS AND CIRCUMSTANCES AS IN THE CASE ON HAND, ISSUE FOR CONSIDERATION IS COVERED BY THE DECISIONS OF THE BENGALURU ITAT IN THE CASES OF ARVIND KUMAR MOOLCHAND IN ITA NO.509/BANG/2017 AND PUKHRAJ HASMUKHLAL IN ITA NO.1927/BANG/2017 WHEREIN THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE AO HAVING OBSERVED THAT THE ADDITIONS WERE MADE BASED ON REPORTS OF THE INVESTIGATION DIRECTORATE AT KOLKATA AND STATEMENTS OF VARIOUS PERSONS WITHOUT CONFRONTING OR MAKING THEM AVAILABLE TO THE ASSESSEE FOR REBUTTAL. IN THOSE CASES, THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO CONFRONT THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO CONFRONT ITA NO. 2093/BANG/2018 PAGE 4 OF 5 THE ASSESSEE WITH THE REPORTS / DOCUMENTS / STATEMENTS PROPOSED TO BE USED AGAINST THE ASSESSEE, ALLOW REBUTTAL THEREOF AND CROSS EXAMINATION OF PARTIES ON WHOSE TESTIMONY IS PROPOSED TO BE RELIED UPON AND THE MATTER BE ADJUDICATED AFRESH AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO ALSO FILE DETAILS / SUBMISSIONS IN THIS REGARD. 3.4 IN REJOINDER, THE LD.AR FOR THE ASSESSEE DID NOT DISPUTE THE PROPOSITION PUT FORTH BY THE LD. DR FOR RESTORING THIS ISSUE TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION. 3.5 I 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 AND THE JUDICIAL DECISIONS CITED, I FIND THAT THE IMPUGNED ISSUE 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), I SET ASIDE THE ORDERS OF THE AO AND RESTORE THE MATTER OF TREATMENT OF PROFIT DECLARED ON SALE OF SHARES CLAIMED 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 HIS REBUTTAL ALL DOCUMENTS 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. GROUND NO. 5 OF ASSESSEES APPEAL IS DISPOSED OFF AS ABOVE. 4. IN VIEW OF THE ABOVE, THE OTHER GROUNDS RAISED BY THE ASSESSEE ON MERITS ARE RENDERED ACADEMIC AND DO NOT CALL FOR ADJUDICATION AT THIS JUNCTURE. 5. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2015-16 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2093/BANG/2018 PAGE 5 OF 5 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF DECEMBER, 2018. SD/- SD/- BANGALORE. DATED: 5 TH DECEMBER, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE. (N. V. VASUDEVAN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER