Smt. Vanita Tekriwal, Flat No.715, Sun n Moon Belvedere Park, Swage Farm Circle, New Sanganer Road, Jaipur V. ITO, Ward-2(3), Jaipur

ITA 22/JPR/2022

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7375 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 17-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Cost of acquisition; TDS; Capital Gains
• Section: 54F; 48

Judgement Text

1 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 22/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2014-15 Smt. Vanita Tekriwal Flat No. 715, Sun N Moon Belvedere Park, Swage Farm Circle, New Sanganer Road, Jaipur cuke Vs. The ITO Ward- 2(3) Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACZP 7013 P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri P.C. Parwal, CA jktLo dh vksj ls@Revenue by: Smt. Runi Pal, Addl. CIT lquokbZ dh rkjh[k@Date of Hearing : 22/02/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 08 /03/2022 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal by the assessee is directed against the order of the ld. CIT(A), Delhi -42 dated 07-01-2022 for the assessment year 2014-15. 2. The hearing of the appeal was concluded through video conference by both the parties in view of the prevailing situation of Covid-19 Pandemic. 3. The grounds of appeal raised by the assessee are as under:- 1. The Ld. CIT(A), NFAC has erred on facts and in law in holding that long term capital gain of Rs.37,78,270/- earned in AY 2008-09 on sale of shares against which deduction u/s 54F was claimed was not shown in the e-filed return by not refuting the explanation of assessee and thereby confirming the addition for the same in the year under consideration. 2 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur 2. The Ld. CIT(A), NFAC has erred on facts and in law in holding that the transaction of purchase & sale of shares of M/s Radha Swami Buildcon Pvt. Ltd. on which long term capital gain of Rs.37,78,270/- was earned in AY 2008-09 is an accommodation entry without any basis thus confirming the addition in the year under consideration even when accepting that the transaction pertain to AY 2008-09. 4.1 Apropos Ground No. 1 and 2 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- ‘’8. The appellant has raised some contentions which were made before the AO. The appellant has claimed that the data was not properly captured in the return and there were many inaccuracies in the return captured by the system. It is observed that the appellant had uploaded e-return on 26-07-2008 and it has been claimed that the same return was filed on 28-07-2008 with the AO. The AO has observed that the appellant had not filed all the paper including computation of income for the relevant year alongwith the return not filed physically / manually. As per Section 139C r.w. Rule 12 which came into force w.e.f. 01-06-2006, provided that the return of income should not be accompanied by any document or copy of a new account or form or audit report etc.,however, it was obligatory on the part of an to file copy of acknowledgement of e- return with the concerned AO. Thus no computation of income or any return of income claiming deduction u/s 54F had been filed in the eyes of law by the appellant on 28-07-2008. 9. The appellant has failed to explain as to how the e-‘filed return could not have captured the details of capital gain and claim of deduction u/s 54F. In fact, the data of e-filed return is showing that the long term capital gain filed by the appellant was blank. The claim is proven to be false from the fact that the data relating to other heads of income are showing correct figures. In a computerized system driven environment, it is not possible that an assessee would feed something and the IT department system would capture something else. Moreover, in the case of e-filed return, immediately after submitting return, the electronic copy of the return so submitted is available for download. In normal course, the appellant would have noticed from the downloaded return that the return is not showing correct information and in that case, the appellant could have revised the return. However, this is not the case here. 10. Without prejudice to the above, the details of the purported transaction i.e. purchase of shares of M/s. Radha Swami Buildcon Pvt. 3 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur Ltd. on 27-03-2006 for Rs. 2,00,000/- at the rate of Rs.10/- per share and subsequent sale on 07-04-2007 for Rs. 4,00,000/- indicate that this was an accommodation entry taken by the appellant. Within a short span of holding for just one year (which was the time period to claim long term holding of shares) the shares of an unknown company had risen by 20 times. 11. Thus, clearly the appellant had not shown the long term capital gain in the e-filed return of income for Assessment Year 2008-09 but it was claimed to have been submitted in the paper return which was not in the form specified under relevant rules. It seems that the appellant had purposely done so in order to avoid any scrutiny/investigation of the transaction. It is therefore, concluded that the appellant had not shown any such exempt income in the return of income for A.Y. 2008-09 which has been claimed to have been brought in the capital account for the A.Y. 2014-15. The AO is found to be justified in treating the accretion to the capital account of Rs. 37,38,270 as an undisclosed income. The addition is confirmed. 12. In the result, the appeal is dismissed.’’ 5. During the course of hearing, the ld.AR of the assessee submitted that the lower authorities have erred in confirming the addition of Rs. 37,78,270/- and further submitted that lower authorities have taxed the capital gain on account of sale of shares and resultantly the capital gain which had arisen in A.Y. 2008-09 and deduction claimed u/s 54of the Act. Thus the capital gain which relates to A.Y. 2008-09 cannot be taxed in A.Y. 2014-15 merely on the technical reasons. To this effect, the ld.AR has submitted following written submission. ‘’1. From the facts stated above the two issues arising in the present appeal is whether the amount of Rs.37,78,270/- can be considered unexplained only because the system generated return for AY 2008-09 is not reflecting the long term capital gain and whether the amount from sale of shares on which the said gain is earned in AY 2008-09 can be treated as unexplained income for AY 2014-15. 2. It is submitted that for AY 2008-09 the assessee has e-filed the return of income on 26.07.2008. The return uploaded through software in XML file contained all the figures including the long term capital gain on 4 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur sale of shares and the exemption u/s 54F (PB 44). The assessee also filed the paper return along with the computation of total income on 28.07.2008 which also reflect the long term capital gain on sales of shares of RSBPL against which exemption u/s 54F of Rs.37,78,270/- is claimed (PB 4-6). In support of this fact the assessee has filed the affidavit (PB 59). However, inspite of all these facts available on record, the AO has solely relied on the system generated return which contains number of errors as pointed out vide letter dt. 18.11.2016 as under:- (a) Column of First Name is blank whereas First Name is shown in Last Name column and last name is shown in Middle Name column (PB 7). (b) Column of Phone No. is showing 2367434 instead of 2-293095 (PB 7). (c) In Part A-BS Point No. 3d(ii)(C), provision for leave encashment/superannuation/gratuity is showing Rs.9,188/- whereas it is zero (PB 8). (d) In Part A-BS Point No. 3d(ii)(E), total is shown at Rs.1,15,16,118/- whereas it should be Rs.9,188/- (PB 8). (e) In Schedule CG, column A3 is showing totally blank (PB 21) whereas it was filled as under:- 3 From other assets a Full value of consideration 3a 136946 b Deductions under section 48 i Cost of acquisition bi 124050 ii Cost of Improvement bii Nil iii Expenditure on transfer biii Nil iv Total (i+ii+iii) biv 124050 c Balance (3a-biv) 3c 12896 d Loss, if any, to be ignored under section 94(7) or 94(8) 3d Nil e Deduction under section 54B/54D 3e Nil f Short-term capital gain (3c+3d-3e) 3f 12896 However, this figure of Rs.12,896/- is shown in Part B-TI, column 4(a)(iii) (PB 14) and in Schedule CYLA, row no. (iv) (PB 22) which shows that data of Schedule CG of the return was not ported in the department software whereas it was filled by the assessee. 5 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur (f) In Schedule CG, column B3 is showing totally blank (PB 21) whereas it was filled as under:- 3 Other assets for which option under proviso to section 112(1) not exercised a Full value of consideration 3a 4000000 b Deductions under section 48 i Cost of acquisition after indexation bi 221730 ii Cost of Improvement after indexation bii Nil iii Expenditure on transfer biii Nil iv Total (bi+bii+biii) biv 221730 c Balance (3a-biv) 3c 3778270 d Exemption under sections 54/54B/54D/54EC/54F/54G/54GA 3d 3778270 e Net balance (3c-3d) 3e Nil However, ‘0’ is shown in Part B-TI, column 4(b) (PB 14) and in Schedule CYLA, row no. (v) (PB 22) which shows that data of Schedule CG of the return was not ported in the department software whereas it was filled by the assessee. (g) Apart from this there are other errors also as mentioned in Point No.7 to 11 of letter dt. 18.11.2016 (PB 56-57) From the above mistakes it can be noted that in the system generated return the various amounts/ details mentioned in the e-return uploaded through software in XML file is not properly captured. It may be noted that e-filing of the return was in the initial stage in AY 2008-09 and therefore, as the system has not stabilized properly such mistakes has occurred. The AO in Para 4(a) has accepted the fact that the assessee has filed the copy of acknowledgment of e-filed return but at the same time has not accepted the fact that all papers including computation of income was filed manually by referring to Rule 12 of the IT Rules according to which it was obligatory on the part of assessee to file copy of acknowledgment of e-return with the concerned AO but return is not to be accompanied with any document. The AO, however, ignored that the rule is for not filing any document along with the e-return filed on the system but the said rule nowhere debarred the assessee to file computation of total income along with the acknowledgment of e- return filed with the AO. In any case when the sale proceeds of shares and the investment u/s 54F are both evident from the bank statement of the assessee for the concerned year, the same cannot be treated as unexplained only because of alleged non-disclosure of the same in the return of income filed electronically. 6 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur Hence, addition made by the AO and confirmed by Ld. CIT(A) by treating the amount of Rs.37,78,270/- as unexplained is unjustified and be deleted. 3. The assessee was allotted 20,000 shares @ Rs.10 per share by M/s Radha Swami Buildcon Pvt. Ltd. on 27.03.2006. Copy of Form 2 is at PB 61-64. These shares were sold on 07.04.2007 to 4 companies for Rs.40 lacs. Copy of sale bills and bank statement where the sale proceeds are credited is at PB 65-69. The Ld. CIT(A) without any basis has incorrectly held that this transaction of purchase & sale of shares is an accommodation entry. 4. Without prejudice to above, it is submitted that the lower authorities have accepted that the transaction of sale of shares and the resultant capital gain has arisen in AY 2008-09. Therefore, such capital gain which relate to AY 2008-09 cannot be taxed in AY 2014-15. Hence, for this reason alone, the addition made by AO and confirmed by Ld. CIT(A) needs to be deleted. In view of above, addition of Rs.37,78,270/- confirmed by the Ld. CIT(A) be directed to be deleted.’’ The ld.AR of the assessee further argued that the print version of ITR generated from the system perfectly shows the capital (APB 44) not only that deduction claimed u/s 54F of the Act is also reflected. Thus, there is no fault. Not only that the transaction of capital gain and is subsequent investment in A.Y. 2008-09 how can be taxed in A.Y. 2014-15 merely on the reasons that on line transaction does not show capital gain. The ld.AR of the assessee has filed an affidavit dated 24- 10-2016 placed before the AO and the ld. CIT(A) wherein she has confirmed the fact on oath about the capital gain and deduction claimed u/s 54F of the Act. She has further stated that she is assessed to tax since 1998 and since then no such behavior is observed. Not only that the transactions are duly supported by bills and routed through bank account which are already disclosed in all the income tax returns 6. On the other hand, the ld. DR supported the orders of the lower authorities and submitted that capital gain is now escaped and is not reflected and captured. The assessee has claimed capitalization in this year for the first time and source of capital gain income is also not checked 7 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur and thus the action of taxing the credit in the year is based on finding and thus the ld. DR relied on the assessment order finding. 7 We have heard the rival contentions and perused the materials available on record. Brief facts of the case are that the assessee has income from salary, business, capital gains and income from other sources. She filed the return on 09.07.2014 declaring total income of Rs.10,35,250/- . The AO during the course of assessment proceeding observed that as per the return of income for AY 2013-14 capital declared by the assessee was Rs.13,72,546/- whereas for AY 2014-15 capital declared is Rs.1,45,30,080/- and thus, there is an increase of Rs.1,31,57,534/-. For increase in capital, the assessee vide letter dated 26.08.2016 explained that during the year she has transferred loans & advances and the amount of advance tax/ TDS from personal balance sheet to the business balance sheet to the extent of Rs.1,46,62,649/- which has resulted in increase in the capital in the business balance sheet. The assessee further filed the copy of return and computation of total income from AY 2007-08 to 2014-15 giving the details of gross total income and exempted income aggregating to Rs.1,52,27,206/- (70,93,124+81,34,082) in support of the capital introduced as business capital. 7.1 The AO, however, vide show cause notice dated 10.10.2016 observed that the system generated return for AY 2008-09 is not showing any long term capital gain. In the return income of Rs.6,36,857/- has been declared exempt but no income under the head capital gain has been declared and therefore, the capital gain income claimed at Rs.37,78,270/- should be treated as undisclosed income for the year under consideration. 7.2 In response to the show cause notice assessee vide submission filed on 18.11.2016 (PB 54-58) made detailed explanation pointing out various mistakes in the system generated return and explained that in the e-return filed by the assessee on 26.07.2008, she has duly declared the 8 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur long term capital of Rs.37,78,270/- on sale of shares of Radha Swami Buildcon Pvt. Ltd. which she has claimed as deduction u/s 54F of the Act. Further the paper return was also filed with AO on 28.07.2008 in which this fact is declared in the computation. Affidavit in support of declaration of long term capital gain of Rs.37,78,270/- and deduction claimed u/s 54F as declared in the return uploaded through software in XML file was filed at paper book page 44. 7.3 The AO, however, at Para 4 of order by just referring to the submission of assessee held that same is not acceptable and thereby treated the amount of Rs.37,78,270/- as undisclosed income for the year under consideration and made addition for the same. 7.4 In first appeal, the ld. CIT(A) held that the assessee has failed to explain as to how the e- filed return could not have captured the details of capital gain and claim of deduction u/s 54F. In fact, the data of e-filed return is showing that the long term capital gain filled up by the appellant was blank. The claim is proven to be false from the fact that the data relating to other heads of income are showing correct figures. In a computerized system driven environment, it is not possible that an assessee would feed something and the IT department system would capture something else. Moreover, in the case of e-filed return, immediately after submitting return, the electronic copy of the return so submitted is available for download. In normal course, the appellant would have noticed from the downloaded return that the return is not showing correct information and in that case the appellant could have revised the return. However, this is not the case here. Further the details of the purported transaction i.e. purchase of the shares of M/s Radha Swami Buildcon Pvt. Ltd. on 27.03.2006 for Rs.2,00,000/- at the rate of Rs.10/- per share and subsequent sale on 07.04.2007 for Rs.40,00,000/- indicate that this was an accommodation entry taken by the assessee . Within a short span of holding for just one year, the shares of an 9 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur unknown company had risen by 20 times. Thus, clearly the assessee had not shown the long term capital gain in the e-filed return of income for AY 2008-09 but it was claimed to have been submitted in the paper return which was not in the form specified under relevant rules. The assessee had purposely done so in order to avoid any scrutiny/ investigation of the transaction. It is therefore concluded that the assessee had not shown any such income in the return of income for AY 2008-09 which has been claimed to have been brought in the capital account for the AY 2014-15. Hence, AO is justified in treating the accretion to the capital account of Rs.37,78,270/- as an undisclosed income. 7.5 It is not imperative to repeat the facts of the case, however, we find that the assessee was was allotted 20,000 shares @ Rs.10 per share by M/s Radha Swami Buildcon Pvt. Ltd. on 27.03.2006 and Copy of Form 2 is at PB 61-64. These shares were sold on 07.04.2007 to 4 companies for Rs.40 lacs and Copy of sale bills and bank statement where the sale proceeds are credited is at PB 65-69 clearly establish that the transactions are of A.Y. 2008-09. Against the affidavit and copy of online ITR filed in the paper book, the ld. DR has not filed any contrary facts that the contention of the assessee are not correct. Thus, it appears that the Ld. CIT(A) has incorrectly held that this transaction of purchase & sale of shares is an accommodation entry. Thus, once the record before the lower authorities suggest that the transaction of sale of shares and the resultant capital gain has arisen in AY 2008-09, it cannot be added in the year under consideration. Therefore, such capital gain which relate to AY 2008-09 cannot be taxed in AY 2014-15. Hence, for this reason alone, the addition made by AO and confirmed by Ld. CIT(A) cannot be sustained. Thus the grounds No. 1 and 2 of the assessee are allowed. 10 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur 8.0. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 08/03/2022 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 08/03/2022 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Smt. Vanita Tekriwal, Jaipur ,. 2. izR;FkhZ@ The Respondent- The ITO, Ward- 2(3), Jaipur . 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 22/JP/2022) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar 11 ITA No.22/JP/2022 Smt. Vanita Tekriwal vs ITO, wed 2(3), Jaipur