Gourav Gupta , Bangalore V. The Income Tax Officer Ward-4(3)(2), Bangalore

ITA 2513/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8138 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-06-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 03-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice; Accommodation entries; Set aside; Capital Gains
• Section: 68; 143(3); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 2513 /BANG/201 8 ASSESSMENT YEAR : 20 1 5 - 1 6 SHRI. GOURAV GUPTA, NO.576, KALYAN MANTAP ROAD, 8 TH BLOCK KORAMANGALA, BANGALORE 560 095. PAN : ACCPG 6116 H VS. THE INCOME TAX OFFICER, WARD - 4(3)(2), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SMT. SUMAN LUNKAR, CA REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT DATE OF HEARING : 19 . 06 .201 9 DATE OF PRONOUNCEMENT : 19 . 07 .201 9 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)-4, BANGALORE DATED 31.07.2018 FOR ASSESSMENT YEAR 2015-16. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2015-16 ON 20.11.2015 DECLARING INCOME OF RS.19,94,690/- FROM TRADING / COMMISSION AGENT IN GGBS AND CEMENT, AS PARTNER IN NAMRATA AGENCIES AND LONG TERM CAPITAL GAINS (LTCG) OF RS.34,28,400/- CLAIMED AS EXEMPT U/S 10(38) OF THE ITA NO. 2513/BANG/2018 PAGE 2 OF 6 INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS CONCLUDED U/S 143(3) OF THE ACT VIDE ORDER DATED 29.12.2017, WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT RS.54,23,090/- IN VIEW OF THE LTCG OF RS.34,28,400/- ARISING ON ACCOUNT OF SALE OF SHARES OF M/S. GCM SECURITIES LTD., BEING HELD TO BE UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. ON APPEAL, THE CIT(A)-4, BANGALORE, DISMISSED THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 31.07.2018. 3 AGGRIEVED BY THE ORDER OF THE CIT(A)-4, BANGALORE, DATED 31.07.2018 FOR ASSESSMENT YEAR 2015-16, THE ASSESSEE HAS PREFERRED THIS APPEAL WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS BEING BAD IN LAW, VOID AB-INITIO ARE REQUIRED TO BE QUASHED. 2. IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE ABSENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORDER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED. 3. IN ANY CASE AND WITHOUT PREJUDICE, THE LEARNED ASSESSING OFFICER HAD ERRED IN MAKING ADDITION OF RS. 34,28,400/ - TO THE INCOME OF THE APPELLANT AND THE LEARNED CIT (A) -4 HAS ERRED IN CONFIRMING THE SAME. THE ADDITION TO THE INCOME IS BAD BOTH IN LAW AND ON FACTS AND IS LIABLE TO BE DELETED IN ENTIRETY. 4. THE LEARNED ASSESSING OFFICER HAS NOT PROPERLY APPRECIATED THE FACTS OF THE CASE. ON PROPER APPRECIATION OF THE FACTS AND LAW APPLICABLE, IT WILL BE CLEAR THAT THE ADDITION AS MADE HAS NO BASIS TO STAND AND IS LIABLE TO BE DELETED IN ENTIRETY. ITA NO. 2513/BANG/2018 PAGE 3 OF 6 5. THE LEARNED ASSESSING OFFICER HAD ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 68 OR LT. ACT, 1961 ARE APPLICABLE AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THERE BEING NO UNEXPLAINED CREDIT AND IN FACT THE CREDIT HAVING BEEN DULY EXPLAINED, MAKES THE ADDITION U/S. 68 WHOLLY ERRONEOUS AND LIABLE TO BE DELETED. 6. THE APPELLANT DENIES LIABILITY TO PAY INTEREST UNDER THE ACT. THE INTEREST HAVING BEEN ERRONEOUSLY LEVIED TO BE DELETED. 7. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING. IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE ASSESSMENT OF ENTIRE SALE CONSIDERATION ON SALE OF SHARES AS INCOME FROM OTHER SOURCES BE DELETED, THE INCOME FROM LONG TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS RETURNED BY THE APPELLANT BE ACCEPTED, AND THE INTEREST LEVIED BE ALSO DELETED. 4. GROUND NO.2 4.1 IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE IN GROUND NO.2 (SUPRA), THAT THE ASSESSEE HAS DISPUTED THE VALIDITY OF THE ASSESSMENT ORDER PASSED BY THE AO WHICH WAS UPHELD BY THE LEARNED CIT(A) BY RELYING ON REPORT OF THE KOLKATA INVESTIGATION DIRECTORATE AND STATEMENT OF VARIOUS OPERATORS, ENTRY PROVIDERS AND STOCK BROKERS IN WHICH IT IS ALLEGED THAT THEY HAVE PROVIDED ACCOMMODATION ENTRIES FOR LONG TERM AND SHORT TERM CAPITAL GAINS, PURCHASE AND SALES OF SHARES ETC., AND THE LIST OF BENEFICIARIES INCLUDE THE NAME OF THE ASSESSEE ALSO. IT WAS SUBMITTED THAT NEITHER THE COPY OF THE STATEMENTS OF THE OPERATORS, STOCK BROKERS, ENTRY PROVIDERS AND THE REPORT OF KOLKATA INVESTIGATION DIRECTORATE HAVE BEEN MADE AVAILABLE TO THE ASSESSEE NOR HAS HE BEEN ALLOWED CROSS-EXAMINATION OF THE PERSONS ON THE BASIS OF WHOSE STATEMENTS, THE AUTHORITIES BELOW HAVE DRAWN ADVERSE INFERENCE IN THE ASSESSEES CASE. THE LEARNED AR SUBMITTED THAT UNDER THESE FACTS, JUDGMENTS OF ITA NO. 2513/BANG/2018 PAGE 4 OF 6 HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CHANDRA DEVI KOTHARI IN WRIT PETITION NO.39370/2014 DATED 2ND OF FEB, 2015 (COPY OF WHICH HAS BEEN PLACED ON RECORD), IS SQUARELY APPLICABLE. SHE HAS PARTICULARLY DRAWN MY ATTENTION TO PARA NO.8 OF THIS JUDGMENT OF HONBLE KARNATAKA HIGH COURT, AS PER WHICH, IT WAS HELD THAT SINCE THE PETITIONER HAS BEEN DENIED AN OPPORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS, THE MATTER IS REQUIRED TO BE RECONSIDERED BY THE AO BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AFTER FURNISHING DETAILS / COPY OF THE STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED. THE LEARNED AR SUBMITTED THAT IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND AS PER THIS JUDGMENT OF HONBLE KARNATAKA HIGH COURT, IN THE CASE ON HAND ALSO, THE ENTIRE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION WITH SAME DIRECTIONS. 4.2 PER CONTRA, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4.3.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AT THE OUTSET, REPRODUCE PARA NO.8 OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA) AND THIS IS AS UNDER: 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES AS ADVERTED TO ABOVE AND AS THE PETITIONER HAS BEEN DENIED AN OPPORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS REGARDING THE ALLEGED SHARE AMOUNT, I AM OF THE VIEW THAT THE MATTER REQUIRES TO BE RE-CONSIDERED BY THE RESPONDENT BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE PETITIONER AND BY FURNISHING THE DETAILS / COPY OF THE STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED. 4.3.2 FROM THE ABOVE PARA 8 OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA) IT IS SEEN THAT MATTER WAS RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE STATEMENTS AND OTHER RELATED DETAILS RELIED ON BY THE AO. AS PER THE FACTS NOTED BY THE HIGH ITA NO. 2513/BANG/2018 PAGE 5 OF 6 COURT IN THE EARLIER PARAS OF JUDGMENT (SUPRA) AND AS PER THE FACTS OF THE CASE ON HAND, THERE APPEARS TO BE NO DIFFERENCE IN FACTS. THEREFORE, RESPECTFULLY FOLLOWING THIS JUDGMENT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA), WE SET ASIDE THE IMPUGNED ORDER OF LEARNED CIT(A) FOR ASSESSMENT YEAR 2015-16 AND RESTORE THE MATTER OF TREATMENT OF PROFIT DECLARED ON SALE OF SHARES, CLAIMED AS EXEMPT UNDER SECTION 10(38) OF THE ACT TO THE FILE OF THE AO FOR FRESH DECISION WITH THE SAME DIRECTIONS AS WERE ISSUED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE AS PER PARA NO.8 OF THE JUDGMENT REPRODUCED ABOVE I.E., FOR MAKING AVAILABLE DOCUMENTS, STATEMENTS, INVESTIGATION REPORT, ETC., RELIED UPON BY REVENUE FOR MAKING THE ADDITIONS AND PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE FOR CROSS-EXAMINATION OF PERSONS WHOSE STATEMENTS ARE BEING RELIED UPON BY THE AO. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STAGE REGARDING THE MERITS OF THE ADDITION. 5. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2015-16 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JULY, 2019. SD / - SD/ - (PAVAN KUMAR GADALE) JUDICIAL MEMBER (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE. DATED: 19 TH JULY, 2019. /NS/* ITA NO. 2513/BANG/2018 PAGE 6 OF 6 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.