Arun Kumar Bhaiya, New Delhi V. ITO, Ward- 23(4), New Delhi

ITA 2701/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2205 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 18-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND KHANDELWAL SENIOR
• Assessee Lawyers: ASHUTOSH JAIN
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2701/DEL./2018 (ASSESSMENT YEAR : 2014-15) SHRI ARUN KUMAR BHAIYA, VS. ITO, WARD 23 (4), AM 197, SHALIMAR BAGH, NEW DELHI. NEW DELHI 110 088. (PAN : AEEPB6622H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHUTOSH JAIN, CA REVENUE BY : SHRI ANAND KHANDELWAL, SENIOR DR DATE OF HEARING : 27.08.2018 DATE OF ORDER : 30.08.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SHRI ARUN KUMAR BHAIYA (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 16.02.2018 PASSED BY LD. C IT (APPEALS)-28, NEW DELHI QUA THE ASSESSMENT YEAR 201 4-15 ON THE GROUNDS INTER ALIA THAT :- 1. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN D ISALLOWING LONG TERM CAPITAL GAIN AMOUNTING TO RS.66,79,985 TREATIN G THE SAME AS UNEXPLAINED CASH CREDIT IN TERMS OF SECTION 68 OF T HE INCOME TAX ACT, 1961, ALLEGING THAT THE SAME HAS BEEN EARNED B Y THE ASSESSEE FROM SALE OF PENNY STOCK. ITA NO.2701/DEL./2018 2 1.1 THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER AS A BOVE WITHOUT APPRECIATING THAT THE AFORESAID ADDITION WAS MADE S OLELY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATIO N WING WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE TO REBUT THE SAME. 1.2 THAT CIT(A) HAS ERRED ON FACTS AND IN LAW IN H OLDING AS ABOVE WITHOUT APPRECIATING THAT THE ALLEGED PENNY S TOCK WERE LISTED IN A RECOGNIZED STOCK EXCHANGE AND THE ASSES SEE HAD DULY SUBMITTED ALL THE RELEVANT DETAILS / DOCUMENTS IN S UPPORT OF HIS CLAIM WHICH WERE NOT TAKEN COGNIZANCE BY THE ASSESS ING OFFICER. 1.3 THAT THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN HOLDING AS ABOVE WITHOUT APPRECIATING THAT THE ASSESSEE HAS DULY DISCHARGED HIS ONUS CAST ON HIM UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 AND ASSESSING OFFICER HAS FAILED TO B RING ANY COGENT MATERIAL ON RECORD IN SUPPORT OF HIS CONTENT ION OF TREATING THE AFORESAID LONG TERM CAPITAL GAINS AS UNEXPLAINE D CASH CREDITS IN TERMS OF THAT SECTION. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : DURING THE ASSESSMENT PRO CEEDINGS, ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHO WN LONG TERM CAPITAL GAIN OF RS.66,79,985/- FROM TWO SCRIPS VIZ. ONE LAC SHARES OF UNNAO INDUSTRIES LTD. WITH PURCHASING COST OF 125 S HARES AT RS.1,49,522/- AND ACQUIRED REMAINING SHARES AS BONU S SHARES ON DIFFERENT DATES FOR A SALE CONSIDERATION OF RS.29,0 2,569/- AND ONE LAC SHARES OF KAILASH AUTO FINANCE LTD. WITH PURCHA SING COST OF RS.1,10,211/- AND THE SALE CONSIDERATION ON DIFFERE NT DATES IS SHOWN AT RS.40,37,149/-. DECLINING THE CONTENTIONS RAISE D BY THE ASSESSEE, AO PROCEEDED TO CONCLUDE THAT THE ASSESSE E HAS CLAIMED BOGUS LONG TERM CAPITAL GAIN BEING NOT GENUINE INVE STOR AND THEREBY DISALLOWED THE LONG TERM CAPITAL GAIN TO TH E TUNE OF ITA NO.2701/DEL./2018 3 RS.66,79,985/- AND TREATED THE SAME AS UNEXPLAINED CASH CREDIT FOUND IN THE BOOKS OF THE ASSESSEE AND MADE ADDITIO N THEREOF TO THE TOTAL INCOME OF THE ASSESSEE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF APPEAL BEF ORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITION BY DISMISSIN G THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LD. AR FOR THE ASSESSEE CHALLENGING THE IMPU GNED ORDER CONTENDED INTER ALIA THAT THE ENTIRE ASSESSMENT ORD ER HAS BEEN BASED UPON THE REPORT GIVEN BY THE INVESTIGATION WING OF THE INCOME-TAX DEPARTMENT AND NO INDEPENDENT ENQUIRY HAS BEEN COND UCTED BY THE AO; THAT ALL THE SHARES HAVE BEEN PURCHASED BY THE ASSESSEE THROUGH BANKING CHANNEL FOR WHICH STT PAYMENT HAS B EEN MADE WHICH IS DULY REFLECTED IN THE CONTRACT NOTE ITSELF ; THAT THE SECURITY EXCHANGE BOARD OF INDIA (SEBI) HAS NOT TAKEN ANY AD VERSE INFERENCE AGAINST UNNAO INDUSTRIES LTD.; THAT THE A SSESSEE HAS SUPPLIED THE ENTIRE DATA TO THE ASSESSMENT PROCEEDI NGS WHICH HAVE NOT BEEN RELIED UPON. ITA NO.2701/DEL./2018 4 6. HOWEVER, ON THE OTHER HAND, TO REPEL THE ARGUMEN TS ADVANCED BY THE LD. AR FOR THE ASSESSEE, THE LD. DR FOR THE REVENUE SUPPORTING THE ORDER PASSED BY AO AND LD. C IT (A) CONTENDED INTER ALIA THAT CIRCUMSTANTIAL EVIDENCE B ROUGHT ON RECORD BY THE AO APPARENTLY GO TO PROVE THAT AS AGAINST 12 5 SHARES ORIGINALLY PURCHASED BY THE ASSESSEE, 9875 SHARES H AVE BEEN ALLEGEDLY ALLOTTED TO THE ASSESSEE AS BONUS SHARES WHICH HAVE BEEN SOLD BY THE ASSESSEE IMMEDIATELY AFTER THE SAME WER E DEMATERIALIZED WHICH IS HUMANLY NOT POSSIBLE; THAT VALUE OF THE SHARES PURCHASED BY THE ASSESSEE INCREASED 29 TIMES AND 40 TIMES WITHIN A SHORT PERIOD WHICH MAKES ALL THE TRANSACTI ONS UNUSUAL AND SUSPICIOUS. 7. UNDISPUTEDLY, AO HAS BASED ASSESSMENT ORDER ON T HE REPORT GIVEN BY INVESTIGATION WING OF THE INCOME-TAX DEPAR TMENT THAT THE LONG TERM CAPITAL GAINS ON SHARES HAVE BEEN CLAIMED BY THE ASSESSEE IS RESULT OF BOGUS TRANSACTIONS. FOR FACI LITY OF REFERENCE, OPERATIVE PART OF THE ASSESSMENT ORDER IS EXTRACTED AS UNDER :- THE REPLY OF THE ASSESSEE HAS BEEN DULY CONSIDERED BUT NOT FOUND ACCEPTABLE AND THE SET OF FACTS OF THE CASE LAWS QUOTED IN IT ARE DIFFERENT FROM TH E SET OF FACTS IN THIS CASE. THE ASSESSEE HAS SOUGHT THE REP ORT OF THE WING WHICH HAS ALREADY BEEN SHOWN TO THE DIRECT OR IN THE COURSE OF STATEMENT, IT ALSO ASKED THE CERTI FIED TRUE COPY OF THE INVESTIGATION REPORT OF THE SEBI; THE REPORT OF THE SEBL IS ONLINE AND ALSO WITH THE INVESTIGATION WING AND THE GIST OF THIS REPORT WAS SHOWN ITA NO.2701/DEL./2018 5 TO THE ASSESSEE DURING THE COURSE OF STATEMENT. FUR THER THE ASSESSEE HAS ALSO ASKED TO PRESENT THE PERSONS FOR CONFRONTATION WHO HAS GIVEN THE STATEMENT OF THIS VICIOUS PLAN BEFORE THE INVESTIGATION WING ON OATH AND THE SAME IS NOT POSSIBLE AT THE FAG END OF THE ASSE SSMENT PROCEEDINGS. 8. BARE PERUSAL OF THE ASSESSMENT ORDER GOES TO PRO VE THAT THE AO HAS BOTCHED UP THE ENQUIRY BY DENYING OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE WHO HAS NOT BEEN ALLOWED TO C ROSS EXAMINE THE WITNESSES. AO HAS ALSO NOT ENQUIRED FROM THE S TOCK EXCHANGE SO AS TO WORK OUT IF BY APPLYING THE RULE OF CIRCUI T BREAKER THE APPRECIATION IN SHARES TO THE TUNE OF 29 TIMES OR 4 0 TIMES IN A SHORT PERIOD IS FEASIBLE, RATHER AO HAS MERELY RELIED UPO N REPORT OF INVESTIGATION WING. NO DOUBT, SEBI HAS NOT DRAWN A NY ADVERSE INFERENCE IN CASE OF UNNAO INDUSTRIES LTD. COMPANY BUT THAT REPORT IS AGAINST THE COMPANY AND NOT THE INDIVIDUAL WHO H AVE BEEN INSTRUMENTAL IN GETTING THE TRANSACTIONS IN QUESTIO N MATURED, BUT AO HAS ALSO NOT ASSOCIATED ANY OF THE BROKERS INVOL VED IN THE TRANSACTIONS OF SHARES PURCHASED BY THE ASSESSEE AN D SUBSEQUENT SALE THEREOF. 9. AO HAS ALSO NOT MADE ANY ENQUIRY AS TO THE TRADI NG VALUE OF THE SHARES AT TIME WHEN THE SAME WAS DEMATERIALIZED NOR HAS MADE ANY ENQUIRY FROM THE COMPANY ITSELF BY PERUSING THE IR FINANCIAL STATEMENT. AO HAS BASED THE ASSESSMENT ORDER ON PR EPONDERANCE ITA NO.2701/DEL./2018 6 OF PROBABILITIES BY RELYING UPON CIRCUMSTANTIAL EVI DENCE BY ENTIRELY IGNORING DIRECT EVIDENCE AVAILABLE IN THIS CASE. A O HAS ALSO NOT MADE ENQUIRY FROM THE FATHER OF THE ASSESSEE WHO WA S FINANCIAL ADVISER FOR THE SALE AND PURCHASE OF THE SHARES IN QUESTION BY THE ASSESSEE AS DISCLOSED IN THE STATEMENT EXTRACTED IN THE ASSESSMENT ORDER. AO HAS ALSO IGNORED THE FACT THAT THERE CAN NOT BE MORE THAN 5% INCREASE IN THE VALUE OF SHARES IN A DAY AS PER CIRCUIT BREAKER RULE. 9. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT AO HAS BOTCHED UP THE ENQUIRY TO COMPLETE THE ASSESSMENT HURRIEDLY BY BASING THE ASSESSMENT O RDER ON REPORT OF THE INVESTIGATION WING DESPITE THE FACT THAT DIR ECT EVIDENCE WAS AVAILABLE IN THIS CASE. SO, IN THESE CIRCUMSTANCES , WE ARE OF THE CONSIDERED VIEW THAT THE CASE IS REQUIRED TO BE SET ASIDE TO THE AO TO DECIDE AFRESH BY PROVIDING AN OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE IN THE LIGHT OF THE OBSERVATIONS MADE HERE IN ABOVE. SO, APPEAL FILED BY THE ASSESSEE IS REMANDED BACK TO TH E AO AND ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2018. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF AUGUST, 2018/TS ITA NO.2701/DEL./2018 7 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-28, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.