Income Tax Officer- 1(1), Kanpur V. Shri Baikunth Nath Khandelwal through L/H Smt. Maya Khandelwal and Shri Manish Khandelwal, Kanpur

ITA 37/LKW/2020

AI Insights

The case involves an appeal by the Income Tax Officer against the decision of the Commissioner of Income Tax (Appeals), which had deleted an addition of Rs. 25,10,396 to the assessee's income. The addition was initially made on the grounds that the sale of shares involved was part of a dubious design to provide accommodation entry of Long Term Capital Gain (LTCG). The Revenue argued that this was part of an organized scam to claim bogus LTCG through penny stocks, referencing CBDT's Circular No.23 of 2019 and subsequent O.M. dated 16.09.2019. However, the appeal was rendered moot as the assessee opted for the VSVS, a scheme designed to resolve tax disputes.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113255 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-05-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 09-01-2020
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARISH GIDWANI
• Keywords: Earning of tax free income; Penny stocks
• Section: 143(3)

Judgement Text

I.T.A. No.37/Lkw/2020 Assessment year:2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘A’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.37/Lkw/2020 Assessment Year: 2014-15 Income Tax Officer-1(1), Kanpur. Vs. Shri Baikunth Nath Khandelwal, Thru L/h Smt. Maya Khandelwal, 26/64, Birhana Road, Kanpur. PAN:ADKPK9546J (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) Appeal vide I.T.A. No. 37/Lkw/2020 has been filed by the Revenue for assessment year 2014-15 against impugned appellate order dated 30/11/2018 of learned CIT(A). The grounds of appeal are as under: “1. The Ld. Commissioner of Income Tax (Appeals)-1, Kanpur has erred in law and on facts in deleting the addition of Rs.25,10,396/- (24,35,398+74,458) without going into the merits of the case and ignoring the findings recorded by the assessing officer in assessment order that the sale of shares in this case is not a natural phenomenon- but an arrangement of dubious design of providing accommodation entry of Long Term Capital Gain to introduce unaccounted own money as exempt income in the form of LTCG on sale of shares and the assessee being fully aware of it is also a part of this manipulation. Appellants by None Respondent by Shri Harish Gidwani, D.R. Date of hearing 16/05/2023 Date of pronouncement 16/05/2023 I.T.A. No.37/Lkw/2020 Assessment year:2014-15 2 2. The Ld. Commissioner of Income Tax (Appeals)-1, Kanpur has erred in law and on facts without appreciating the facts that the issue involved pertains to organized scam/tax evasion activity and unique modus operandi of this embezzlement for which CBDT's Circular No.23 of 2019 dated 06.09.2019 and subsequent O.M. dated 16.09.2019 mandate that the appeals may be filed on merits in case of the assessee claiming bogus LTCG/STCL through Penny Stocks. 3. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, unjust and bad in law be vacated and the order dated 30.12.2016 passed u/s 143(3) of I.T. Act of the Assessing Officer be resorted.” (B). During the course of hearing, the learned Departmental Representative has submitted copy of challan generated through ITBA (Income Tax Business Application) for full and final settlement of tax arrears under Vivad Se Viswas Scheme (“VSVS” for short) for assessment year 2014-15. It was submitted by him that since the assessee has opted for VSVS, the appeal filed by the Department may be dismissed as withdrawn. In view of the foregoing, the appeal of the Department is dismissed as withdrawn on account of assessee opting for VSVS. (B.1) By way of abundant caution, we clarify that Revenue will be at liberty to approach Income Tax Appellate Tribunal for restoration of appeal if it is found that issues in dispute in present appeal are not settled under aforesaid VSVS. If Revenue does approach Income Tax Appellate Tribunal, the matter will be considered in accordance with law and relevant facts and circumstances. (C). In the result, the appeal of the Revenue stands dismissed. (Order pronounced in the open court on 16/05/2023) Sd/. Sd/. (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) Judicial Member Accountant Member Dated:16/05/2023 *Singh I.T.A. No.37/Lkw/2020 Assessment year:2014-15 3 Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., 5. CIT(A) Assistant Registrar