SONAM RAJESH RATERIA, Mumbai V. ITO 18(3)(3), Mumbai

ITA 4030/MUM/2019

AI Insights

The case involves Sonam Rajesh Rateria, the Appellant, who appealed against the order of the Commissioner of Income Tax/National Faceless Appeal Centre, which had confirmed the addition of Rs. 5,67,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961. This amount was derived from transactions involving penny stocks, which were under scrutiny by the Investigation Directorate, Kolkata. The Assessee had initially declared a long-term capital gain and sought exemption under section 10(38). However, following the investigation, the case was reopened, and the Assessee was unable to substantiate the source of the funds, leading to the addition of the amount as income from other sources. The tribunal found that the Assessee's reply, although submitted, was not considered due to it being unsigned, and thus remanded the case for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300173 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 05-06-2019
• Other Referred Cases: CIT Vs Durga Prasad More (1971) 82 ITR 540 (SC), Kale Khan Mohd. Hanif Vs Commissioner of Income Tax M.P. and Bhopal in 50 ITR 1 (SC)
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: . ANURAG TRIPATHI
• Keywords: Unexplained cash credit
• Section: 147; 68; 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI N. K. CHOUDHRY, JM I.T.A. No. 4030/Mum/2019 Assessment Year: 2011-12) Sonam Rajesh Rateria 401/402 B Wing, Ramji House, Jambul Wadi, Mumbai- 400002 PAN No. AHAPR6432J Vs. Income Tax Officer- 18(3)(3) Room No. 606, 6 th Floor, Earnest House, Nariman Point Mumbai- 400021 Appellant) : Respondent) Appellant by : Sh. Suchek Anchaliya Ld. Amicus curiae Respondent by : Sh.. Anurag Tripathi, Ld. DR Date of Hearing : 29.08.2023 Date of pronouncement : 31.08.2023 O R D E R Per N. K. Choudhry, JM: The Assessee/Appellant herein has preferred this appeal against the order dated 28.03.2019 impugned herein passed by Ld. Commissioner of Income Tax/National Faceless Appeal Centre {in short ‘Ld. Commissioner)’} u/s 250 of the Income Tax Act 1961 (in short ‘the Act’). ITA No. 4030/M/2019 Sonam Rajesh Rateria 2 2. In the instant case, the Assessee declared its total income of Rs. 9,50,670/- and also sought exemption u/s 10(38) qua Long Term Capital Gain of Rs. 4,97,000/- by E-filling its return of income on dated 27.07.2011, which was processed u/s 143(1) of the Act. 3. Subsequently on the basis of Investigation carried out into 84 penny stocks companies by the Investigation Directorate Kolkata, case of the Assessee was re-opened u/s 147 of the Act and thereafter the Assessee was show caused as to why entire sale consideration of Rs. 5,67,000/- from penny stock shall not be treated as unexplained cash credit u/s 68 of the Act and brought to tax under the head ‘income from other source’ by treating the same as transaction which has been manipulated to introduce fund through the LTCG rate at ‘nil’ tax rate. 4. The Assessee filed its reply vide letter dated 16.12.2016 however the same was not considered by the assessing officer on the ground that the same is not signed by the Assessee or any authorized representative of the Assessee. Further the Assessee has not even filed any letter of authority during the course of Assessment proceedings and not complied with the notices issued to her. The assessing officer ultimately on the basis of findings of investigation wing of Kolkata and analyzing “transactions qua purchase of 22500 shares of Tuni Textile Mills Ltd for Rs. 2,25,000/- and selling of 7,000/- shares at the price of Rs. 567000/- and consequently, earning the capital gain of Rs. 497000/-“, decided the case of the Assessee and ultimately added the amount of Rs. 5,67,000/- as unexplained cash credit u/s 68 of the Act. ITA No. 4030/M/2019 Sonam Rajesh Rateria 3 5. The Assessee being aggrieved preferred first appeal before the Ld. Commissioner, who on the same reasoning as given by the assessing officer and by relying upon the judgment passed by the Hon’ble Apex Court in CIT Vs Durga Prasad More (1971) 82 ITR 540 (SC) and in the case of Kale Khan Mohd. Hanif Vs Commissioner of Income Tax M.P. and Bhopal in 50 ITR 1 (SC) wherein it was held that "it is well established that the onus of proving the source of a sum of money found to have been received by the Assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the Income tax Officer is entitled to treat it as taxable income. 6. We have given thoughtful consideration to the peculiar facts and circumstance of the case. It is not the case here of not filling any reply/submissions but infact vide letter dated 16.12.2016 the Assessee filed its reply but the same was ignored on the ground that the same is not duly signed by the Assessee or its authorized representative. Therefore considering peculiar facts and circumstance in totality, specifically to the effects that the assessing officer though decided the issue on the basis of the investigation report of Kolkata Wing, however did not consider the submission/claim raised by the Assessee due to non-signing, hence in my considered view it would be proper for just decision of the case and for the ends of justice, to remand the instant case to the file of the assessing officer for decision afresh, suffice to say by affording reasonable opportunity of being heard to the Assessee, hence the case is remanded accordingly. The Assessee is also directed to appear and file the documents before the AO as filed before this bench and also to file relevant document(s) which would be needed for proper and just decision of the case. ITA No. 4030/M/2019 Sonam Rajesh Rateria 4 7. In the result, appeal filed by the Assessee stands allowed for statistical purpose. Order pronounced in the open court on 31.08.2023. /- Sd/-/-/- (N. K. CHOUDHRY) Judicial Member Mumbai, Shubham P. Lohar Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai