Shri. Sanjiv Bhutra, Bangalore V. The Income Tax Officer, Ward- 5(2)(4), Bangalore

ITA 43/BANG/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6077 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 12-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NITISH RANJAN
• Keywords: Opportunity of being heard; Bonafide belief; Reasonable cause; Penny stocks; Set aside; Capital Gains

Judgement Text

ITA NOS.43&44/BANG/2021 SANJIV BHUTRA & RAJIV KUMAR BHUTRA, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER SMC ITA NO.43/BANG/2021 ASSESSMENT YEAR: 2014-15 SANJIV BHUTRA, NO.3, 3 RD CROSS MYSORE ROAD BANGALORE 560 026. PAN NO : AAKPB9338E VS. ITO WARD 5(2)(4) BANGALORE APPELLANT RESPONDENT ITA NO.44/BANG/2021 ASSESSMENT YEAR: 2014-15 RAJIV KUMAR BHUTRA, NO.3, 3 RD CROSS MYSORE ROAD BANGALORE 560 026. PAN NO : AAKPB9339F VS. ITO WARD 5(2)(4) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI NITISH RANJAN, A.R. RESPONDENT BY : SHRI GANESH R. GHALE, STANDING COUNSEL DATE OF HEARING : 22.04.2021 DATE OF PRONOUNCEMENT : 23.04.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE RESPECTIVE ASSESSEES ARE D IRECTED AGAINST THE ORDERS PASSED BY LD. CIT(A)-5, BENGALUR U IN THEIR RESPECTIVE HANDS AND BOTH THE APPEALS RELATE TO ASS ESSMENT YEAR ITA NOS.43&44/BANG/2021 SANJIV BHUTRA & RAJIV KUMAR BHUTRA, BANGALORE PAGE 2 OF 6 2014-15. SINCE THE ISSUES CONTESTED IN THIS APPEAL IS IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISP OSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMI TTED THAT THE APPEAL FILED BY SHRI SANJIV BHUTRA IS BARRED BY LIM ITATION BY 998 DAYS AND THE APPEAL FILED BY SHRI RAJIV KUMAR BHUTRA IS BARRED BY LIMITATION BY 1013 DAYS. THE LD. A.R. SUBMITTED TH AT BOTH THE ASSESSEES HAVE FILED PETITIONS REQUESTING THE BENCH TO CONDONE THE DELAY. THE LD. A.R. SUBMITTED THAT BOTH THE ASSESS EES ARE RELATED TO EACH OTHER AND THEIR CASES WERE EARLIER HANDLED BY A CHARTERED ACCOUNTANT NAMED SHRI MURALIDHARA. THESE APPELLANT S HAD GIVEN THE ORDERS OF LD. CIT(A) TO THE ABOVE SAID CA WITH A REQUEST TO FILE APPEALS BEFORE THE TRIBUNAL. THE ASSESSEES WERE UN DER THE BONAFIDE BELIEF THAT THE APPEALS WOULD HAVE BEEN FILED IN TI ME. HOWEVER, ONLY AFTER RECEIVING THE REMINDER FOR PAYMENT OF TAX DUE , THEY CAME TO KNOW THAT THE CHARTERED ACCOUNTANT HAS NOT FILED AP PEALS. HENCE, THEY APPROACHED ANOTHER CHARTERED ACCOUNTANT, WHO A DVISED THEM TO FILE APPEAL WITH A PETITION FOR CONDONATION OF D ELAY. THE LD. A.R. SUBMITTED THAT THE EARLIER CHARTERED ACCOUNTANT SHR I MURALIDHARA HAS SINCE EXPIRED AND HENCE, THE ASSESSEES COULD NO T GET ANY LETTER FROM HIM IN SUPPORT OF THEIR AVERMENTS. THE LD. A. R. SUBMITTED THAT THERE IS REASONABLE CAUSE FOR THE ASSESSEES IN NOT FILING APPEALS IN TIME. ACCORDINGLY, HE PRAYED THAT THE DELAY IN FIL ING THE APPEALS BY BOTH THE ASSESSEES MAY KINDLY BE CONDONED. HE ALSO PLACED HIS RELIANCE ON SOME CERTAIN CASE LAWS. 3. THE LD. D.R. ON THE CONTRARY, STRONGLY OPPOSED T HE PETITION FILED BY THE ASSESSEES. THE LD. D.R. SUBMITTED THA T THE ASSESSEES HAVE SIMPLY PUT THE BLAME UPON A CHARTERED ACCOUNTA NT WITHOUT OBTAINING ANY LETTER FROM HIM IN SUPPORT OF THEIR S UBMISSIONS. HE SUBMITTED THAT IT IS THE DUTY OF THE ASSESSEES TO S UBSTANTIATE THEIR ITA NOS.43&44/BANG/2021 SANJIV BHUTRA & RAJIV KUMAR BHUTRA, BANGALORE PAGE 3 OF 6 SUBMISSIONS. HAVING FAILED TO DO SO, THEY CANNOT P UT THE BLAME ON THEIR CHARTERED ACCOUNTANT. ACCORDINGLY, THE LD. D .R. SUBMITTED THAT THE ASSESSEES HAVE NOT SHOWN SUFFICIENT CAUSE FOR THE DELAY IN FILING THE APPEALS AND HENCE, THEIR APPEALS HAVE TO BE DISMISSED IN LIMINE. 4. I HEARD THE RIVAL CONTENTIONS ON THIS PRELIMINAR Y ISSUE AND PERUSED THE RECORD. IT IS STATED IN THE PETITION T HAT THERE WAS CERTAIN MIS-COMMUNICATION BETWEEN THE ASSESSEES AND THEIR A UTHORIZED REPRESENTATIVE. IT IS FURTHER STATED THAT THE ASSE SSEES WERE UNDER BONAFIDE BELIEF THAT THEIR EARLIER CHARTERED ACCOUN TANT WOULD HAVE FILED APPEAL IN TIME. BUT IT CAME TO THEIR NOTICE LATER THAT THE APPEALS HAVE NOT BEEN FILED AND BY THAT TIME THE DUE DATE F OR FILING APPEALS HAS ELAPSED. IT IS STATED THAT THE EARLIER CHARTER ED ACCOUNTANT HAS EXPIRED AND HENCE THEY COULD NOT GET ANY LETTER FRO M HIM IN SUPPORT OF THEIR AVERMENTS. BEFORE ME, THE LD. A.R. PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF CONCORD OF INDIA INSURANCE COMPANY LTD. VS. SMT. NIRMALA DE VI, WHEREIN IT WAS HELD THAT A LEGAL ADVICE TENDERED BY A PROFESSI ONAL AND THE LITIGANT ACTING UPON IT ONE WAY OR THE OTHER COULD BE A SUFFICIENT CAUSE TO SEEK CONDONATION OF DELAY. THE LD. A.R. ALSO PL ACED RELIANCE ON THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF VIJAY VISHIN MEGHANI VS. DCIT, WHEREIN THE HONBLE COURT CONDONED THE DELAY OF 2984 DAYS. I NOTICE THAT, SINCE THE A SSESSEES HAD BELIEVED THAT THE EARLIER CHARTERED ACCOUNTANT WOULD HAVE FI LED APPEALS AS PER THEIR REQUEST, THEY DID NOT FOLLOW UP THE MATTER. ONCE THEY REALIZED THAT THE APPEALS HAVE NOT BEEN FILED, THE PRESENT A PPEALS HAVE BEEN FILED WITH DELAY. UNDER THESE SET OF FACTS AND CIR CUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THERE IS SUFFICIENT CAU SE FOR NOT FILING THE APPEALS IN TIME. HOWEVER, AS CONTENDED BY LD D.R, IT IS ALSO THE DUTY OF THE ASSESSEES TO FOLLOW UP THEIR EARLIER CA WITH REGARD TO FILING OF APPEAL IN TIME. NO PRUDENT BUSINESSMAN WOULD REMAI N SO INACTIVE ITA NOS.43&44/BANG/2021 SANJIV BHUTRA & RAJIV KUMAR BHUTRA, BANGALORE PAGE 4 OF 6 OR IDLE, WHEN IT COMES TO THE COMPLIANCE OF LEGAL P ROVISIONS, THAT TOO HAVING FINANCIAL STAKES. SINCE THE EARLIER CA HAS E XPIRED, THEIR AVERMENTS COULD NOT BE CROSS VERIFIED. ACCORDINGLY , I AM OF THE VIEW THAT BOTH THE ASSESSEES SHOULD BE IMPOSED COST FOR BEING LETHARGIC. ACCORDINGLY, I IMPOSE A COST OF RS.10,000/- (TEN TH OUSAND) UPON EACH OF THE ASSESSEES, WHICH SHALL BE PAID TO THE C REDIT OF INCOME TAX DEPARTMENT AS OTHER FEES WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF THE ORDER OF THE TRIBUNAL. SUBJECT TO THE PAYMENT OF ABOVE SAID COST BY THE ASSESSEES, I CONDONE THE DELAY IN FILING BOT H THE APPEALS UNDER CONSIDERATION AND ADMIT THEM. 5. THE SOLITARY ISSUE URGED IN BOTH THE APPEALS REL ATE TO ASSESSMENT OF LONGTERM CAPITAL GAIN ARISING ON SALE OF SHARES AS INCOME OF THE ASSESSEE REJECTING THE CLAIM OF LONG TERM CAPITAL GAIN. 6. THE ASSESSEE SHRI SANJIV BHUTRA HAD PURCHASED 60 00 SHARES OF CRESANDA SALES LTD. (EARLIER KNOWN AS M/S SMARTC HAMPS IT AND INFRA LIMITED) FOR A SUM OF RS.60,000/- ON 17.11.20 11 AND SOLD THE SAME ON 4.4.2013 FOR RS.24,52,044/-, WHICH RESULTED IN CAPITAL GAIN OF RS.23.80 LAKHS. SINCE, IT WAS LONG TERM CAPITAL GAINS, THE ASSESSEE CLAIMED THE SAME AS EXEMPT. 7. THE ASSESSEE SHRI RAJIV KUMAR BHUTRA HAD PURCHAS ED 2000 SHARES OF NCL RESEARCH & FINANCIAL SERVICES LTD. FO R RS.5,38,225/- AND SOLD THE SAME ON 24.5.2013 FOR A SUM OF RS.34,0 4,874/-, RESULTING IN GAIN OF RS.28.66 LAKHS. SINCE, IT WAS LONG TERM CAPITAL GAINS, THE ASSESSEE CLAIMED THE SAME AS EXEMPT. 8. THE A.O. NOTICED BOTH THE ABOVE SAID COMPANIES H AVE BEEN CATEGORIZED AS PENNY STOCK. THE A.O. ALSO NOTICED THAT THE CHAIRMAN & MANAGING DIRECTOR OF M/S. NCL RESEARCH & FINANCIA L SERVICES LTD., NAMED SHRI VIJAY JAY DEO PODDAR, HAD ADMITTED THAT THE ABOVE SAID ITA NOS.43&44/BANG/2021 SANJIV BHUTRA & RAJIV KUMAR BHUTRA, BANGALORE PAGE 5 OF 6 COMPANY IS A PENNY STOCK COMPANY AND ITS SHARES HAV E BEEN USED TO PROVIDE ENTRY FOR BOGUS LONG TERM CAPITAL GAIN. HE NCE THE A.O. TOOK THE VIEW THAT THE ASSESSEES HEREIN HAVE ALSO ADOPTE D COLOURABLE DEVICE TO DECLARE LONG TERM CAPITAL GAIN AND CLAIM EXEMPTION. ACCORDINGLY, HE REJECTED THE CLAIM OF LONG TERM CAP ITAL GAINS AND HENCE REJECTED THE CLAIM OF EXEMPTION ALSO. ACCORD INGLY, HE ASSESSED THE PROFIT AMOUNT OF RS.23.80 LAKHS AND RS.28.66 LA KHS RESPECTIVELY IN THE HANDS OF SANJIV BHUTRA AND RAJIV KUMAR BHUTR A AS THEIR TAXABLE INCOME. THE APPEALS FILED BY BOTH THE ASSE SSEES WERE DISMISSED BY LD. CIT(A). 9. I HEARD THE PARTIES AND PERUSED THE RECORD. THE MAIN CONTENTION OF LD. A.R. WAS THAT THE A.O. HAS ASSESS ED THE CAPITAL GAIN DECLARED BY THE ASSESSEES AS THEIR TAXABLE INCOME W ITHOUT CONFRONTING THE MATERIALS RELIED UPON BY THE A.O. W ITH THE ASSESSEES. FURTHER, THE A.O. HAS NOT GIVEN OPPORTUNITY OF CROS S EXAMINING THE CHAIRMAN AND MD OF M/S. NCL RESEARCH & FINANCIAL S ERVICES LTD. ACCORDINGLY, THE LD. A.R. SUBMITTED THAT THE ISSUES MAY BE RESTORED TO THE FILE OF THE A.O. FOR EXAMINING THEM AFRESH A FTER OFFERING OPPORTUNITY OF REBUTTING VARIOUS EVIDENCES WHICH WE RE RELIED UPON BY A.O. FOR MAKING THE IMPUGNED ADDITIONS. THE LD. A .R. SUBMITTED THAT THE ASSESSEES MAY ALSO BE PROVIDED WITH AN OPP ORTUNITY TO CROSS EXAMINE ANY PERSON WHOSE STATEMENT HAS BEEN RELIED ON BY THE A.O. 10. ON THE CONTRARY, THE LD. D.R. SUBMITTED THAT TH E ASSESSEES HAVE NOT PROVED THAT THE CAPITAL GAIN DECLARED BY T HEM IS GENUINE, SINCE THEY HAVE DEALT WITH PENNY STOCKS WHICH ARE U SED ONLY TO CREATE BOGUS LONG TERM CAPITAL GAINS. 11. HAVING HEARD THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE ASSESSEES SHOULD BE PROVIDED WITH AN OPPORTUNITY TO REBUT THE EVIDENCES/STATEMENTS RELIED UPON BY THE A.O. FOR TR EATING THE ITA NOS.43&44/BANG/2021 SANJIV BHUTRA & RAJIV KUMAR BHUTRA, BANGALORE PAGE 6 OF 6 LONGTERM CAPITAL GAIN DECLARED BY THE ASSESSEES AS BOGUS IN NATURE. FROM THE ASSESSMENT ORDER, I NOTICE THAT THE A.O. H AS NOT DISCUSSED ABOUT THE OPPORTUNITY, IF ANY, GIVEN TO THE ASSESSE E TO REBUT THE EVIDENCES. ACCORDINGLY, I SET ASIDE THE ORDERS PAS SED BY LD. CIT(A) IN THE HANDS OF BOTH THE ASSESSEES AND RESTORE ALL ISS UES TO THE FILE OF THE A.O. FOR EXAMINING THEM AFRESH. AFTER AFFORDIN G ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEES, THE A. O. MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 12. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD APR, 2021 SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 23 RD APR, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.