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

ITA 48/BANG/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3495 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-08-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 18-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H KABILA
• Assessee Lawyers: NITISH RANJAN
• Keywords: Opportunity of being heard; Bonafide belief; Condonation of delay; Penny stocks; Set aside; Capital Gains
• Section: 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER AND S MT BEENA PILLAI, JUDICIAL MEMBER ITA. NO. 48 /BANG/20 21 ASSESSMENT YEAR: 2013 - 1 4 SHRI RAJIV KUMAR BHUTRA, NO. 3, 3 RD CROSS, MYSORE ROAD, BANGALORE 560 026. PAN: AAKPB9339F VS. THE INCOME TAX OFFICER, WARD 5 (2) (4), BANGALORE. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI NITISH RANJAN, CA FOR REVENUE : SMT. H. KABILA, ADDL. CIT (DR) DATE OF HEARING : 2 7 .08.2021 DATE OF PRONOUNCEMENT : 08 .10.2021 ORDER PER BEENA PILLAI , JM . PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER DATED 09/01/2018 PASSED BY THE LD.CIT(A) - 5, BANGALORE. 2. THE LD.AR SUBMITTED THAT, THERE IS A DELAY IN FILING PRESENT APPEAL BEFORE THIS TRIBUNAL AMOUNTING TO 1045 DAYS. 3. WE NOTE THAT ASSESSEE HAS NOT FILED ANY APPLICATION FOR CONDONATION OF DELAY AND AFFIDAVIT IN SUPPORT EXPLAINING THE DELAY OF 1045 DAYS IN FILING THE PRESENT APPEAL. THE LD.AR AT THE TIME OF HEARING RELIED ON ORDER PASSED BY COORDINATE SMC BENCH OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2014 - 15 IN ASSESSES OWN CASE IN SUPPORT. PAGE 2 OF 7 ITA NO. 48/BANG/2021 4. THE ORDER PASSED BY SMC BENCH OF THIS TRIBUNAL IS AS UNDER: 2. THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE APPEAL FILED BY SHRI SANJIV BHUTRA IS BARRED BY LIMITATION BY 998 DAYS AND THE APPEAL FILED BY SHRI RAJIV KUMAR BHUTRA IS BARRED BY LIMITATION BY 1013 DAYS. THE LD. A.R. SUBMITTED THAT BOTH THE ASSESSEES HAVE FILED PETITIONS REQUESTING THE BENCH TO CONDONE THE DELAY. THE LD. A.R. SUBMITTED THAT BOTH THE ASSESSEES ARE RELATED TO EACH OTHER AND THEIR CASES WERE EARLIER HANDLED BY A CHARTERED ACCOUNTANT NAMED SHRI MURALIDHARA. THESE APPELLANTS 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 UNDER THE BONAFIDE BELIEF THAT THE APPEALS WOULD HAVE BEE N FILED IN TIME. HOWEVER, ONLY AFTER RECEIVING THE REMINDER FOR PAYMENT OF TAX DUE, THEY CAME TO KNOW THAT THE CHARTERED ACCOUNTANT HAS NOT FILED APPEALS. HENCE, THEY APPROACHED ANOTHER CHARTERED ACCOUNTANT, WHO ADVISED THEM TO FILE APPEAL WITH A PETITION FOR CONDONATION OF DELAY. THE LD. A.R. SUBMITTED THAT THE EARLIER CHARTERED ACCOUNTANT SHRI MURALIDHARA HAS SINCE EXPIRED AND HENCE, THE ASSESSEES COULD NOT GET ANY LETTER FROM HIM IN SUPPORT OF THEIR AVERMENTS. THE LD. A.R. SUBMITTED THAT THERE IS REAS ONABLE CAUSE FOR THE ASSESSEES IN NOT FILING APPEALS IN TIME. ACCORDINGLY, HE PRAYED THAT THE DELAY IN FILING 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 THE PETITION FILED BY THE ASSESSEES. THE LD. D.R. SUBMITTED THAT THE ASSESSEES HAVE SIMPLY PUT THE BLAME UPON A CHARTERED ACCOUNTANT WITHOUT OBTAINING ANY LETTER FROM HIM IN SUPPORT OF THEIR SUBMISSIONS. HE SUBMITTED THAT IT IS THE DUTY OF THE ASSESSEES TO SUBSTANTIATE THEIR SUBMISSIONS. HAVING FAILED TO DO SO, THEY CANNOT PUT 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 AN D HENCE, THEIR APPEALS HAVE TO BE DISMISSED IN LIMINE. 4. I HEARD THE RIVAL CONTENTIONS ON THIS PRELIMINARY ISSUE AND PERUSED THE RECORD. IT IS STATED IN THE PETITION THAT THERE WAS CERTAIN MIS - COMMUNICATION BETWEEN THE ASSESSEES AND THEIR AUTHORIZED REPRE SENTATIVE. IT IS FURTHER STATED THAT THE ASSESSEES WERE UNDER BONAFIDE BELIEF THAT THEIR EARLIER CHARTERED ACCOUNTANT 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 FO R FILING APPEALS HAS ELAPSED. IT IS STATED THAT THE EARLIER CHARTERED ACCOUNTANT HAS EXPIRED AND HENCE THEY COULD NOT GET ANY LETTER FROM HIM IN SUPPORT OF THEIR AVERMENTS. BEFORE ME, THE LD. A.R. PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CONCORD OF INDIA INSURANCE COMPANY LTD. VS. SMT. NIRMALA DEVI, WHEREIN IT WAS HELD THAT A LEGAL ADVICE TENDERED BY A PROFESSIONAL AND THE LITIGANT ACTING UPON IT ONE WAY OR THE OTHER COULD BE A SUFFICIENT CAUSE TO SEEK CONDONATION O F DELAY. THE LD. A.R. ALSO PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF VIJAY VISHIN MEGHANI VS. DCIT, WHEREIN THE HONBLE PAGE 3 OF 7 ITA NO. 48/BANG/2021 COURT CONDONED THE DELAY OF 2984 DAYS. I NOTICE THAT, SINCE THE ASSESSEES HAD BELIEVED T HAT THE EARLIER CHARTERED ACCOUNTANT WOULD HAVE FILED APPEALS AS PER THEIR REQUEST, THEY DID NOT FOLLOW UP THE MATTER. ONCE THEY REALIZED THAT THE APPEALS HAVE NOT BEEN FILED, THE PRESENT APPEALS 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 CAUSE 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 PRU DENT BUSINESSMAN WOULD REMAIN SO INACTIVE OR IDLE, WHEN IT COMES TO THE COMPLIANCE OF LEGAL PROVISIONS, THAT TOO HAVING FINANCIAL STAKES. SINCE THE EARLIER CA HAS EXPIRED, 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 THOUSAND) UPON EACH OF THE ASSESSEES, WHICH SHALL BE PAID TO THE CREDIT OF INCOME TAX DEPARTMENT AS OTHER FEES WITHIN 30 DAYS FROM THE DATE OF RE CEIPT OF THE ORDER OF THE TRIBUNAL. SUBJECT TO THE PAYMENT OF ABOVE SAID COST BY THE ASSESSEES, I CONDONE THE DELAY IN FILING BOTH THE APPEALS UNDER CONSIDERATION AND ADMIT THEM. 5. THE SOLITARY ISSUE URGED IN BOTH THE APPEALS RELATE TO ASSESSMENT OF LON GTERM 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 6000 SHARES OF CRESANDA SALES LTD. (EARLIER KNOWN AS M/S SMARTCHAMPS IT AND INFRA LIMITED ) FOR A SUM OF RS.60,000/ - ON 17.11.2011 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 BH UTRA HAD PURCHASED 2000 SHARES OF NCL RESEARCH & FINANCIAL SERVICES LTD. FOR RS.5,38,225/ - AND SOLD THE SAME ON 24.5.2013 FOR A SUM OF RS.34,04,874/ - , 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 HAVE BEEN CATEGORIZED AS PENNY STOCK. THE A.O. ALSO NOTICED THAT THE CHAIRMAN & MANAGING DIRECTOR OF M/S. NCL RESEARCH & FINANCIAL SERVICES LTD., NAMED SHRI VIJAY JAY DEO PODDAR, HAD ADMITTED TH AT THE ABOVE SAID COMPANY IS A PENNY STOCK COMPANY AND ITS SHARES HAVE BEEN USED TO PROVIDE ENTRY FOR BOGUS LONG TERM CAPITAL GAIN. HENCE THE A.O. TOOK THE VIEW THAT THE ASSESSEES HEREIN HAVE ALSO ADOPTED COLOURABLE DEVICE TO DECLARE LONG TERM CAPITAL GAIN AND CLAIM EXEMPTION. ACCORDINGLY, HE REJECTED THE CLAIM OF LONG TERM CAPITAL GAINS AND HENCE REJECTED THE CLAIM OF EXEMPTION ALSO. ACCORDINGLY, HE ASSESSED THE PROFIT AMOUNT OF RS.23.80 LAKHS AND RS.28.66 LAKHS RESPECTIVELY IN THE HANDS OF SANJIV BHUTRA A ND RAJIV KUMAR BHUTRA AS THEIR TAXABLE INCOME. THE APPEALS FILED BY BOTH THE ASSESSEES 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 ASSESSED THE CAPITAL GAIN DECLARED BY THE ASSESSEES AS THEIR TAXABLE INCOME WITHOUT CONFRONTING THE MATERIALS RELIED UPON BY THE A.O. WITH THE ASSESSEES. FURTHER, THE A.O. HAS NOT GIVEN OPPORTUNITY OF CROSS PAGE 4 OF 7 ITA NO. 48/BANG/2021 EXAMINING THE CHAIRMAN AND MD OF M/S. NCL RESEARCH & FINANCIAL SERVICES LTD. ACCORDINGL Y, THE LD. A.R. SUBMITTED THAT THE ISSUES MAY BE RESTORED TO THE FILE OF THE A.O. FOR EXAMINING THEM AFRESH AFTER OFFERING OPPORTUNITY OF REBUTTING VARIOUS EVIDENCES WHICH WERE RELIED UPON BY A.O. FOR MAKING THE IMPUGNED ADDITIONS. THE LD. A.R. SUBMITTED T HAT THE ASSESSEES MAY ALSO BE PROVIDED WITH AN OPPORTUNITY 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 THE ASSESSEES HAVE NOT PROVED THAT THE CAPITAL GAIN DECLARED BY THEM IS G ENUINE, SINCE THEY HAVE DEALT WITH PENNY STOCKS WHICH ARE USED 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/STATEMENT S RELIED UPON BY THE A.O. FOR TREATING THE LONGTERM CAPITAL GAIN DECLARED BY THE ASSESSEES AS BOGUS IN NATURE. FROM THE ASSESSMENT ORDER, I NOTICE THAT THE A.O. HAS NOT DISCUSSED ABOUT THE OPPORTUNITY, IF ANY, GIVEN TO THE ASSESSEE TO REBUT THE EVIDENCES. ACCORDINGLY, I SET ASIDE THE ORDERS PASSED BY LD. CIT(A) IN THE HANDS OF BOTH THE ASSESSEES AND RESTORE ALL ISSUES TO THE FILE OF THE A.O. FOR EXAMINING THEM AFRESH. AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEES, THE A.O. MAY TAKE AP PROPRIATE DECISION IN ACCORDANCE WITH LAW. 5. IT IS SUBMITTED THAT SIMILAR CIRCUMSTANCES PREVAILED FOR YEAR UNDER CONSIDERATION, AND THEREBY CAUSING THE DELAY. THE LD.AR SUBMITTED THAT, IN THE INTEREST OF SUBSTANTIAL JUSTICE, THE DELAY MAY BE CONDONED. 6. ON THE CONTRARY, THE LD.SR.DR, COULD NOT CONTROVERT THE SUBMISSIONS OF ASSSESSEE AND THE FINDINGS OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2014 - 15 IN SUPPORT OF CONDONATION OF DELAY . 7. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH SIDES. 8. CONSIDERING THE CIRCUMSTANCES UNDER WHICH THE DELAY WAS CAUSED IN FILING THE PRESENT APPEAL BEFORE THIS TRIBUNAL AND THAT NOTHING CONTRARY COULD BE ESTABLISHED BY THE REVENUE BEFORE US. WE PLACE RELIANCE ON FOLLOWING OBSERVATIONS BY HONBLE SUPREME COURT PAGE 5 OF 7 ITA NO. 48/BANG/2021 I N CASE OF COLLECTOR LAND ACQUISITION VS. MST. KATIJI & ORS. , R EPORTED IN (1987) 167 ITR 471 WHEREIN, HONBLE COURT OBSERVED AS UNDER: - THE LEGISLATURE HAS CONFERRED THE POWER TO CONDONE DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 1963 IN ORDER T O ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOSING OF MATTERS ON DE MERITS '. THE EXPRESSION SUFFICIENT CAUSE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSER VES THE ENDS OF JUSTICE THAT BEING THE LIFE - PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT IS COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFIABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHER COURTS IN THE HIERARCHY. AND SUCH A LIBERAL APPROACH IS ADOPTED ON PRINCIPLE AS IT IS REALIZED THAT : 1. ORDINARILY, A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS, WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. ......................................................1.ANY APPEAL OR ANY APPLICATION, OTHER THAN AN APPLICATION UNDER ANY OF THE PROVISIONS OF ORDER XXI OF THE CODE OF CIVIL PROCEDURE, 1908, MAY BE ADMITTED AFTER THE PRESCRIBED PERIOD IF THE APPELLANT OR THE APPLICANT SATISFIES THE COURT THAT HE HAD SUFFICIENT CAUSE FOR NOT PREFERRING THE APPEAL OR MAKING THE APPLICATION WITHIN SUCH PERIOD. 8.1. CONSIDERING THE SUBMISSIONS BY BOTH SIDES AND RESPECTFULLY FOLLOWING THE OBSERVATION BY HONBLE SUPREME COURT , WE FIND IT FIT TO CONDONE THE DELAY CAUSED IN FILING THE PRESENT APPEAL BEFORE US. IT IS SUBMITTED BY THE LD.AR THAT THE ASSESSEE COULD NOT FILE VARIOUS DETAILS BEFORE THE AUTHORITIES BELOW IN ORDER TO SUBSTANTIATE HIS CLAIM. T IN THE INTEREST OF JUSTICE, WE REMAND THIS ISSUE BACK TO THE LD.AO. THE LD. AO SHALL VERIFY THE DETAILS FILED BY ASSESSEE. ASSESSEE IS DIRECTED TO FILE THE EVIDENCES RELATING TO PURCHASE OF THE SHARES TO ESTABLISH THE GENUINENESS OF TRANSACTION. ASSESSEE IS THEREFORE DIRECTED TO PRO VIDE ALL RELEVANT DOCUMENTS TO ESTABLISH SOUND FINANCIAL OF ALLEDGED COMPANIES AND THAT FLUCTUATION IN PRICE WAS MARKET DRIVEN. LD.AO SHALL TAKE ALL EVIDENCES INTO CONSIDERATION AND THEN DECIDE THE ISSUE AS PER LAW. LD.AO IS PAGE 6 OF 7 ITA NO. 48/BANG/2021 DIRECTED TO PROVIDE ALL STATEME NTS RECORDED THAT ARE NOT OF SECONDARY AND SUBORDINATE CATEGORY, CROSS EXAMINATION HAS TO BE GRANTED TO ASSESSEE AS THE CASE MAY BE. LD.AO IS DIRECTED TO RE - EXAMINE THE CASE OF ASSESSEE IN THE LIGHT OF AFORESTATED DIRECTION IN ACCORDANCE WITH LAW. IN THE EVENT DE HORS STATEMENT, THERE ARE OVERWHELMING EVIDENCES AND ASSESSEE IS UNABLE TO ESTABLISH GENUINENESS OF SALE AND PURCHASE OF ALLEDGED SCRIPTS, ADVERSE VIEW WOULD BE TAKEN BY HOLDING THE TRANSACTION TO BE SHAM. 9. NEEDLESS TO SAY THAT PROPER OPPORT UNITY OF BEING HEARD MUST BE GRANTED TO ASSESSEE IN ACCORDANCE WITH LAW. 10. RESPECTFULLY FOLLOWING THE VIEW TAKEN IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2014 - 15, WE REMAND THIS ISSUE BACK TO THE LD.AO FOR DE NOVO ASSESSMENT. 11. ACCORDINGLY THE GROUNDS RA ISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH OCTOBER, 2021. SD/ - SD/ - ( CHANDRA POOJARI) ( BEENA PILLAI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08 TH OCTOBER, 2021. /MS/ PAGE 7 OF 7 ITA NO. 48/BANG/2021 COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE