Manish Baid, Kolkata V. ITO, Ward - 22(4), Kolkata , Kolkata

ITA 530/KOL/2018

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8726 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-09-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 27-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Earning of tax free income
• Section: 68; 143(3); 143(2)

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘ए’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: KOLKATA Įी मनीष बोरड, लेखा सदèय एवं Įी संजय शमा[, ÛयाǓयक सदèय के सम¢ [Before Shri Manish Borad, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 530/Kol/2018 Assessment Year : 2014-15 Manish Baid (PAN: ADWPB 8817 D) Vs. ITO, Ward-22(4), Kolkata Appellant / )अपीलाथȸ( Respondent / )Ĥ×य थȸ( Date of Hearing / स ु नवाई कȧ Ǔतͬथ 22.09.2022 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 10.11.2022 For the Appellant/ Ǔनधा[ǐरती कȧ ओर से Shri Amlesh Sadhu, AR For the Respondent/ राजèव कȧ ओर से Shri Biswanath Das, CIT, DR ORDER / आदेश Per Shri Sonjoy Sarma, JM: This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax(Appeals) – 6, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 31.01.2018 for the AY 2014-15. 2. The brief facts of the case are that the assessee is an individual and the assessee filed his return of income for the assessment year 2014-15 at Rs. 8,05,000/-. The case of the assessee was selected for scrutiny under CASS and the notice u/s 143(2) and 142(1) were issued upon the assessee. In compliance of such notice, the AR of the assessee appeared time to time before the Assessing Officer. During the course of assessment proceeding, the AO noticed that the assessee had shown income from Long Term Capital Gain arising from sale of shares of M/s. NCL Research & Financial Services Ltd. and computed Long Term Capital Gain (LTCG) of Rs. 7,05,62,394/- and claimed such income as exempt income u/s 10(38) of the Act as 2 I.T.A. No.530/Kol/2018 Assessment Year: 2014-15 Manish Baid those shares were held by the assessee for more than 12 months time. During the course of assessment proceeding, the AO after examination of the facts of the case, he viewed that this sole purpose behind such transactions to deliver profit to the assessee in the form of capital gain from stock investment and to defraud the revenue by claiming exemption u/s 10(38) of the I.T. Act against such transaction. Accordingly, the AO added the entire amount of Rs. 7,05,62,394/- as income in the hands of assessee and consider the same as unexplained cash credit u/s 68 of the Act in the hands of assessee. 3. Dissatisfied with the above order, assessee preferred an appeal before the ld. CIT(A) where the appeal of the assessee was dismissed. 4. Aggrieved by the order of ld. CIT(A), assessee preferred another appeal before the Tribunal by raising several grounds. 5. While going through the grounds of appeal, the main grievance of the assessee is relating to the disallowance of claim of exemption u/s 10(38) in respect of Long Term Capital Gain arising from the sale of shares. Therefore, we are going to decide the same on the basis of material available on record. The assessee during the assessment year in question has claimed exempt income of Rs. 7,05,62,394/- from the sale of equity share of M/s. NCL Research & Financial Services Ltd. and the share price of said company witnessed a drastic and sharp increase in a very short span of time without having sufficient reason for such increase in price. While framing the assessment referred to the information from Directorate of Income Tax (Investigation), Kolkata, which had unearthed a large economic scam of tax evasion in July 2013 conducting search and seizure operations. It was also found that the share brokers and entry operators were involved in manipulation of market price of such penny stock. Therefore, the AO added such exempted income in the hands of assessee. Similar view was taken by the ld. CIT(A) while passing such order and the ld. CIT(A) did not interfere with the order passed by the ld. AO. 3 I.T.A. No.530/Kol/2018 Assessment Year: 2014-15 Manish Baid 6. We after going through the facts and circumstances of the case and material available on record. We observe that share prices of alleged company witnessed a drastic and sharp increase in a very short span of time without having sufficient reason for such increase of price of such share and findings of authorities below on this issue. The Hon’ble Jurisdictional High Court in the case of Swati Bajaj supra under similar set of facts considering report of Directorate of Income Tax (Investigation), Kolkata and also poor financials of the penny stock companies but having sharp, drastic and abnormal increase in share price, held such long term capital gain from sale of such shares as bogus and confirmed the addition made by the ld. AO u/s. 68 of the Act and also confirmed the order passed by the AO thereby treating the assessment order is a valid one. We, therefore, of the considered view that since the ratio laid down by the Hon’ble Jurisdictional High Court in the case of Swati Bajaj (supra) is squarely applicable on the issue raised by the assessee in the instant appeal and the assessee having failed to controvert this finding by placing any other binding precedence of Hon’ble Supreme Court in its favour therefore we fail to find any infirmity in the finding of the authorities below and the assessment order passed u/s 143(3) of the Act dated 19.12.2016 and order passed by the ld. CIT(A). Therefore, we dismiss the appeal filed by the assessee. The other grounds are general and consequential in nature therefore need not required to be adjudicated. 7. In the result, the appeal of the assessee stands dismissed. Order is pronounced in the open court on 10 th November, 2022 Sd/- Sd/- (Manish Borad/मनीष बोरड) (Sonjoy Sarma/संजय शमा[) Accountant Member/लेखा सदèय Judicial Member/ÛयाǓयक सदèय Dated: 10 th November, 2022 Biswajit, Sr. PS 4 I.T.A. No.530/Kol/2018 Assessment Year: 2014-15 Manish Baid Copy of the order forwarded to: 1. Appellant- Manish Baid, 3B, Lal Bazar Street, 5 th Floor, Kolkata – 700001. 2. Respondent – ITO, Ward-22(4), Kolkata. 3. Ld. CIT(A) 4. The CIT 5. DR True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata