Income Tax Officer-2(2), Range-2, Lucknow V. Smt. Purnima Agarwal, Lucknow

ITA 561/LKW/2017

AI Insights

The case involves an appeal by the Revenue against the decision of the CIT(A) which had allowed the assessee's appeal, deleting an addition of Rs.2,88,22,802 to her income. This addition was initially made by the Assessing Officer, categorizing the Long Term Capital Gain as income from other sources, which was exempt under section 10(38) of the Income Tax Act. The Revenue challenged the CIT(A)'s decision, arguing that proper enquiries were not made and that the addition was based on findings from a survey operation revealing manipulation of share prices. However, following the settlement under the DTVSVA, both parties agreed to withdraw their respective appeals and objections.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113267 (ITAT-LUCKNOW)
• Duration Of Justice: 6 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 04-09-2017
• Other Referred Cases: Andhra Pradesh Beverages Corporation Ltd. Vs. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 68; 143(3); 133A

Judgement Text

I.T.A. No.561/Lkw/2017 C.O.No.31/Lkw/2017 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.561/Lkw/2017 Assessment Year: 2014-15 Income Tax Officer-2(2), Range-2, Lucknow. Vs. Smt. Purnima Agarwal, A-705, Sector-C, Mahanagar, Lucknow. PAN:AARPA5459Q (Appellant) (Respondent) C.O. No.31/Lkw/2017 (in I.T.A. No.561/Lkw/2017) Assessment Year: 2014-15 Smt. Purnima Agarwal, A-705, Sector-C, Mahanagar, Lucknow. PAN:AARPA5459Q Vs. Income Tax Officer-2(2), Range-2, Lucknow. (Appellant) (Respondent) O R D E R PER BENCH: In this case assessment order dated 30/12/2016 was passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (“IT Act” for short) whereby the assessee’s income was determined at Rs.2,96,43,382/- as against returned income of Rs.8,20,560/-. In the aforesaid assessment order, Long Term Capital Gain amounting to Rs.2,88,22,802/-, claimed by Revenue by Shri Sanjeev Krishna Sharma, Addl. CIT (D.R.) Assessee by Shri P. K. Kapoor, C. A. Date of hearing 25/09/2023 Date of pronouncement 25/09/2023 I.T.A. No.561/Lkw/2017 C.O.No.31/Lkw/2017 Assessment year:2014-15 2 the assessee as Long Term Capital Gain exempt u/s 10(38) of the Act, was disallowed and added to her income as income from other sources. The assessee filed appeal in the office of the learned CIT(A). Vide impugned appellate order dated 28/02/2017, the assessee’s appeal was allowed and the aforesaid addition of Rs.2,88,22,802/- was deleted. The present appeal has been filed by the Revenue against the aforesaid impugned appellate order dated 28/02/2017 of learned CIT(A). The assessee filed Cross Objection in Income Tax Appellate Tribunal (“ITAT” for short) after the aforesaid appeal was filed by Revenue. Grounds taken in Revenue’s appeal and the assessee’s Cross Objection are as under: Grounds of I.T.A. No.561/Lkw/2017 (Revenue’s Appeal) “1. In the facts and circumstances of the case, the Ld. CIT(A)-1, Lucknow has erred in coming to the conclusion that the Assessing Officer has not made proper enquiries independently and in turn passed the appellate order without taking recourse to the provision of the section 250(4) of the I.T. Act, 1961 according to which the CIT(A) may make further enquiries as he think fit or may direct the Assessing Officer in making further enquiries in the matter. 2. In the fact and circumstances of the, the Ld. CIT(A)-1, Lucknow has erred in deleting the addition of Rs.2,88,22,802/- on completely ignoring the fact that the additions was made by the A.O. on the basis of statement recorded during the survey operation u/s 133A of the I.T. Act, 1961 at the premises of office of M/s Kayan Securities Pvt. Ltd., 1-R.N. Mukherjee Road, Kolkata. 3. In the facts and circumstance of the case, the Ld. CIT(A)-1, Lucknow has overlooked the fact that the prices of the shares were rigged and artificially jacked up by doing act of fabrication / malpractice and were executed in a planned manner. 4. In the facts and circumstances of the case, the Ld. CIT(A)-1, Lucknow has failed to appreciate the fact that the SEBI has passed several order where it has highlighted the process I.T.A. No.561/Lkw/2017 C.O.No.31/Lkw/2017 Assessment year:2014-15 3 through which bogus entries are passed in connivance with the share brokers involved in dubious trading. 5. In the facts and circumstances of the case Ld. CIT(A) has failed to appreciate the fact that the assessing officer, while disallowing the exemption u/s 10(38) of the I.T. Act primarily relied on the fact that all transacted scripts were procured by the assessee outside the recognized stock exchange and SEBI has also suspended trading in various scripts of such penny stock companies including the script of M/s Kappac Pharma Ltd. and M/s Kailash Auto Finance Ltd.” Grounds of C.O. No.31/Lkw/2017 (Assessee’s Cross Objection) “1. BECAUSE the revenue having not disputed the view expressed on the issue of applicability of section 68 under which addition had been made by the Assessing Officer, the appeal filed by it (the revenue) is not maintainable. 2. BECAUSE the CIT(A) has erred in law and on facts in upholding the validity of notice dated 21.09.2015 purported to have been issued by the Assessing Officer under section 143(2), by referring and relying upon the decision of Hon'ble Andhra Pradesh High Court in the case of Andhra Pradesh Beverages Corporation Ltd. Vs. Income Tax Officer. 3. BECAUSE selection of case for scrutiny assessment is a part of judicial function of the Assessing Officer and the same could not be held to be subservient to the "CASS Methodology" and the view expressed by the Hon'ble Andhra Pradesh High Court (as had been followed by the ld. First Appellate Authority) is inconsistent with the principle laid down in large number of case laws (including those rendered by the Hon'ble Apex Court) and consequently the assessee was liable to succeed in its claim as had been raised vide ground no.1 before the ld. First Appellate Authority.” (A.1) At the time of hearing before us on 25/09/2023, a letter dated 25/09/2023 was filed from assessee’s side by C.A. Shri P. K. Kapoor, C. A., learned Authorised Representative for the assessee. The relevant portion of the letter is reproduced as under: I.T.A. No.561/Lkw/2017 C.O.No.31/Lkw/2017 Assessment year:2014-15 4 “2. The tax arrear involved in the Departmental appeal bearing ITA No.561/LKW-2017 has already been settled by the assessee under Direct Tax Vivad se Viswas Act 2020 (DTVSVA 2020). A copy of Form 5 dated 31.01.2022/03.03.2022, being order for full and final settlement of tax arrear, alongwith a petition has already been submitted to the Hon'ble Bench on 19.04.2023. For the sake of ready reference, a copy of said petition together with copy of Form 5 is enclosed herewith. 3. In view of the settlement of tax arrear under DTVSVA 2020, the said Departmental appeal is deemed to have been withdrawn as per Sub-Section (2) of Section 4 of DTVSVA 2020. As a consequence, the Cross Objection filed by the assessee has become infructuous. Therefore, in the petition filed on 19.04.2023 the assessee has requested to treat the C.O. as withdrawn. 4. Subsequently, the captioned appeal and C.O. were fixed for hearing before the Spl. Bench on 23.05.2023 through virtual mode. During the course of hearing before the Spl. Bench, the assessee had submitted a petition wherein the assessee had made the submission on similar lines as submitted in her petition filed before your honours on 19.04.2023. A copy of the petition dated 20.05.2023 submitted to the Spl. Bench is also enclosed herewith. 5. In view of the aforesaid, the Departmental appeal bearing I.T.A. No.561/Lkw/2017 may kindly be dismissed as deemed to have been withdrawn under sub-section (2) of section 4 of DTVSVA-2020 and the C.O. filed by the assessee may kindly be treated as withdrawn.” (B) Earlier, a Special Bench was constituted in this case by Hon'ble President, ITAT vide order dated 23/02/2023. Vide order dated 23 rd May, 2023, it was held by the Special Bench that adjudication of the question referred to Special Bench by Hon'ble President, ITAT, was just an academic exercise because the assessee had already settled her grievance with the Department under Vivad Se Viswas Scheme. It was further held in the aforesaid order dated 23 rd May, 2023 that it was not deemed necessary to I.T.A. No.561/Lkw/2017 C.O.No.31/Lkw/2017 Assessment year:2014-15 5 continue the hearing and adjudicate the question referred. The Special Bench itself recommended to Hon'ble President, ITAT for dissolution of the Special Bench. Relevant portion of the aforesaid order dated 23 rd May, 2023 is reproduced as under: “4. During the course of hearing, it emerges out from the record that the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSVA) has been enacted by the Parliament, which provided an opportunity to the litigants to resolve their disputes with the Department on fulfillment of the conditions formulated in this Scheme. As per the assessee, she has availed the benefit of this Scheme and fulfilled the procedural requirements for availing such benefit. The Department has issued a Certificate in Form No. 5 bearing No. exhibiting the Resolution of the Dispute by the assessee with the Department. In view of the above development, the assessee prayed that she is no more interested in adjudication of the Question of Law referred by the Division Bench arose in her C.O. She prayed for withdrawal her Cross Objection. 5. On the other hand, ld. D.R. did not dispute with the contentions raised by the ld. Counsel for the assessee. 6. We have dwelled upon this development and prima facie view that in view of the prayer of the assessee for withdrawal of the Cross Objection, the adjudication of the question referred to the Special Bench by the Hon'ble President, ITAT is just an academic exercise, because the assessee has already settled her grievance with the Department under the VSV Scheme. She does not want to continue with the litigation. There is no intervener, who had filed an application for permission to participate in the Special Bench. Therefore, we do not deem it necessary to continue the hearing and adjudicate the question referred to us, rather, we recommend the Hon'ble President for dissolution of this Special Bench.” (B.1.1) On 16/08/2023, Hon'ble President disbanded the aforesaid Special Bench, noting as under: “In view of the peculiar facts brought out by the learned Bench, the Special Bench constituted vide order dated 23/02/2023 is hereby I.T.A. No.561/Lkw/2017 C.O.No.31/Lkw/2017 Assessment year:2014-15 6 disbanded. The matter may be placed before the ld. Division Bench for necessary orders.” (B.2) Before us, at the time of hearing on 25/09/2023, representatives of both sides, the learned Sr. Departmental Representative for Revenue and the learned Authorised Representative for the assessee were in agreement that; assessee having already settled the dispute under Vivad Se Viswas Scheme-2020; Revenue’ appeal may be treated as withdrawn and the assessee’s Cross Objection may be treated as infructuous. Further, vide aforesaid letter dated 25/09/2023 [referred to in foregoing paragraph (A.1) of this order], the assessee has also withdrawn the Cross Objection. Accordingly, representatives of both sides were in further agreement that Revenue’s appeal may be dismissed, treated as withdrawn and assessee’s Cross Objection may be dismissed, being both infructuous and withdrawn. (B.2.1) In view of the foregoing, and as representatives of both sides are in agreement with this, Revenue’s appeal is dismissed as withdrawn; and assessee’s Cross Objection is dismissed being both infructuous and withdrawn. (C) In the result, the appeal of the Revenue and Cross Objection of the assessee stand dismissed. (C.1) Registry is directed to forward a copy of this order to Hon'ble President, ITAT, for his kind information. (Order pronounced in the open court on 25/09/2023) Sd/. Sd/. (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) Judicial Member Accountant Member Dated:25/09/2023 *Singh I.T.A. No.561/Lkw/2017 C.O.No.31/Lkw/2017 Assessment year:2014-15 7 Copy of the order forwarded to : 1. Hon'ble President, ITAT 2. The Appellant 3. The Respondent. 4. Concerned CIT 5. D.R., I.T.A.T. 6. CIT(A) Assistant Registrar