Sonal Ramesh Shah , Bangalore V. The Income Tax Officer Ward-5(2)(3), Bangalore

ITA 597/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9939 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 02-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDINI DAS
• Assessee Lawyers: H N KHINCHA
• Keywords: Unexplained cash credit; Income from undisclosed sources; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER ITA NO. 597 /BANG/201 8 ASSESSMENT YEAR : 20 14 - 15 MS. SONAL RAMESH SHAH, NO. 1/1, 3 RD FLOOR, VINAYAKA TOWERS, 1 ST CROSS, GANDHINAGAR, BANGALORE 560 009. PAN : BILPS 9610 N VS. THE INCOME TAX OFFICER, WARD 5(2)(3), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI. H. N. KHINCHA, CA REVENUE BY : MS. NANDINI DAS, ADDL. CIT DATE OF HEARING : 20 . 11 .201 8 DATE OF PRONOUNCEMENT : 5 . 1 2 .201 8 O R D E R PER JASON P BOAZ, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-5, BANGALORE DATED 31.01.2018 FOR ASSESSMENT YEAR 2014-15. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE, AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR ASSESSMENT YEAR 2014-15 ON 31.03.2015 DECLARING INCOME OF RS.12,55,280/- FROM SALARY, OTHER SOURCES AND LONG TERM CAPITAL GAINS (LTCG) OF RS.2,32,66,933/- CLAIMED AS EXEMPT U/S 10(38) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE CASE WAS ITA NO. 597/BANG/2018 PAGE 2 OF 5 TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS CONCLUDED U/S 143(3) OF THE ACT VIDE ORDER DATED 29.12.2016, WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT RS.2,50,21,078/- IN VIEW OF THE SALE CONSIDERATION OF RS.2,37,65,800/- ARISING ON ACCOUNT OF SALE OF 13,500 SHARES OF M/S. NCL RESEARCH AND FINANCIALS SERVICES LTD., BEING HELD TO BE UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. ON APPEAL, THE CIT(A)- 5, BANGALORE, DISMISSED THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 31.01.2018. 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-5, BANGALORE, DATED 31.01.2018 FOR ASSESSMENT YEAR 2014-15, THE ASSESSEE HAS PREFERRED THIS APPEAL WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS BEING BAD IN LAW, VOID AB-INITIO ARE REQUIRED TO BE QUASHED. 2 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE ABSENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARC SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORDER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED. 3. IN ANY CASE AND WITHOUT PREJUDICE, THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS. 2,37,65,800/ - TO THE INCOME OF THE APPELLANT AND THE LEARNED CIT (A) -5 HAS ERRED IN CONFIRMING THE SAME. THE ADDITION TO THE INCOME IS BAD IN BOTH LAW AND ON FACTS AND IS LIABLE TO BE DELETED IN ENTIRETY. 4. THE LEARNED ASSESSING OFFICER HAS NOT PROPERLY APPRECIATED THE FACTS OF THE CASE. ON PROPER APPRECIATION OF THE FACTS AND LAW APPLICABLE, IT WILL BE CLEAR THAT THE ADDITION AS MADE HAS NO BASIS TO STAND AND IS LIABLE TO BE DELETED IN ENTIRETY. 5. THE LEARNED ASSESSING OFFICER HAD ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 68 C)1 I.T. ACT, 1961 ARE APPLICABLE AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THERE BEING NO UNEXPLAINED CREDIT AND IN FACT THE CREDIT HAVING BEEN DULY EXPLAINED, MAKES THE ADDITION U/S. 68 WHOLLY ERRONEOUS AND LIABLE TO BE DELETED. ITA NO. 597/BANG/2018 PAGE 3 OF 5 6. THE APPELLANT DENIES LIABILITY TO PAY INTEREST U/S 234B AND 234C OF THE ACT. THE INTEREST HAVING BEEN ERRONEOUSLY LEVIED IS TO BE DELETED. 7. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE ASSESSMENT OF SALE CONSIDERATION ON SALE OF SHARES AS INCOME FROM OTHER SOURCES BE DELETED, THE INCOME FROM LONG TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS RETURNED BY THE APPELLANT BE ACCEPTED, AND THE INTEREST LEVIED HE ALSO DELETED. 3.2 DURING THE COURSE OF HEARING, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT ON SIMILAR FACTS AND CIRCUMSTANCES, THE MATTER FOR CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF THE ITAT, KOLKATA BENCH IN ITS ORDER IN ITA NO. 2394/KOL/2017 IN THE CASE OF PRAKASH CHAND BUTORIA. IT IS SUBMITTED THAT IN THE CITED CASE (SUPRA) ALSO, THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME CLAIMING INCOME ON SALE OF SHARES AS EXEMPT U/S 10(38) OF THE ACT. THE ASSESSING OFFICER (AO) TREATED THE RECEIPT OF SALE CONSIDERATION AS UNACCOUNTED INCOME AND MADE AN ADDITION U/S 68 OF THE ACT. ON APPEAL, THE CIT(A) UPHELD THE AOS ORDER. HOWEVER, ON FURTHER APPEAL, THE ITAT, KOLKATA BENCH ALLOWED THE ASSESSEES APPEAL OBSERVING THAT THE ADDITION WAS UNSUSTAINABLE SINCE THE AO MADE THE ADDITION IN A ROUTINE AND MECHANIZED MANNER, MERELY ON SUSPICIONS BASED ON REPORT OF ENQUIRIES MADE BY THE INVESTIGATION DIRECTORATE OF DIT, KOLKATA, WITHOUT BRINGING THE SAME ON RECORD OR CONFRONTING THE ASSESSEE WITH OR SUPPLYING THE ASSESSEE COPIES OF THE DOCUMENTS RELIED UPON FOR MAKING THE ADDITION AND PROVIDING HER OPPORTUNITIES FOR REBUTTAL. IT IS PRAYED THAT IN VIEW OF THE ABOVE, THE ORDERS OF THE AUTHORITIES BELOW BE SET ASIDE AND THE ASSESSEES APPEAL BE ALLOWED. 3.3 PER CONTRA, THE LEARNED DR FOR REVENUE SUBMITTED THAT ON SIMILAR FACTS AND CIRCUMSTANCES AS IN THE CASE ON HAND, ISSUE FOR CONSIDERATION IS COVERED BY THE DECISIONS OF THE BENGALURU ITAT IN THE CASES OF ARVIND KUMAR MOOCHAND IN ITA NO.509/BANG/2017 AND PUKHRAJ HASMUKHLAL IN ITA NO.1927/BANG/2017 WHEREIN THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE AO HAVING OBSERVED THAT THE ADDITIONS ITA NO. 597/BANG/2018 PAGE 4 OF 5 WERE MADE BASED ON REPORTS OF THE INVESTIGATION DIRECTORATE AT KOLKATA AND STATEMENTS OF VARIOUS PERSONS WITHOUT CONFRONTING OR MAKING THEM AVAILABLE TO THE ASSESSEE FOR REBUTTAL. IN THOSE CASES, THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO CONFRONT THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO CONFRONT THE ASSESSEE WITH THE REPORTS / DOCUMENTS / STATEMENTS PROPOSED TO BE USED AGAINST THE ASSESSEE, ALLOW REBUTTAL THEREOF AND CROSS EXAMINATION OF PARTIES ON WHOSE TESTIMONY IS PROPOSED TO BE RELIED UPON AND THE MATTER BE ADJUDICATED AFRESH AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO ALSO FILE DETAILS / SUBMISSIONS IN THIS REGARD. 3.4 IN REJOINDER, THE LD.AR FOR THE ASSESSEE DID NOT DISPUTE THE PROPOSITION PUT FORTH BY THE LD. DR FOR RESTORING THIS ISSUE TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION. 3.5 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL DECISIONS CITED AND THE ORDERS OF THE AUTHORITIES BELOW. TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE SPECIFICALLY REQUESTED FOR CROSS-EXAMINATION OF THE DEPONENTS WHOSE STATEMENTS WERE THE BASIS OF ADDITION BY THE AO AND ALSO THE REPORT OF THE INVESTIGATION DIRECTORATE, KOLKATA FOR REBUTTAL; THE JUDICIAL DECISIONS CITED, WE FIND THAT THE ISSUE FOR CONSIDERATION IS SQUARELY COVERED BY THE ORDERS OF THE BENGALURU ITAT IN THE CASES OF ARVIND KUMAR MOOCHAND (SUPRA) AND PUKHRAJ HASMUKHLAL (SUPRA). FOLLOWING THE AFORESAID ORDERS (SUPRA), WE SET ASIDE THE ORDERS OF THE AO AND RESTORE THE MATTER OF TREATMENT OF PROFIT DECLARED ON SALE OF SHARES, CLAIMED AS EXEMPT U/S 10(38) OF THE ACT, TO THE FILE OF THE AO TO RE-ADJUDICATE THE ISSUE AFRESH; AFTER MAKING AVAILABLE TO THE ASSESSEE FOR REBUTTAL ALL DOCUMENTS; INCLUDING STATEMENTS, INVESTIGATION REPORTS, ETC., RELIED UPON BY REVENUE FOR MAKING THE ADDITIONS/DISALLOWANCES AND PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE FOR CROSS- ITA NO. 597/BANG/2018 PAGE 5 OF 5 EXAMINATION OF PERSONS WHOSE STATEMENTS ARE BEING RELIED UPON. IT IS ACCORDINGLY ORDERED. CONSEQUENTLY, GROUND NO. 2 IS DISPOSED OFF AS ABOVE. 4. IN VIEW OF THE ABOVE, THE OTHER GROUNDS RAISED ON MERITS ARE RENDERED ACADEMIC AND THEREFORE NOT REQUIRED TO BE ADJUDICATED AT THIS JUNCTURE. 5. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF DECEMBER, 2018. SD/- SD/- BANGALORE. DATED: 5 TH DECEMBER, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE. (N. V. VASUDEVAN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER