Pradeep Kothari (HUF), Bangalore V. Income Tax Officer, Ward-2(2)(1), Bangalore

ITA 620/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8575 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 01-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARUPPUSAMY S R
• Assessee Lawyers: G S PRASHANT
• Keywords: Principle of natural justice; Set aside; Capital Gains
• Section: 143(3); 142(1); 234B; 143(2); 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA. NO S . 681 & 661 /BANG/201 9 (ASSESSMENT YEAR S : 20 14 - 15 & 2015 - 16 ) SHRI VINOD KOTHARI (HUF) SHRI VINOD KOTHARI, NO.92, LINK ROAD, SESHADRIPURAM, BANGALORE - 560 020 .APPELLANT VS. INCOME TAX OFFICER, WARD 2(2)(1), BANGALORE. RESPONDENT. ITA. NO S . 620, 621 & 682 /BANG/201 9 (ASSESSMENT YEAR S : 20 14 - 15 & 2015 - 16 ) SHRI PRADEEP KOTHARI (HUF) SHRI PRADEEP KOTHARI, NO.39, LINK ROAD, SESHADRIPURAM, BANGALORE - 560 020 .APPELLANT VS. INCOME TAX OFFICER, WARD 2(2)(1), BANGALORE. RESPONDENT. ASSESSEE BY: SHRI G.S. PRASHANT, C.A. REVENUE BY: SHRI KARUPPUSA MY, S.R., ADDL.CIT (D.R) DATE OF HEARING : 19.12 .2019 DATE OF PRONOUNCEMENT : 17 .01 .20 20 2 ITA NO S . 620, 621, 661, 681 & 682/BANG/2019 O R D E R PER BENCH : THESE ARE THE APPEALS FILED BY DIFFERENT ASSESSEE . SINCE ALL THE APPEALS HAVE IDENTICAL AND COMMON ISSUE S. THEY ARE CLUBBED AND HEARD TOGETHER AND DISPOSE OFF BY COMMON CONSOLIDATED ORDER . 2. FOR THE SAKE OF CONVENIENCE, WE SHALL TAKE UP THE ITA NO.661/BANG/2019 FOR THE ASSESSMENT YEAR 2014 - 15. THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL : 1 A) THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THESE ARE AGAINST THE APPELLANT IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, NATURAL JUSTICE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. B) THE APPELLANT DENIES HIMSELF LIABLE TO BE ASSESSED ON A TOTAL INCOME OF RS. 1 , 29 , 95 , 512 / - AS AGAINST RS. 11 , 03 , 340 / - RETURNED BY THE APPELLANT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 DISALLOWANCE OF LONG TERM CAPITAL GAIN OF RS. 1 , 18 , 92 , 172 / - : A) THE AUTHORITIES BELOW ERRED IN DISALLOWING THE EXEMPTION CLAIMED BY THE ASSESSEE OF RS.1,18,92,172/ - ARISING OUT OF SALE OF SHARES OF M/S. SUNRISE ASIAN LIMITED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. B) THE AUTHORITIES BELOW ERRED IN TREATING THE SHARE PURCHASE TRANSACTIONS AS SHAM WITHOUT PROPER EXAMINATION UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. C) THE AUTHORITIES BELOW MERELY ON SUSPICION AND SURMISES TREATED THE TRANSACTIONS MADE BY THE APPELLANT AS ACCOMMODATIVE AND BOGUS IN NATURE AND THU S THE ADDITION MADE OF RS. 1,18,92,172 / - NEEDS TO BE DELETED FOR THE SUBSTANTIAL CAUSE OF ADVANCEMENT OF JUSTICE. 3 A) THE ORDER OF CIT(A) NEEDS TO BE SET ASIDE FOR NON - APPLICATION OF MIND AS THE FINDINGS OF THE CIT(A) HAS NO NEXUS WITH THE ORDER PASSED BY TH E ASSESSING OFFICER ON THE FACTS OF THE CASE. B) THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING ADDITIONS BASED ON THE INVESTIGATION REPORT OF KOLKATA INVESTIGATION DIRECTORATE WHICH WAS NOT RELIED UPON BY THE ASSESSING OFFICER IS BAD IN LA W AND THEREFORE THE ORDER PASSED NEEDS TO BE QUASHED ON THE FACTS OF THE CASE. 3 ITA NO S . 620, 621, 661, 681 & 682/BANG/2019 C) WITHOUT PREJUDICE, THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING ADDITIONS BASED ON THE INVESTIGATION REPORT OF KOLKATA INVESTIGATION DIRECTORATE, WHICH WAS NOT PUT FORTH TO THE APPELLANT FOR REBUTTAL IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND THERE FORE THE ORDER PASSED NEEDS TO BE SET ASIDE ON THE FACTS OF THE CASE. D) WITHOUT PREJUDICE, THE LEARNED CIT(A) ERRED IN NOT PROVIDING AN OPPORTUNITY TO CROSS EXAMINE THE THIRD PARTY WHOSE STATEMENTS WERE USED AGAINST THE APPELLANT ON THE FACTS OF THE CASE. T HUS, THE ORDER PASSED IS OPPOSED TO PRINCIPLES OF NATURAL JUSTICE AND REQUIRES TO BE DELETED ON THE FACTS OF THE CASE. 4 A) THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITIONS BASED ON THE CIRCULAR ISSUED BY SEBI, WHICH WAS NOT PUT FORTH TO THE APPELLANT FOR REBUTTAL IS UNACCEPTABLE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. B) THE ASSESSING OFFICER ERRED IN TREATING THE TRANSACTIONS ENTERED INTO BY THE APPELLANT AS ACCOMMODATIVE IN NATURE WITHOUT ANY CORROBORATIVE EVIDENCE AND FURTHER THE CIT(A) ERRED IN CONFIRMING THE ADDITIONS BASED ON SUCH STATEMENT AND THUS THE ORDERS PASSED BY THE AUTHORITIES BELOW NEEDS TO BE SET ASIDE ON THE FACTS OF THE CASE. 5 A) THE AUTHORITIES BELOW ERRED IN MAKING ADDITION PURELY ON SUSPICION AND SURMISES AND NOT BASED ON ANY FACTUAL FOUNDATION. B) THE AUTHORITIES BELOW ERRED IN NOT TAKING COGNIZANCE OF THE VARIOUS DOCUMENTS/ DETAILS/ INFORMATION FURNISHED BY THE APPELLANT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 6 A) THE APPELLANT DENIES HIMSELF LIABLE TO BE LEVIED INTERES T UNDER SECTION S 234A AND 234B OF THE ACT AND FURTHER THE COMPUTATION OF INTEREST WAS NOT PROVIDED TO THE APPELLANT AS REGARD TO THE RATE, PERIOD AND METHOD OF CALCULATION OF INTEREST UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. B) WITHOUT PREJUDICE, THE IN TEREST LEVIED UNDER SECTION S234A AND 234B OF THE ACT REQUIRES TO BE WAIVED OFF UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. SL. NO. ADDITIONAL GROUNDS OF APPEAL 7 DISALLOWANCE OF LONG TERM CAPITAL GAIN OF RS. 1,18,92,172/ - : E) THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACT THAT ALL THE TRANSACTIONS HAD TAKEN PLACE THROUGH PROPER BANKING CHANNELS AND NO CASH WAS PAID TO THE BROKERS/ PARTIES FROM WHOM THE SHARES WERE PURCHASED AND THEREFORE THE ADDITION NEEDS TO BE DELETED ON THE FACTS OF THE CASE. F) THE ASSESSING OFFICER FAILED TO APPRECIATE THE FACT THAT THE APPELLANT COULD NOT HAVE INFLUENCED THE SHARE PRICES AS THE SALE TOOK PLACE IN A RECOGNISED STOCK EXCHANGE ON A SCREEN BASED SYSTEM WHERE THE TRADERS 4 ITA NO S . 620, 621, 661, 681 & 682/BANG/2019 IN SHARES ARE UNKNOWN AND THUS THE ADDITION MADE IS ONLY ON SUSPICION & SURMISES AND NEEDS TO BE DELETED ON THE FACTS OF THE CASE. G) THE ACTION OF THE ASSESSING OFFICER IN CONSIDERING THE CASES COVERED AGAINST THE APPELLANT WITHOUT TAKING INTO ACCOUNT THE JUDICIAL PRONOUNCEMENTS IN FAVOUR OF THE APPELLAN T IS BIASED AND BAD IN LAW FOR THE REASON THAT IN THE CASE OF DIVERGENT VIEWS, IT IS SETTLED POSITION OF LAW THAT THE VIEW FAVOURING THE APPELLANT NEEDS TO BE ADOPTED UNDER THE FACTS OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS INTEREST INCOME AND FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014 - 15 ON 23.03.2015 WITH TOTAL INCOME OF RS.11,03,340. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE I SSUED. IN COMPLIANCE THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED THE DETAILS. THE ASSESSING OFFICER ON PERUSAL OF THE COMPUTATION OF INCOME FOUND THAT THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE INCOME TAX ACT, 1961 ('THE ACT') UNDER L ONG TERM CAPITAL GAINS (LTCG) IN RES PECT OF SHARES SOLD IN THE MARKET . THE ASSESSING OFFICER CALLED FOR VARIOUS CLARIFICATIONS AND DETAILS , AND IS OF THE OPINION THAT THE TRANSACTION OF PURCHASE OF SHARES AND SUBSEQUENT SALE AR E SHAM, HENCE DENIED THE EXEMPTION UNDER SECTION 10(38) OF THE ACT AND MADE ADDITION OF LTCG AND A SSESSED THE TOTAL INCOME OF RS.1,29,95,512 AND PASSED THE ORDER UNDER SECTION 143(3) OF THE ACT DT.26.12.2016. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH T HE CIT(APPEALS), BUT APPELLATE AUTHORITY HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER AND DISMISSED THE 5 ITA NO S . 620, 621, 661, 681 & 682/BANG/2019 ASSESSEE APPEAL. AGGRIEVED BY THE ORDER OF CIT(APPEALS) , THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 4. AT THE T IME OF HEARING, THE LEARNED AUTHORISED REPRESENTATIVE MADE SUBM ISSIONS ON GROUNDS OF APPEAL AND PAPER BOOK, AND EMPHASIZED THAT ON THE SIMILAR AND I DENTICAL ISSUE, THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE BROTHER CASE SHRI SURESH J KOTHARI(H UF ) VS. ITO IN ITA NO.650 /BANG/2019 DT.31.7.2019 HAS RESTORED THE ISSUES TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION AND EXAMINATION AFRE SH RELYING ON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CHANDRA D EVI K OTHARI VS. ITO IN WRIT PETITION NO.39370/2 014 DT.2.2.2015 AND PRAYED FOR R ESTORATION OF DISPUTED ISSUES TO THE FILE OF ASSESSING OFFICER. CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE CIT(APPEALS) ORDER. 5. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FOUND THAT THE LEARNED AUTHORIZED REPRESENTATIVE HAS BEEN EMPHASIZING IN RESPECT OF DISPUTED ISSUES RELYING ON SHRI SURESH J KOTHARI(H UF ) VS. I TO (SUPRA) WERE THE MATTER WAS RESTORED TO THE FILE OF ASSESSING FOR FRESH ADJUDICATI ON . WE CONSIDER APPROPRIATE TO REFER TO THE OBSERVATIONS OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.650/BANG/2019 (SUPRA) AT PAGE 3 P ARA 5 WHICH READ AS UNDER : 5. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE SMC BENCH OF BANGALORE TRIBUNAL HAS CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF SHRI 6 ITA NO S . 620, 621, 661, 681 & 682/BANG/2019 VINOD KOTHARI (HUF) (SUPRA) AND THE MATTER HAS BEEN RESTORED TO THE FILE OF ASSESSING OFFICER WITH THE FOLLOWING OBSERVATION : 4.3.1 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRST OF ALL, I REPRODUCE PARA NO.8 OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF M/S. CHANDRA DEVI KOTHARI (SUPRA) AND THIS IS AS UNDER: 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES AS ADVERTED TO ABOVE AND AS THE PETITIONER HAS BEEN DENIED AN OPPORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS REGARDING THE ALLEGED SHARE AMOUNT, I AM OF THE VIEW THAT THE M ATTER REQUIRES TO BE RE - CONSIDERED BY THE RESPONDENT BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE PETITIONER AND BY FURNISHING THE DETAILS / COPY OF THE STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED. 4.3.2 FROM THE ABOVE PARA 8 OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA) IT IS SEEN THAT MATTER WAS RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE STATEMENT AND OTHER RELATED DETAILS R ELIED UPON BY THE AO; IN THIS CASE COPY OF THE REPORT OF KOLKATA INVESTIGATION DIRECTORATE AND OTHER ATTENDANT DETAILS. AS PER THE FACTS NOTED BY THE HIGH COURT IN THE EARLIER PARAS OF JUDGMENT (SUPRA) AND AS PER THE FACTS OF THE CASE ON HAND, THERE APPEA RS TO BE NO DIFFERENCE IN FACTS AND THEREFORE BY RESPECTFULLY FOLLOWING THIS JUDGMENT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA), I SET ASIDE THE IMPUGNED ORDER OF LEARNED CIT(A) FOR ASSESSMENT YEAR 2014 - 15 AND RESTORE THE MATTERS TO THE FILE OF THE AO FO R FRESH DECISION WITH THE SAME DIRECTIONS AS WERE ISSUED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE AS PER PARA NO.8 OF THE JUDGMENT REPRODUCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STAGE REGARDING THE MERITS OF THE AD DITION. AS THE FACTS PREVAILING IN THE INSTANT CASE IS IDENTICAL NATURE, FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT (APPEALS) AND RESTORE ALL THE ISSUES TO THE FILE OF ASSESSING OFFICER WITH SIMILA R DIRECTIONS MENTIONED IN ITAT ORDER (SUPRA) FOR EXAMINING THEM AFRESH. 6. WE CONSIDERING THE NATURE OF DISPUTED ISSUES , WHICH ARE IDENTICAL TO THE PRE SENT CASE, RESPECTFULLY FOLLOW THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL AND SET ASIDE TH E ORDER OF THE CIT(APPEALS) AND RESTORE THE DISPUTED ISSUE TO THE FILE OF ASSESSING OFFICER FOR VERIFIC ATION AND EXAMINATION WITH SI MILAR DIRECTIONS AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSES. 7 ITA NO S . 620, 621, 661, 681 & 682/BANG/2019 7. IN THE RESULT, THE APP EAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8 . IN THE CASE OF APPEALS ITA NOS .620, 621, 681 & 682/BANG/2019 WHERE THE ISSUES ARE SIMILAR AND IDENTICAL AND SAME DECISION AS DEALT IN ITA NO.661/BANG/2019 S HALL APPLY. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(APPEALS) IN THESE APPEALS AND RESTORE ALL DISPUTED ISSUE TO THE FILE OF THE ASSE SSING OFFICER FOR VERIFICATION, AND EXAMINATION AFRESH AND ALLOW THE GROUNDS OF APPEAL OF ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT, THE ASSESSEE APPEALS IN ITA NOS .620, 621, 661, 681 & 682/BANG/2019 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 T H JAN., 20 20 . S D / - S D / - ( B.R. B ASKARAN ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 7 .01. 20 20 . *REDDY GP 8 ITA NO S . 620, 621, 661, 681 & 682/BANG/2019 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