ACIT, Central Circle-2, Chandigarh V. Shri Amit Kumar Goel, Parwanoo

ITA 642/CHANDI/2022

AI Insights

The case revolves around an appeal by the Revenue against the CIT(A)'s decision to delete additions made on account of bogus LTCG and related commission expenses. The appellant, Shri Amit Kumar Goel, had initially disclosed the LTCG in a revised return following a search and seizure operation, admitting it as undisclosed income. However, this income was also included in the undisclosed income of M/s Radhika Traders, a partnership firm in which the appellant was a partner, during proceedings before the Income Tax Settlement Commission (ITSC). The CIT(A) found that taxing the same income again in the hands of the appellant would result in double taxation, a view supported by previous ITAT decisions in similar cases. The Tribunal agreed with the CIT(A)'s findings and dismissed the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135491 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 28-09-2022
• Other Referred Cases: Smt. Anjula Goel vs. DCIT, Smt. Radhika Goel vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Accommodation entries; Revised return; Capital Gains
• Section: 68; 69C; 139; 153A

Judgement Text

आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “ए” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH ᮰ी आकाश दीप जैन, उपा᭟यᭃ एवं ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA NO.642/Chd/2022 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 The Asst. CIT Central Circle-2, Chandigarh बनाम Shri Amit Kumar Goel Plot No. 29, Om Oil Floor Mills, Sector-1, Parwanoo ᭭थायी लेखा सं./PAN NO: ADIPG7409C अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri Ashwani Kumar, C.A राज᭭व कᳱ ओर से/ Revenue by : Shri Rohit Sharma, CIT, DR सुनवाई कᳱ तारीख/Date of Hearing : 11/09/2023 उदघोषणा कᳱ तारीख/Date of Pronouncement : 03/10/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Revenue against the order of the Ld. CIT(A)- 3, Gurgaon dt. 26/07/2022 pertaining to Assessment Year 2014-15. 2. In the present appeal, the Revenue has raised the following grounds of appeal: “i) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law by allowing relief to the assessee in respect addition made on account of bogus Long Term Capital Gain (LTCG) of Rs.56,37,144/- which was not disclosed in the return filed on 14.08.2017 in response to the notice u/s 153A of the Act whereas the assessee suo-moto offered the said income for taxation in the earlier return of income filed u/s 139 of the Act on 30.03.2016. ii) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 56,37,144/- on account of bogus LTCG despite the fact that the same was surrendered as undisclosed income in the statement recorded u/s 132(4) of the Act, on the basis of incriminating material seized. iii) On the facts and in the circumstances of the case, the Ld. CIT(A) has misinterpreted the order of Hon'ble Settlement Commission and held that the 2 LTCG of Rs. 56,37,144/- along with the facilitation charges thereon, stand categorically surrendered as undisclosed income of M/s Radhika Traders, before the Settlement Commission and the said income having been categorically taxed as undisclosed income of the firm i.e. M/s Radhika Traders cannot be taxed in the hands of the assessee, which would only result in taxing the same income twice which is not in accordance with the order u/s 245D(4) order dated 31.03.2019 passed by the Hon'ble Settlement Commission. iv) On the facts and in the circumstances of the case, the order of Ld. CIT(A) is perverse as ld. CIT(A) allowed the benefit of telescoping of additional income disclosed by M/s Radhika Traders before the Hon'ble ITSC, in the hands of non- applicant, which is not consistent with the observations of the Hon'ble ITSC as per para 51 on page No. 318 of its order. v) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law by allowing the appeal of the assessee as there is no evidence or documents to prove that the additional income disclosed by M/s Radhika Trader was utilized by the assessee to obtain bogus entries of long-term capital gain in the penny stock. vi) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in allowing relief of Rs. 4,40,039/- added on account of commission paid for the said accommodation entry of bogus LTCG as these expenses were well supported by incriminating documents found and seized during search. vii) The appellant craves to add, amend, alter or modify any grounds of appeal at the time of hearing.” 3. Briefly the facts of the case are that during the year under consideration, the appellant has claimed long term capital gain of Rs. 56,43,684/- exempt u/s 10(38) of the Act. The AO after making detail analysis of transactions undertaking by the appellant reached to the conclusion that the appellant has introduced unexplained credit in the bank account in the garb of bogus long term capital gain. The appellant has earned the said long term capital gain from the sale of shares of M/s Cressenda Solution Ltd. which was found to be penny stock. During the course of search proceedings, the issue was examined u/s 132(4) of the Act. Shri Sushil Kumar Goel, father of the appellant and authorized in his behalf by the appellant admitted to pay taxes upon such transaction for AY 2014-15 as additional income. Accordingly the appellant filed revised return on 30.03.2016 in which long term capital gain of Rs. 56,43,684/- 3 was disclosed as income from other source and paid taxes thereupon. However, the said income was not disclosed in return filed in response to the notice u/s 153A of the Act. It was explained by the appellant before the AO that the undisclosed income admitted by M/s Radhika Traders in which the appellant was partner in its application before Hon'ble Settlement Commission u/s 245C(1) was utilized by taking long term capital gain through accommodation entries by the appellant. Further revised return was filed on 30.03.2016 under a wrong notion as the said original return could not be revised on 30.03.2016 as all the proceedings were abated on date of search on 10.03.2016 and only return could have been filed only in response to u/s 153A of the Act. 4. The appellant was confronted about the contents of page no. 91 of A-11 found and seized from the premise of M/s Om Oil and Floor Mills, reproduced on page 30 of assessment order in which there were details of long term capital gain taken and corresponding payment made against the accommodation entries taken in the garb of long term capital gain by making cash payment. Subsequently, another letter was signed by Shri Sushil Kumar Goel dated 17.04.2016 in which it was stated that income offered in the hands of the appellant of Rs. 56,43,684/- on account of long term capital gain was admitted in respect of which revised return was already filed. The said bogus nature of long term capital gain was again admitted by Shri Sushil Kumar Goel, father of the appellant in his statement recorded u/s 132(4) of the Act on 07.04.2016 reproduced by the AO in the assessment order from page 40-43. The AO held that the proceedings u/s 153A are for the benefit of the revenue and not for the appellant. Therefore once the appellant has included the income on account of long term capital gain in the revised return, return u/s 153A cannot be taken by the appellant for his benefit. Accordingly the AO made addition of Rs.56,37,144/- on account of unexplained cash credits u/s 68 of the Act and Rs.4,40,039/- u/s 69C on account of expenditure made in the form of commission paid to take such accommodation entries. 4 5. Being aggrieved, the appellant carried the matter in appeal before the ld CIT(A) and during the appellate proceedings, the submission as made before the AO was repeated. It was explained that the alleged long term capital gain related to the appellant has already been disclosed and taxed in the hands of M/s Radhika Traders in its admission before Hon'ble ITSC and therefore the same could not be taxed again in the hands of appellant. Further it was stated that on the similar facts, the ITAT in the case of Smt. Anjula Goel and Smt. Radhika Goel has allowed relief in ITA No. 1174-75/Chd/2019 and 1172-73/Chd/ 2019 for AY 2015-16, 2016-17 and 2014-15, 2015-16 respectively. 6. The submissions so filed were considered by the ld CIT(A). The ld CIT(A) has returned a finding that on consideration of facts of the case, it is noted that there is no dispute that the appellant has shown bogus long term capital gain of Rs.56,37,144/- through accommodation entries. M/s Radhika Trader in its application before Hon'ble Settlement Commission u/s 245C(1) has disclosed additional income of Rs. 78,37,055/-. In the said application, it was mentioned that M/s Radhika Trader has given advances to its partners (Shri Amit Goel of Rs. 56,43,684/- for AY 2014-15) which was used by him to obtain accommodation entries in the garb of long term capital gain out of undisclosed income earned by M/s Radhika Traders. The said offer of income has been accepted by the ITSC vide order passed u/s 245D(4). Though the ITSC in the order u/s 245D(4)has refrained from making any order in respect of claim of utilization of additional income of M/s Radhika Traders in the hands of the appellant who has not filed application before the Hon'ble ITSC, however, on similar facts, ITAT Chandigarh in the case of Smt. Anjula Goel and Smt. Radhika Goel (supra) on similar facts has allowed utilization of income disclosed by the firm in the hands of the partners. The relevant part of the said order is reproduced as under:- 14. “We have perused the contents of the statement of facts filed before the Settlement Commission in the case of M/s Rohit Traders and find merit in the contention of the Ld. Counsel for the assessee. Undoubtedly the impugned long term capital gain of the assessee of Rs. 17,89,989/- alongwith the facilitation charges thereon, stand categorically surrendered as undisclosed income of M/s Rohit Traders, before the Settlement Commission. The Revenue has not controverted the said fact. 5 The impugned income having been categorically taxed as undisclosed income of the assessee firm, we fail to understand why it should be taxed in the hands of the assessee also, which would only result in taxing the same income twice. 15. The observation of the Hon'ble Settlement Commission on which the Revenue has relied for dismissing assesses claim, that they refrain from making any comment in respect of claim of utilization of additional income of M/s Rohit Traders in the hands of partners, in our view, only serves the limited purpose of the commission refraining from commenting on assesses which were not there before them. This observation, we find, does not negate the admitted and undisputed fact of surrender of the impugned capital gains of the assessee in the hands of M/s Rohit Traders. 16. In view of the above, we direct the deletion of addition made on account of long term capital gains and expenditure incurred on account of the same in the hands of the assessee amounting to Rs. 17,19,989/- and Rs. 1,34,027/- respectively Ground of appeal nos 1 and 5 raised by the assessee, therefore, stands allowed.” 7. The ld CIT(A) following the ratio laid by ITAT Chandigarh Benches in the case of Smt. Anjula Goel (supra) belonging to the same group of cases held that the facts are similar and the additions of Rs. 56,37,144 and Rs. 4,40,039/- made by the AO were deleted. 8. Against the aforesaid findings and directions of the ld CIT(A), the Revenue is in appeal before us. 9. During the course of hearing, the Ld. DR supported the order of the AO and referring to the order passed by the Income Tax Settlement Commission (ITSC), it was submitted that since the assessee was not the applicant in terms of Section 245D(1) of the Act before the ITSC, it cannot be said that the amount which was disclosed by M/s Radhika Traders had been ustilised for making the investment by the assessee. 10. Per contra, the Ld. AR has relied on the order of the Ld. CIT(A) and submitted that the Ld. CIT(A) has allowed the relief to the assessee by following the decision of the Coordinate Chandigarh Benches in case of Anjula Goel Vs. DCIT in ITA Nos. 1174 & 1175/Chd/2019 dt. 12/03/2021 as well as in case of Smt. 6 Radhika Goel Vs. DCIT in ITA Nos 1172 & 1173/Chd/2019 dt. 14/02/2022. It was submitted that M/s Radhika Traders made the surrender and settled the matter before the ITSC and the assessee is one of the partners in M/s Radhika Traders and the amount surrendered therein was used by the assessee to earn the Long Term Capital Gain, therefore no separate addition is called for in the hands of the present assessee. It was accordingly, submitted that the matter is squarely covered by the decision of the Coordinate Chandigarh Benches in case of Anjula Goel Vs. DCIT (supra) and Smt. Radhika Goel Vs. DCIT(supra). 11. We have heard the rival contention and perused the material available on the record. It is noted that Ld. CIT(A) following the decisions of the Coordinate Chandigarh Benches in case of Anjula Goel Vs. DCIT (supra) and Smt. Radhika Goel Vs. DCIT (supra) has allowed the necessary relief to the assessee holding that the assessee belongs to the same group of cases and has similar facts wherein M/s Radhika Traders in its application before ITSC has disclosed additional income of Rs. 78,37,055/- which includes advances to Shri Amit Goel, one of its partners of Rs. 56,43,684/- for AY 2014-15 which was used by him to obtain accommodation entries in the garb of long term capital gain out of undisclosed income earned by M/s Radhika Traders and the application so filed disclosing the additional undisclosed income has been accepted by the ITSC. Nothing has been brought on record by the Revenue as to any distinguishing facts in the present case nor the fact that the decisions so rendered by the Coordinate Benches, wherein it was held that where the impugned income have been taxed as undisclosed income of the partnership firm, the same cannot be taxed again in the hands of the partner as the same would result in taxing the same income twice, have either been stayed or reversed by the higher appellate authorities. Therefore following the order of the Coordinate Chandigarh Benches which have been followed by the Ld. 7 CIT(A), we do not find any infirmity in the said decision and the appeal filed by the Revenue is hereby dismissed. 12. In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on 03/10/2023. Sd/- Sd/- आकाश दीप जैन िवᮓम ᳲसह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा᭟यᭃ / VICE PRESIDENT लेखा सद᭭य/ ACCOUNTANT MEMBER AG Date: 03/10/2023 आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar