Gunjan Jain, New Delhi V. ITO, Ward- 29(3), New Delhi

ITA 7655/DEL/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3151 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 02-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Salary income; Additional evidence; Capital Gains
• Section: 68; 40A(3); 143(2); 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘C’ : NEW DELHI) BEFORE SH. PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.7655/Del/2018 (Assessment Year : 2014-15) Gunjan Jain C/o. Kapil Goel, Adv. F-26/124 Sector 7 Rohini Delhi 110085 PAN : ADSPJ3072C Vs. ITO, Ward-29(3) New Delhi (APPELLANT) (RESPONDENT) Assessee by None Revenue by Shri Yoggesh Nayyar, Sr. DR Date of hearing: 18.04.2022 Date of Pronouncement: 04.05.2022 ORDER PER ANUBHAV SHARMA, JM: The appeal is preferred by the assessee against order dated 25/01/2017 in appeal no. 258/2016-17 for the assessment year 2014-15 passed by Ld. Commissioner of Income Tax (Appeals)-10, New Delhi, u/s 250(6) of the Income Tax Act, 1961. 2. The facts in brief are assessee is an individual who has filed her return of income on 29.11.2014 for the subject assessment year showing an income of 2 ITA No. 7655/Del./2018 Gunjan Jain Rs. 5,09,070. The Appellant is engaged in the business. In addition to the business income the assessee had also earned income from salary, income from other sources and income under head capital gains. Various incomes were duly considered as per the provisions of Income Tax Act, 1961 and have been offered to tax in the return filed appropriately. Additionally, here the appellant wish to mention that she had earned Long Term Capital Gain (LTCG) income of Rs. 1,04,24,669 from the sale of shares of M/s Cressanda Solutions Ltd. Since, the said LTCG was satisfying the conditions as laid down under section 10 (38) of the Act, accordingly, it was rightfully claimed as exempt while filing her return of income. During the course of assessment proceedings, the assessee had submitted the bank account statements, transfer deed of shares at the time of purchase, contract note on sale of shares, depository participant statements and broker notes etc. in order to substantiate her claim of LTCG which is eligible for exemption under section 10(38) of the act. While concluding the assessment proceedings the Ld. AO had taxed the amount of LTCG earned by the assessee amounting to Rs. 1,06,40,171 (amount of sale proceeds of shares) as unexplained cash credit under section 68 of the Act which is taxable at the rate of 30% as provided under section 115BBE. While concluding the assessment proceedings the Ld. AO had also made an addition of Rs. 5,32,008 (5% of Rs. 1,06,40,171) as an unexplained expenditure chargeable to tax under section 69C, by alleging that the assessee has earned this capital gain by paying the commission of 5%. While concluding the assessment proceedings the Ld. AO had also taxed the amount of purchases for Rs. 60,20,800 by treating them as Cash purchases and disallowed the same under section 40A(3). In addition to above the Ld. AO had also initiated penalty proceedings under section 271 (l)(c) of the Act. 3 ITA No. 7655/Del./2018 Gunjan Jain 3. In the appeal the Ld. First Appellate Authority found no error in findings of the ld. AO and dismissed the appeal. Thereafter the assessee has come before the Tribunal raising following grounds of appeal :- “ Jurisdictional Ground Notice u/s 143(2) is invalid 1. That order passed by Ld AO dated 29/12/2016 and further order passed by Id CIT A dated 28/09/2018 are bad in law in as much as mechanical notice u/s 143(2) on basis of CASS is not in accordance with jurisdictional conditions stipulated under the Act so it shows grave and patent non application of mind on part of Ld AO in issuing notice u/s 143(2) and accordingly all subsequent proceeding including orders passed by Ld AO and Ld CIT-A are void ab initio. Other grounds on merits qua addition of Rs. l,11,72,1 79 2.That order passed by Ld AO dated 29/12/2016 and further order passed by Id CIT A dated 28/09/2018 are bad in law in as much as addition of Rs. 11,72,179/-(break up : addition u/s 68 on a/c of bogus LTCG Rs1,06,40,171 (Entire Sale Proceeds) & Commission u/s69C Rs5,32,008) is made without appreciating that firstly shares were purchased by making payment through banking channel (purchase date on 09/01/2012) of M/s Smartchamps IT and Infra Limited from M/s SmartChamps IT and Infra Limited (purchase price Rs 200000) which shares were converted into shares of M/s Cressanda Solutions Limited due to amalgamation of M/s Smartchamps IT and Infra Limited into M/s Cressanda Solutions Limited vide Bombay high court order dated 24/01/2013 and secondly shares of M/s Cressanda Solutions Limited were sold by assessee on stock exchange on due payment of STT through registered broker (M/s Indo Jatalia Securities Pvt Ltd) (date of sale on 05/08/2013, 28/08/2013, 03/09/2013, 04/09/2013, 20/09/2013, 26/02/2014, 03/03/2014, 06/03/2014 sale price Rs. l,06,40,17l recd through banking channel) for which all relevant documents are placed on records and no document is controverted by any meaningful independent enquiry. 2.1 That order passed by Ld AO dated 29/12/2016and further order passed by Id CIT A dated 28/09/2018 are bad in law in as much as addition of Rs. 1,11,72,179/-is made violating principles 4 ITA No. 7655/Del./2018 Gunjan Jain of natural justice without confronting any investigation wing report relevant extract, statements recorded by investigation wing, etc which is sufficient to quash the assessment order and order passed by Ld CIT-A . 3. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the action of Id AO in making addition of Rs 1,11, 72,179/- without appreciating that burden to prove that transaction is bogus/ sham has remained un-discharged from side of revenue. 4. That on the facts and in the circumstances of the case and in law, both Id CIT-A and Id AO erred in making subject additions without appreciating that the modus operandi relied extensively in impugned orders is never co-related even remotely to the facts of the present case as there is no iota of evidence brought on record which can display that assessee herein has inducted certain cash at the time of sale to certain indentified broker/middleman/syndicate member who has in turn introduced certain identified artificial paper company for alleged parking of said cash to buy the shares sold by the assessee which theoretical trail has remained inchoate completely nullifying the entire basis of the addition. 5. That on the facts and in the circumstances of the case and in law, Id AO and Ld. CIT-A erred in making and sustaining subject additions without appreciating that law gives discretion to the assessing officer in applying deeming fictions u/s 68 etc as firstly no “books” are there in existence before Id AO in which any sum is found credited therein so as to invoke section 68 of the Act vis a vis subject LTCG is concerned, and secondly opinion and satisfaction u/s 68 has not been objectively arrived in facts of present case on due application of mindthirdly assessee has no economic capacity and source to generate given amount of unaccounted income. Fourthly law requires that additions under said deeming fiction cannot he made sans incriminating material brought on record which is completely lacking in present case.Lastly section 68 does not apply to sale of shares where no credit within meaning of section 68 can be said to have arisen therein. 5 ITA No. 7655/Del./2018 Gunjan Jain 6.That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the action of Id AO in making addition of Rs. 1,11,72,179/- without appreciating that basis of findings of the lower authorities is “suspicion” and “human probabilities” only which is never converted to reliable and trustworthy material and entire assessment order is passed on sole basis of “borrowed satisfaction” and without any independent application of mind (like a rubber stamp order). 7. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the action of Id AO in making addition of Rs. 1,11,72,179/- without appreciating that no opportunity isgiven to the assessee to be confronted with back material reliedextensively in impugned orders like investigation wing report etcand no opportunity to cross examine the revenue’s witness was given despite specific request in this regard made to Ld. AO/CIT-A. 8. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the action of Id AO in making addition of Rs. 1,11,72,179/-- without appreciating that in identical facts in various orders relief has been granted to assessee accepting LTCG (long term capital gains) as genuine. 9.That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the action of Id AO in making addition of Rs. 1,11,72,179/- without appreciating spirit of law contained in section 10(38) and section 43 (5) (d) where statutory status is provided to evidences generated from stock exchange system treating the same to be impeccable and only from finance act 2017 with prospective effective from AY 2018-2019, amendment is made in section 10(38), prior to which such gains would remain exempt. 10. That Ld. CIT(A) erred in sustaining addition of Rs. 60,20,800 made by AO u/s 40A(3) without appreciating that genuineness of cash payments is undoubted as evident from details furnished in application under rule 46A, which has been arbitrarily and summarily rejected in perfunctory manner. 11.That as evident from details furnished to CIT(A) with reference to books of accounts (ledger accounts along with bills raised by 6 ITA No. 7655/Del./2018 Gunjan Jain the parties) manifestly and palpably established the apprehenable fact that there is no question of invocation of Section 40A(3) as no payment in a single day to a person has exceeded Rs. 20,000 in cash. 12.That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal. Humble Prayer: i) To delete the addition of Rs. 1,11,72,179/- on a/c of alleged bogus LTCG and Rs. 60,20,800 added due to invocation of Section 40A(3); ii) To quash assessment order and Id CIT-A order for being passed in serious violation of audialtrempartem iii) To hold section 68 and section 115BBE does not apply to sale of shares iv) To restore returned income v) Any other appropriate relief” 4. As the case was called for hearing on on 18/4/22 non-appeared for the assessee and the perusal of record shows that on 09.09.2019, the Bench had passed the following order :- “In this case stay was granted by the Tribunal vide order dated 22.03.2019, wherein it was clearly specified that assessee shall not seek adjournment on the date which was fixed as per the convenience of the parties. Thereafter, assessee on three occasions sought adjournment. On the last date of hearing i.e. on 02.07.2019 the case was adjourned for 09.09.2019. Today also i.e. on 09.09.2019, the ld. Counsel for the assessee has again filed an adjournment application. It seems that the assessee is not interested in conducting the matter expeditiously despite granting stay of remand and priority hearing which was given as per the request of the assessee only. thus, looking to the callous attitude of the assessee, we are vacating the stay and adjourning the case for 11.11.2019. Parties informed in the Open Court. Sd/- Sd/- (Anadee Nath Misshra) (Amit Shukla) AM JM” 7 ITA No. 7655/Del./2018 Gunjan Jain 5. Thereafter the matter was taken up for hearing on 28.01.2021, 06.04.2021, 10.08.2021, 07.10.2021, 07.12.2021, 09.02.2022 but non-appeared for the assessee. The record shows notices have been repeatedly issued to the assessee and same have not been accepted. The matter pertains to the year 2018 and the assessment year 2014-15 thus keeping it pending with no possibility of assessee appearing is not justified. The arguments of Ld. Sr. DR were heard. He relied the order of Ld. Lower Tax Authorities. 6. Appreciating the matter on record it can be observed that the Lower Tax Authorities below have applied rules of prudence in reaching conclusion that the investments made by the assessee were not bonafide investments for appreciation of investment but intended to validate the tax evasion. Assessee seems to be not regular investor and her investment in purchase of 20,000/- shares of M/s. Smart Champs & Infra Ltd. which amalgamated into Cressanda Solutions Ltd. (CSL) is not on basis of any expertise so that she would earn long term capital gain within 2 years of purchase to the extent of selling the stock for Rs. 1,06,40,171/-. Ld. First Appellate Authority has given detail reasonings in para no. 5.17 and 5.18 of its order and which require no interference, as with regard to addition of Rs. 1,11,72,179/- for which ground no. 2 to 9 were raised. 7. As with regard to ground no. 10 and 11 it is apparent from the record that the ld. AO had found total purchases in cash to the tune of Rs. 1,37,50,800/- and the assessee’s explanation to the extent of Rs. 77,30,000/- was accepted while making addition of remaining Rs. 60,20,800/-. Before the ld. CIT(A) the assessee tried to explain by leading additional evidence in the form of cash memo which were rightly rejected as they were not proof of payments being made otherwise then cash. The assessee had failed to produce any evidence showing the payments in excess of Rs. 20,000/- in a 8 ITA No. 7655/Del./2018 Gunjan Jain single day to a person being made otherwise then cash. Thus, with regard to these grounds also there is no substance in appeal, 8. Lastly the ground no. 1 being jurisdictional is also not sustainable as it is coming up from record that the assessment order makes it apparent that the notice or proceedings as recorded by Ld. AO were not mechanical but based on the fact that the quantum of long term capital gain was found suspicious and detailed investigation was taken up. 9. In the light of aforesaid discussion, there is no substance in the grounds raised, the appeal is dismissed ex parte. Order pronounced in open court on this 4 th day of May, 2022. Sd/- Sd/- (PRADIP KUMAR KEDIA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 04 .05.2022 *Binita, SR.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI