The ITO, Ward-1(2)(4), Ahmedabad V. Sangitaben Jagdishkumar Shah, Ahmedabad

ITA 89/AHD/2020

AI Insights

The case revolves around an appeal by the Revenue against the order of the CIT(A) which had deleted the addition of Rs. 3,33,466 as bogus LTCL claimed by the assessee, Sangitaben Jagdishkumar Shah, for the Assessment Year 2011-12. The addition was initially made by the Assessing Officer following an investigation report that identified VAS Infrastructure Ltd. as a penny stock used for providing accommodation entries for bogus LTCG/Loss. The CIT(A) reversed this decision, leading to the Revenue's appeal. The Tribunal's decision was based on the absence of evidence of wrongdoing in the transactions conducted by the assessee, despite the initial concerns raised by the Revenue.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299992 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 26-02-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 22-01-2020
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 32; 148; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . No .8 9/ A h d / 2 02 0 ( A s se ss m e nt Y e a r : 20 11- 12 ) I T O War d- 1 ( 2 ) (4 ), Ah me da bad V s . Sa ngi ta be n J a gd is h ku m ar S h a h , A / 20 4 , B r a h m a n a nd Fl at , A h me da ba d C it y, A h m ed a ba d- 38 00 0 7 [P AN N o.A E FP S1 8 32 P] (Appellant) .. (Respondent) Appellant by : Shri B. K. Patel, A.R. Respondent by: Shri Sanjay Jain, Sr. D.R. D a t e of H ea r i ng 27.02.2023 D a t e of P r o no u n ce me nt 15.03.2023 O R D E R The appeal filed by the Revenue is against the order passed by the Ld. CIT(Appeals)-10, Ahmedabad on 04.12.2019 for A.Y. 2011-12. 2. The grounds of appeal raised by the Revenue are as under: “1. The CIT(A) has erred in law and in facts in circumstances of the case by deleting the addition of Rs. 3,33,466/- being bogus LTCL claimed u/s 10(38) of the Act from bogus transaction of shares through penny stock. 2. It is, therefore, prayed that the order of ld. CIT(A) may be set aside and that of the Assessing Officer be restored.” 3. The assessee filed its return of income for A.Y. 2011-12 on 31.03.2012 declaring total income at Rs. 4,46,520/-. Information and documentary evidences were received from the office of the DDIT (Inv.) Unit 6(2), Mumbai wherein it was intimated that the VAS Infrastructure ltd. is a Penny Stock which has been used to provide accommodation entry to bogus LTCG/Loss to the beneficiaries. The case was reopened under Section 148 of the Act dated 30.03.2018 after recording the reasons and obtaining approval. Notice under ITA No. 89/Ahd/2020 ITO vs. Sangitaben Jagdishkumar Shah Asst.Year–2011-12 - 2 - Section 133(6) was issued to BSE on 02.07.2018 and share broker M/s. Monarch Research & Brokerage Pvt. ltd. on 08.08.2018. The assessee filed submissions. The Assessing Officer observed that the assessee purchased 10000 shares of VAS Infra for Rs. 18,45,000/- on 11.11.2010 and sold them for Rs. 15,12,034/- on 16.11.2010 through Monarch Research & Brokerage Pvt. Ltd. The assessee has incurred loss of Rs. 3,33,466/- by trading in the script of VAS Infra. The Assessing Officer issued show-cause notice and the assessee replied the same. The Assessing Officer made addition of Rs. 3,33,466/- thereby bogus loss. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 5. The Ld. D.R. submitted that the VAS Infrastructure Ltd. is a script which was blacklisted and is declared as penny stock as per investigation report and therefore, the Assessing Officer has rightly made addition thereby disallowing bogus loss. The Ld. D.R. further submitted that the CIT(A) was not right in deleting the addition of Rs. 3,33,466/- being Long Term Capital Loss as the assessee has quantified this loss to provide accommodation entry for inflated LTCG to the beneficiaries and to reduce the income earned from trading in other shares. Thus, the D.R. submitted that the addition may be sustained. 6. The Ld. A.R. relied upon the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that as per the SEBI report the script VAS Infrastructure Ltd. was not blacklisted and was not termed as penny stock by ITA No. 89/Ahd/2020 ITO vs. Sangitaben Jagdishkumar Shah Asst.Year–2011-12 - 3 - the Stock Exchange Regulatory Authority. The period for purchase and sale was mentioned by the Assessing Officer dealt with 10000 shares for which the trading data was taken into account by the CIT(A). The details filed by the assessee such as contract note of transactions in respect of Monarch Research And Brokerage Pvt. Ltd. which is a registered stock broker as well as copy of trading bills were also presented before the Assessing Officer as well as before the CIT(A). The assessee has paid Securities Transaction Tax i.e. “STT” and all the transaction was through banking channel. Besides the investigation report the Assessing Officer has not pointed out any discrepancy in the evidences produced by the assessee, therefore, the CIT(A) has rightly allowed the bill of the assessee and deleting the addition. There is no need to interfere with the finding of the CIT(A). Hence, the appeal of the Revenue is dismissed. 8. In result, the appeal of the Revenue is dismissed. This Order pronounced in Open Court on 15/03/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 15/03/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad