The ACIT, Central Circle-3, Vadodara V. Shri Birju Chhotalal Shah, Kutch

ITSSA 135/AHD/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3575 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 02-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim
• Section: 131; 132; 143(3); 153A

Judgement Text

आयकर य कर , हमदाबाद याय ‘‘स ’’ हमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD ] ] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND SMT.SUCHITRA R. KAMBLE, JUDICIAL MEMBER IT(SS)A No. 135/Ahd/2021 Assessment Year : 2012-13 Asstt. Commissioner of Income-tax, Central Circle-3, Vadodara Vs Shri Birju Chhotalal Shah, Thobh Street, Waniyawad, Bhuj-Kutch, Gujarat-370001 PAN : AFXPS 9491 M ा / (Appellant) य / (Respondent) Revenue by : Shri A.P. Singh, CIT-DR Assessee by : None /Date of Hearing : 07/07/2022 /Date of Pr onouncement: 13/07/2022 आदेश/O R D E R PER P.M. JAGTAP, VICE-PRESIDENT : This appeal is preferred by the Revenue against the order of the learned Commissioner of Income-tax (Appeals)-12, Ahmedabad (“CIT(A)” in short) dated 21.06.2021 and the solitary issue relating to the deletion by the learned CIT(A) of the addition of Rs. 22,89,898/- made by the Assessing Officer on account of the alleged claim of bogus Long Term Capital Gain is raised by the Revenue therein by way of the following grounds:- 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.22,89,898/- made on account of claim of bogus LTCG without appreciating the fact that such accommodation entry in form of LTCG was arranged by the assessee from the Kolkata based entry providing company namely M/s Karma Industries Ltd., which was accepted by Shri Ramesh Kumar Kaithan, one of the directors of the entry providing company i.e. M/s Karma Industries Ltd. before the Investigation Wing. IT(SS)A No. 135/Ahd/2021 ACIT Vs. Shri Birju Chhotalal Shah AY : 2012-13 2 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition made during the course of assessment proceedings u/s. 153A has to be confined to the incriminating material found during the course of search u/s.132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 2. The assessee, in the present case, is an individual. A search action under Section 132 of the Income-tax Act, 1961 (“the Act” in short) was conducted in Cube Group cases on 12.02.2015 including the case of the assessee. Pursuant to the said action, a notice under Section 153A of the Act was issued by the Assessing Officer to the assessee on 05.10.2015; in response to which, the return of income was filed by the assessee on 15.12.2015 declaring a total income of Rs.67,42,910/-. During the course of assessment proceedings, it was noticed by the Assessing Officer that exemption was claimed by the assessee on account of Long Term Capital Gain amounting to Rs.22,89,898/- arising during the year under consideration on sale of shares of M/s. Karma Industries Ltd. In this regard, it was claimed by the assessee that he had duly applied for shares of M/s. Karma Industries Ltd. and after getting the same allotted in physical form, the same were sent to the company with share application form for transfer of the shares in his name. It was submitted that the shares were accordingly transferred to the demat account of the assessee and the same were subsequently sold through proper banking transactions. This explanation of the assessee was not found acceptable by the Assessing IT(SS)A No. 135/Ahd/2021 ACIT Vs. Shri Birju Chhotalal Shah AY : 2012-13 3 Officer on the basis of the investigation carried out by the investigation directorate Kolkata which revealed that Karma Industries Limited’s scrip had been artificially manipulated to provide Long Term Capital Gain to various persons including the assessee. It was found that the scrip had been manipulated by Shri Ramesh Kumar and its associates and Shri Ramesh Kumar was also a broker. Based on the outcome of the investigation carried out by the investigation directorate Kolkata and the statement of Shri Ramesh Kumar recorded under Section 131 of the Act, the Assessing Officer found that the share prices of M/s. Karma Industries Limited had been artificially raised to create bogus Long Term Capital Gain which is exempt under Section 10(38) of the Act. He accordingly treated the claim of the assessee for Long Term Capital Gain of Rs.22,89,898/- as bogus and added the said amount to the total income of the assessee in the assessment completed under Section 153A r.ws. 143(3) of the Act vide an order dated 27.12.2016. 3. Against the order passed by the Assessing Officer under Section 153A r.w.s. 143(3) of the Act, an appeal was preferred by the assessee before the learned CIT(A) and a detailed submission was made on behalf of the assessee in support of assessee’s case on this issue. After considering the submission made by the assessee as well as the material available on record, the learned CIT(A) found the addition of Rs.22,89,898/- made by the Assessing Officer on account of the alleged bogus Long Term Capital Gain shown by the assessee unsustainable inter alia on the ground that the same was not supported by any incriminating documents found during the course of search. By relying on various judicial pronouncements discussed in his impugned order, learned CIT(A) held that the impugned addition was made merely on the basis of statement of third person without there being IT(SS)A No. 135/Ahd/2021 ACIT Vs. Shri Birju Chhotalal Shah AY : 2012-13 4 any incriminating document found during the course of search to support and substantiate the same. He accordingly deleted the addition made by the Assessing Officer on this issue. Aggrieved by the order of the learned CIT(A), the Revenue has preferred this appeal before the Tribunal. 4. At the time of hearing fixed in this case before the Tribunal, none has appeared on behalf of the assessee. This appeal of the assessee is, therefore, being disposed of ex-parte qua the respondent-assessee after hearing the arguments of learned DR and perusing the relevant material available on record. It is observed that a search under Section 132 of the Act in this case was conducted on 12.02.2015 and there was no assessment proceedings pending for the year under consideration on that date. There was thus no abatement of the assessment originally completed in the case of the assessee for the year under consideration and it was a case of unabated assessment which was completed by the Assessing Officer after the search for the year under consideration. As per the settled position of law, the scope of such unabated assessment made under Section 153A of the Act was confined only to the additions which are based on the incriminating material found during the course of search and since there was no such incriminating material found during the course of search on the basis of which the said addition was made as held by the learned CIT(A) in his impugned order and not disputed by the learned DR, we find ourselves in agreement with learned CIT(A) that the impugned addition made by the Assessing Officer on account of alleged bogus Long Term Capital Gain was not sustainable in the absence of any incriminating material found during the course of search to support and substantiate the same. We, therefore, find no infirmity in the order of the learned CIT(A) deleting the addition made by the Assessing IT(SS)A No. 135/Ahd/2021 ACIT Vs. Shri Birju Chhotalal Shah AY : 2012-13 5 Officer on account of alleged bogus claim of 22,89,898/- and upholding the same, we dismiss the appeal filed by the Revenue. 5. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 13 th July, 2022 at Ahmedabad. Sd/- Sd/- (SUCHITRA R. KAMBLE) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad, Dated 13/07/2022 *Bt /Copy of the Order forwarded to : 1. ! / The Appellant 2. "# ! / The Respondent. 3. $%$&' # # ( / Concerned CIT 4. # # ( ) (/ The CIT(A)- 5. + , # &' , # # &' /DR,ITAT, Ahmedabad, 6. , ./ 0 /Guard file. / BY ORDER, TRUE COPY ह # $ज (Asstt. Registrar) # # &' ITAT, Ahmedabad 1. Date of dictation- ...07.07.2022...two pages dictation pad attached..... 2. Date on which the typed draft is placed before the Dictating Member ...07.07.2022............ Other member....11.07.2022.......... 3. Date on which the approved draft comes to the Sr.P.S./P.S. - ...11.07.2022............... 4. Date on which the fair order is placed before the Dictating Member for Pronouncement ...13.07.2022 5. Date on which the file goes to the Bench Clerk...13.07.2022............ 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order..................... 8. Date of Despatch of the Order..................