ACIT, Central Circle-2, Patna V. Smt. Anupma Barnwal, Patna

ITSSA 45/PAT/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2642 (ITAT-PATNA)
• Duration Of Justice: 4 year(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-08-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 27-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Accommodation entries; Penny stocks; Capital Gains
• Section: 143(3); 153A

Judgement Text

आयकर अपीलीय अधिकरण पटना 'डीबी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL PATNA ‘DB’ BENCH AT KOLKATA [वर् च ु अल कोट ु ] [Virtual Court] श्री राजपाल यादव, उपाध्यक्ष (कोलकाता क्ष े त्र) एवं डॉ मनीष बोरड, ल े खा सदस्य क े समक्ष Before SRI RAJPAL YADAV, VICE PRESIDENT & DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.(S.S.)A. Nos.: 40 & 41/Pat/2018 Assessment Years: 2012-13 & 2015-16 ACIT, Central Circle-2, Patna...................................Appellant Vs. Shri Pashupati Nath Prasad................................Respondent [PAN: AEDPP 4478 A] I.T.(S.S.)A. No.: 42/Pat/2018 Assessment Years: 2012-13 ACIT, Central Circle-2, Patna...................................Appellant Vs. Shri Ranjan Prasad..............................................Respondent [PAN: AFQPP 5547 N] I.T.(S.S.)A. Nos.: 40, 41, 42 & 45/Pat/2018 Shri Pashupati Nath Prasad Shri Ranjan Prasad Smt. Anupma Barnwal. Page 2 of 8 I.T.(S.S.)A. No.: 45/Pat/2018 Assessment Years: 2011-12 ACIT, Central Circle-2, Patna...................................Appellant Vs. Smt. Anupma Barnwal.........................................Respondent [PAN: ACTPB 3550 B] Appearances by: Sh. Saumyajit Das Gupta, CIT D/R, appeared on behalf of the Revenue. Sh. A.K. Rastogi, Sr. Adv. & Sh. Rakesh Kumar, Adv., appeared on behalf of the Assessee. Date of concluding the hearing : August 31 st , 2022 Date of pronouncing the order : September 28 th , 2022 आद े श ORDER Per Manish Borad, Accountant Member: The captioned appeals filed by the Revenue pertaining to the Assessment Years (in short “AY”) 2011-12, 2012-13 & 2015-16 are directed against separate orders passed u/s 250(6) of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income- tax (Appeals)-3, Patna [in short ld. “CIT(A)”] dated 16.07.2018. 2. The Revenue is in appeal before this Tribunal raising the following common grounds: “1. Whether on the facts and in law the Ld. CIT(Appeals) is justified in not considering the fact that the assessee voluntarily admitted during the course of search the amount of Long Term Capital Gains as his undisclosed income earned in individual capacity. I.T.(S.S.)A. Nos.: 40, 41, 42 & 45/Pat/2018 Shri Pashupati Nath Prasad Shri Ranjan Prasad Smt. Anupma Barnwal. Page 3 of 8 2. Whether on the facts and in law the Ld. CIT (Appeals) is justified in not considering the fact that the Long Term Capital Gains earned in individual hands and capacity is to be taxed in individual hands only. 3. That the applicant craves leave to add, alter, delete, modify the grounds of appeal before the Hon’ble ITAT.” 3. At the end of both the parties it is an accepted fact that the issues raised in all these appeals are common and the assessee(s) pertains to same group. Therefore, for adjudication purpose we will take up the facts in the case of Shri Pashupati Nath Prasad in IT(SS)A No. 40/Pat/2018 for AY 2012-13 and our decision in this appeal shall apply mutatis mutandis on all the remaining appeals. 4. Facts in brief are that a search was conducted u/s 132(1) of the Act on 02.03.2016 at M/s. National Papers House Group. During the course of search, Mr. Pashupati Nath Prasad, one of the partners of M/s. National Papers House Group voluntarily admitted of booking bogus Long Term Capital Gain (in short “LTCG”) by way of accommodation entries in respect of penny stocks in various files of individuals related to the M/s. National Papers House Group. Subsequently, during the course of assessment proceedings carried out u/s 153A r.w.s. 143(3) of the Act ld. AO made the addition for the bogus LTCG from penny stocks in the case of the following individuals who are in appeal before us: S.No. Name AY Amount 1 Shri Pashupati Nath Prasad 2012-13 1,62,68,650/- 2 Shri Pashupati Nath Prasad 2015-16 36,72,377/- 3 Shri Ranjan Prasad 2012-13 1,56,54,450/- 4 Smt. Anupma Barnwal 2011-12 1,02,99,449/- I.T.(S.S.)A. Nos.: 40, 41, 42 & 45/Pat/2018 Shri Pashupati Nath Prasad Shri Ranjan Prasad Smt. Anupma Barnwal. Page 4 of 8 5. Now, all the above assessees challenged the additions before ld. CIT(A) on the ground that the alleged sum stands offered as income by M/s. National Papers House before the Income Tax Settlement Commission, the same stands accepted by the Income Tax Settlement Commission vide order dated 11.05.2018 and due taxes are paid and therefore, no further addition is called for in the hands of the individual assessee(s). This plea was accepted by ld. CIT(A) and the impugned additions were deleted. 6. Aggrieved, the Revenue is now in appeal before this Tribunal. Ld. D/R vehemently argued supporting the order of ld. AO. 7. Per contra, ld. Counsel for the assessee submitted that since the alleged sum stands already offered to tax by the Group concern M/s. National Papers House and also accepted by the Hon’ble Income Tax Settlement Commission vide order dated 11.05.2018, the finding of ld. CIT(A) may please be confirmed. 8. We have heard rival contentions and perused the records placed before us. The sole grievance of the Revenue in the instant appeals is that ld. CIT(A) erred in deleting the addition for bogus LTCG from penny stocks voluntarily admitted during the course of search. 9. We observe that during the course of search carried out at the M/s. National Papers House Group of cases, statement of one of the partners Mr. Pashupati Nath Prasad voluntarily admitted of I.T.(S.S.)A. Nos.: 40, 41, 42 & 45/Pat/2018 Shri Pashupati Nath Prasad Shri Ranjan Prasad Smt. Anupma Barnwal. Page 5 of 8 booking LTCG by way of contribution entries in respect of penny stocks in the files of following individuals: Name Amount Script Entry operator Pashupati Nath Prasad 16,268,650.47 Blue Print Securities Ltd Praveen Agarwal Aditya bamwal 44,63,900.00 BSR Finance & Construction Ltd Vijay Kr Dokania Pooja Bamwal 4429124.97 BSR Finance & Construction Ltd Vijay Kr Dokania Ankur Prasad 4418150.00 BSR Finance & Construction Ltd Vijay Kr Dokania Ranjan Prasad 15654450.51 Blue Print Securities Ltd Praveen Agarwal Dipti Bamwal 8716000.00 Multiplus Resources Ltd Anupama Bamwal 1,02,99,449.92 Multiplus Resources Ltd Pashupati Nath Prasad 3672377.00 Kailash Auto Ltd Sunil Dokania Ranjan Prasad 3199282.20 Kailash Auto Ltd Sunil Dokania Total Rs 7,11,21385 10. We, further, find that M/s. National Papers House Group took the matter before the Income Tax Settlement Commission and offered 7.46 Cr on account of alleged bogus LTCG from penny stocks and paid the due taxes thereon. This fact remains undisputed at the end of the ld. D/R that the alleged sum of LTCG stands duly offered to tax by M/s. National Papers House before the Income Tax Settlement Commission and the same was accepted by the Income Tax Settlement Commission vide order no. S.A.No.BIHAR/PATNA/PCIT-CENTRAL/2017-18/0506/IT/106- 114 Dated 11/05/2018. Ld. CIT(A), on considering this fact that the alleged sum being offered to tax before Income Tax Settlement Commission deleted the impugned addition observing as follows: I.T.(S.S.)A. Nos.: 40, 41, 42 & 45/Pat/2018 Shri Pashupati Nath Prasad Shri Ranjan Prasad Smt. Anupma Barnwal. Page 6 of 8 “I have perused the assessment order and the submission of the appellant. The appellant stated that one of the assessee of the group namely M/s. National Paper House (NPH) has filed a Settlement application before the Additional Bench, Kolkata. In the settlement application M/s. M/s. National Paper House has admitted that the income declared in the application has been utilized for the purpose of LTCG of penny stock in the name of partners and/or their close relatives. Accordingly, the appellant contended that under these circumstances the bogus LTCG cannot be taxed in the individual hands of partners and/or their family members as the bogus LTCG has been owned up by the NPH. Further, I have also perused the order of Hon’ble Settlement commission passed u/s.245D(4) in S.A.No.BIHAR/PATNA/PCIT-CENTRAL/2017-18/0506/IT/106-114 Dated 11/05/2018, wherein the commission vide para 5.4 has given the following findings: The Rule 9 report of the Pr. CIT and the reply of the applicant has been considered by the Commission. It has been noticed that the department has not been able to explain about the sources/material /evidence from where the discrepancy of Rs. 29,43,207/- has been worked out. As far as the statement u/s 132(4) is concerned, Shri P.N. Prasad has stated categorically that he was surrendering Rs 7.11 crore as accommodation entry for capital gain but he would verify the arithmetical accuracy of this figure. Moreover, the applicant has offered Rs 7.46 crore which is more than Rs. 7.40 crore (7.11 crore - 29,43,207). The Commission is also convinced that the above disclosure in respect of LTCG should be in the hands of the applicant firm i.e. National Paper House because; firstly, the department has itself instructed the firm to pay taxes which were paid after search; secondly, the partners/family members do not have any independent source of income except interest and salary; thirdly, the PCIT himself started in his report that it is evident that the partners of the applicant firm admitted to have earned this LTCG by this concern; fourthly, the income should be assessed in right hands. Furthermore, the commission has also considered the reply of the partners in respect of question No. 31 of statement made u/s. 132(4) where partner had declared that source of LTCG was out of the unaccounted trading of business entities. In view of the above, no adverse inference is called for on this issue and commission is satisfied that the income of Rs. I.T.(S.S.)A. Nos.: 40, 41, 42 & 45/Pat/2018 Shri Pashupati Nath Prasad Shri Ranjan Prasad Smt. Anupma Barnwal. Page 7 of 8 7.46 crore has been rightly declared in the hands of the firm M/s. National Paper House. It is clear from the above finding of the Settlement commission that the bogus LTCG of Rs. 1,62,68,150/- taxed in the hands of the appellant was owned up by M/s. National Paper House. Hence, taxing the same in the hands of the appellant leads to double taxation. Therefore, the AO is directed to delete addition of Rs. 1,62,68,150/-.” 11. Since, the above finding of the ld. CIT(A) remains uncontroverted by ld. D/R, we fail to find any infirmity in the finding of ld. CIT(A) deleting the impugned additions observing that the alleged sum has been offered to tax before Income Tax Settlement Commission by the Group concern M/s. National Papers House. Thus, the ground raised by the Revenue in IT(SS)A No. 40/Pat/2018 for AY 2012-13 stands dismissed. 12. Now we take the remaining appeals by the Revenue in IT(SS)A No. 41/Pat/2018, IT(SS)A No. 42/Pat/2018 & IT(SS)A No. 45/Pat/2018 in cases of Shri Pashupati Nath Prasad, Shri Ranjan Prasad & Smt. Anupma Barnwal. Since, the issues raised in all these appeals as well as the grounds raised are similar to those adjudicated by us in IT(SS)A No. 40/Pat/2018 in the case of Shri Pashupati Nath Prasad in the preceding para, we apply the same decision mutatis mutandis on the remaining three appeals and hold that since the alleged LTCG from penny stocks offered in the name of individual persons during the course of search has been offered to tax by the group concern M/s. National Papers House before the Income Tax Settlement Commission vide order dated 11.05.2018, there remains no justification in making addition for I.T.(S.S.)A. Nos.: 40, 41, 42 & 45/Pat/2018 Shri Pashupati Nath Prasad Shri Ranjan Prasad Smt. Anupma Barnwal. Page 8 of 8 the same amount in the hands of the individual assessee. Thus, no interference is called for in the finding of the ld. CIT(A). All the grounds raised by the Revenue in IT(SS)A No. 41/Pat/2018, IT(SS)A No. 42/Pat/2018 & IT(SS)A No. 45/Pat/2018 are dismissed. 13. In the result, the appeals filed by the Revenue are dismissed. आद े श ददन ांक दितांबर, 2022 को उद्घोदित। Kolkata, the 28 th September, 2022. Sd/- Sd/- [Rajpal Yadav] [Manish Borad] Vice President Accountant Member Dated: 28.09.2022 Bidhan (P.S.) Copy of the order forwarded to: 1. ACIT, Central Circle-2, Patna. 2. Shri Pashupati Nath Prasad, C/o M/s National Paper House, Bindwasani Lane, Kadamkuan, Patna. 3. Shri Ranjan Prasad, C/o M/s National Paper House, Bindwasani Lane, Kadamkuan, Patna. 4. Smt. Anupma Barnwal, C/o M/s National Paper House, Bindwasani Lane, Kadamkuan, Patna. 5. CIT(A)-3, Patna. 6. CIT- 7. CIT(DR), Patna Bench, Patna. True copy By order Assistant Registrar ITAT, Kolkata Benches Kolkata