Income Tax Officer- 3(1), Kanpur V. Shri Akhil Gupta, Kanpur

MA 15/LKW/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4596 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-04-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 26-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Penny stocks; Capital Gains
• Section: 6; 268A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “A”, LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER M.A No.15/LKW/2020 [In ITA No.66/LKW/2019] Assessment Year: 2014-15 The ITO-3(1) Kanpur v. Shri Akhil Gupta 133/187, M Block Kidwai Nagar Kanpur TAN/PAN:ACYPG1748F (Applicant) (Respondent) Applicant by: Shri Harish Gidwani, D.R. Respondent by: Shri P. K. Kapoor, C.A. Date of hearing: 11 03 2022 Date of pronouncement: 27 04 2022 O R D E R PER A.D. JAIN, V.P.: This is Revenue’s Miscellaneous Application arising out of the order of the Tribunal, dated 22.8.2019 in ITA No.66/LKW/2019 for assessment year 2014-15. 2. The brief facts are that the appeal filed by the Revenue in ITA No.66/LKW/2019 was dismissed on low tax effect, vide a composite order dated 22.8.2019. Aggrieved, the Revenue has filed this Miscellaneous Application, requesting to recall the order of the Tribunal dated 22.8.2019. The application moved by the Revenue is reproduced below verbatim: “The Hon'ble ITAT, Lucknow Bench "A", vide its composite order dated 22.08.2019 has dismissed the above mentioned appeal of the Revenue with the following observations: Page 2 of 4 "Since the tax effect involved in these appeals; filed by the Department does not exceed Rs.50 Iakhs in each of the appeals, they are not maintainable in view of CBDT's Circular No.17/2019, dated 8 th August, 2019, F.No. 270/Misc.142/2007-ITJ (Pt.) and are liable to be dismissed as such." 2 In this case return declaring total income of Rs.9,03,390/- was e-filed on 27.02.2018. The case was selected under CASS for complete scrutiny specifically for scrutinizing "suspicious long term capital gain on shares" on the basis of inputs received from investigation wing. From perusal of the AIR details, it was noticed that the assessee had made transactions in Penny Stock. The assessee during the year under consideration had sold scrip of Sulabha Engineering and Services Ltd. for Rs.79,53,820/-. The assessee had claimed the entire amount of long term capital gain of Rs.79,53,820/- as exempt u/s 10(38) of the I.T. Act, 1961. The scrip Sulabha Engineers and Services Limited, which had been traded by the assesse, was actually a penny stock. This company was registered at ROC, Mumbai with registered address of Mumbai, however, the corporate office of the company was at 17/11, The Mall, Kanpur. It was a paper company and doesn't have any real business on the ground. Hence, the Capital Gains arose out of sale of the scrip was alleged as 'bogus' Long Term Capital Gain 3. Therefore, in view of the above facts, the A.O. held that the so called purchase of shares was a fabricated transaction and hence, the same was held as bogus. Accordingly, long term capital gain of Rs.79,53,820/- claimed by the assessee as exempt u/s 10(38) was disallowed and added back to the income of the assessee for the F.Y. 2013-14 (A.Y. 2014-15) resulting into completion of assessment at total income of Rs.88,57,219/-. 4. While adjudicating the appeal, the Hon'ble ITAT has dismissed the appeal of the Revenue only on technical grounds without looking into the merits of the case. The Page 3 of 4 CBDT vide Circular No.23 of 2019 dated 06.09.2019 has decided that notwithstanding anything contained in any circular issued under section 268A specifying monetary limits for filing of Departmental appeals before Income Tax Appellate Tribunal (ITAT), High Courts and SLPs/appeals before Supreme Court, appeals may be filed on merits as an exception to said circular, where Board, by way, of special order direct filing of appeal on merit in cases involved in organised tax evasion activity. In continuation, the CBDT, New Delhi issued O.M. dated 16.09.2019 clarifying as under: "The undersigned is directed to refer to Circular No.23 of 2019 dated 6 th September, 2019 and to say that by virtue of powers of the Central Board of Direct Taxes u/s 268A of the Income Tax Act, 1961, the monetary limits fixed for filing appeals before ITAT/HC and SLPs /appeals before Supreme Court shall not apply in the case of assessees’ claiming bogus LTCG/STCL through penny stocks and appeals /SLPs in such cases shall be filed on merits" 5 In view of the Circular No 23 of 2019 and 0.M. dated 16.09.2019 issued by the CBDT, the Hon'ble ITAT is very kindly requested to recall the order under question in ITA No.66/LKW/2019 dated 22.08.2019 and to re-adjudicate the appeal on merits of the case, considering various facts and circumstances.” 3. At the outset, the ld. Counsel for the assessee, Shri Pradeep Kapoor, C.A., has submitted that the assessee had settled the tax arrears for the Assessment Year 2014-15 under DTVSA, 2020, therefore, the Miscellaneous Application has no legs to stand and the same is liable to be dismissed in terms of section 4(2) of the DTVSA, 2020. The ld. Counsel for the assessee has moved an application dated 18.1.2022, received by the Registry of this Office on 19.1.2022, vide which it has been submitted that the assessee had settled the tax arrears involved in the aforesaid Miscellaneous Application, under the Vivad Se Vishwas Scheme. Page 4 of 4 The copies of Forms No.3, Form 5, i.e., the order of the PCIT-1, Kanpur for full and final settlement of tax arrears under section 5(2) read with section 6 of the DTVSVA, 2020 and also Tax Payer’s Counterfoil, having CIN No.69300041504202104831, i.e., the proof of due tax paid for Assessment Year 2014-15, have been placed on record. It was contended that since the assessee has opted for Vivad Se Viswas Scheme, therefore, the Miscellaneous Application filed by the Department may be dismissed as withdrawn. The ld. D. R. has no objection. Accordingly, since Form No. 3 has been generated in the Departmental appeal and due tax for Assessment Year 2014-15 has been paid, the Miscellaneous Application of the Department is ordered to be dismissed as withdrawn. 4. In the result, the Miscellaneous Application of the Revenue is dismissed. Order pronounced in the open Court on 27/04/2022. Sd/- Sd/- [T. S. KAPOOR] [A. D. JAIN] ACCOUNTANT MEMBER VICE PRESIDENT DATED:27/04/2022 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Assistant Registrar