Income Tax Officer - 2(1), Kanpur V. Smt. Bharti Thakkar, Kanpur

MA 5/LKW/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3425 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-07-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 09-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Tax effect; Capital Gains
• Section: 6; 142(1); 22

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.05/Lkw/2020 [In ITA No.64/LKW/2019] Assessment Year: 2014-15 The ITO 2(1) Kanpur v. Smt. Bharti Thakkar 74/82, Dhankutti Kanpur TAN/PAN:ABJPT2745D (Applicant) (Respondent) Applicant by: Shri Harish Gidwani, D.R. Respondent by: None Date of hearing: 22 07 2022 Date of pronouncement: 25 07 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.64/LKW/2019 for assessment year 2014-15. 2. The brief facts are that the appeal filed by the Revenue in ITA No.64/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: In this case, return declaring total income of Rs.4,04,010/- was filed on 31.07.2014 for A.Y. 2014-15. Subsequently, the case was selected for complete scrutiny on account of suspicious long term capital gain on sale of shares ( input from Investigation Wing) and accordingly the statutory Page 2 of 5 notices u/s.143(2) and 142(1) of the I.T. Act, 1961 were issued. During the course of assessment proceedings it was gathered that during the previous year relevant to assessment year 2014-15 the assessee has earned long term capital gains of Rs.73,13,744/- on sales of shares of M/s Kailash Auto Finance Limited. It was also gathered that the assessee has purchased 200000 shares of M/s. Careful Project Advisory Limited on 26.03.2012 at the rate of Re.1/- per share from a Kolkata based company namely Sanskriti Vincom Pvt. Limited through off market transaction and the total purchase cost of these shares was Rs.2,00,000/-. Subsequently, the above company M/s Careful Project Advisory Limited was amalgamated with M/s Kailash Auto Finance Limited and after this amalgamation the assessee was allotted 200000 shares of Kailash Auto Finance in place of 200000 shares of Careful Projects Advisory Limited in 1:1 ratio. Between July, 2013 to August, 2013, assessee sold these shares in 27 different transactions having different trade IDs in the price range of Rs.37.40 to Rs.38.50 per share. In this way, the assessee earned long term capital gains of Rs.73,13,744/- on a meager investment of Rs.2,00,000/- in a short period of almost one year and the said LTCG was claimed as exempt income u/s. 10(38) of the Income Tax Act, 1961. 2. The assessee was confronted on this issue during the course of assessment proceedings and the assessee produced documentary evidences like purchase bills, sale bills and bank statement relating to the transactions in these shares, in support of his claim. It is worthwhile to mention here that after a thorough investigation conducted by the Directorate of Income Tax [Inv.], Kolkata, the shares of M/s. Kailash Auto Finance Limited was identified as shares of those penny stocks in which several persons/concerns/entities have taken accommodation entries of bogus LTCG to route the unaccounted money of the beneficiaries into their account books in the garb of LTCG on shares which is exempt u/s.10(38) of the Income Tax Act, 1961 and consequently no tax is paid on introduction of such unaccounted money causing huge loss to the government Page 3 of 5 revenue. After considering the averments of the assessee in this regard and after discussing the modus operandi supported by the facts and material available on records it was held that the transactions relating to LTCG is in genuine in this case. Accordingly, the LTCG of Rs.73,13,744/- claimed as exempt u/s. 10(38) was disallowed and added back to the income of the assessee for the previous year relevant to assessment year 2014-15. 3. Aggrieved assessee filed an appeal before Ld, CIT[A]-I, Kanpur. The Ld. CIT(A)-I, Kanpur vide his order dated 27.11.2018 allowed the appeal of the assessee and deleted the above additions made by the A.O. While adjudicating the assessee's appeal the Ld. CIT[Appeals]-I, Kanpur held that in absence of any finding specifically against the assessee in the Investigation Wing report on in the order by SEBI, the assessee cannot be held to be guilty or linked to the wrong acts of any third persons investigated. 4. Against the order passed by the Ld. CIT (A), the Department preferred an appeal before Hon'ble ITAT Lucknow. Cross objections were also filed by the assessee before the Hon'ble ITAT. The Hon'ble ITAT vide its order dated 22.08.2019 rendered in I.T.A, No. 64/LKW/2019 dismissed the appeal of the revenue as non-maintainable on technical grounds of being below the enhanced monetary limit of Rs.50,00,000/- as per Board's later Circular No. 17/2019 dated 08.08.2019. While dismissing the revenue's appeal the Hon'ble ITAT has placed reliance on the order dated 14.08.2019 of the Ahmedabad bench of the ITAT rendered in ITA No. 1398/Ahd/2004 etc., in the case of ITO, Ward-3(2), Ahmedabad Vs. Dinesh Madhavlal Patel, Ahmedabad 86 Others, by observing as under: "Since the tax effect involved in these appeals, filed by the Department, does not exceed Rs.SO lakhs in each of the appeals, they are not maintainable in view of CBDT's Circular Wo.17/2019 dated 08.08.2019, /.Wo. 270/Misc./142/2Q07-ITJ(Pt.) and is liable to be dismissed as such" Page 4 of 5 5. The tax effect of arising out of the Hon'ble ITATs order in this case Rs.22,83,182/- which is below the enhanced monetary limit of Rs.1 Crore for filing of appeal u/s.260A before the Hon'ble High Court as per Board's latest Circular No. 17/2019 dated 08.08.2019. 6. Meanwhile, CBDT, New Delhi vide Circular No.23 of 2019 dated 06.09.2019 and O.M. dated 16.09.2019 has decided that notwithstanding anything contained in any circular issued u/s.268A specifying monetary limits for filing of departmental appeals before the Income Tax Appellate Tribunal [ITAT], High Courts and SLPs/Appeals before the Supreme Court, appeal may be filed on merits as an exception to said circular, where Board, by way of special order direct filing appeal on merits in cases involved in organized tax evasion activity. 7. In view of the above facts, the Hon'ble ITAT is very kindly requested to re-adjudicate the appeal in the light of CBDT's Circular No.23 of 2019 and O.M. dated 16.09.2019 and pass a suitable order in this case.” 3. None has appeared for the Assessee. However, finding that the matter can be proceeded with in the absence of the Assessee, we are doing so, having heard the ld. D.R. and having perused the material on record. 4. At the time of hearing, the ld. D.R. furnished the copy of Form No.5, i.e., the order, dated 24.11.2021 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 in the case of the assessee and has submitted that the assessee had settled the tax arrears for the Assessment Year 2014-15 under DTVSA, 2020, therefore, the Miscellaneous Application filed by the Revenue be treated as withdrawn in terms of section 4(2) of the DTVSA, 2020. Accordingly, since the assessee had settled the tax arrears for the Assessment Year 2014-15 under DTVSA, 2020, Page 5 of 5 the Miscellaneous Application of the Department is ordered to be dismissed as withdrawn. 5. In the result, the Miscellaneous Application of the Revenue is dismissed. Order pronounced in the open Court on 25/07/2022. Sd/- Sd/- [T. S. KAPOOR] [A. D. JAIN] ACCOUNTANT MEMBER VICE PRESIDENT DATED:25/07/2022 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Assistant Registrar