Kiran Bala Gupta, Secunderabad, Hyderabad V. DCIT, Circle-10(1), Hyderabad, Hyderabad

MA 6/Hyd/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4951 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2012-2013
• Appeal Filed On: 24-01-2022

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad (Through Video Conferencing) Before Shri A. Mohan Alankamony, Accountant Member AND Shri S.S. Godara, Judicial Member MA No.06/Hyd/2022 (In ITA No.64/Hyd/2017) Assessment Year: 2012-13 Ms. Kiran Bala Gupta, Secunderabad. PAN : AHVPG6893K. Vs. DCIT, Circle 10(1), Hyderabad. (Appellant) (Respondent) MA No. 7/Hyd/2022 (In ITA No. 1787/Hyd/2019) Assessment Year: 2012-13 Sanjay Gupta, Hyderabad. PAN : ACGPG 3696 N Vs. DCIT, Circle 3(1), Hyderabad. (Appellant) (Respondent) Assessee by: Sri A.V. Raghuram. Revenue by : Sri Y.V.S.T. Sai. Date of hearing: 10/02/2022 Date of pronouncement: 22/03/2022 O R D E R Per A. Mohan Alankamony, A.M. Both the captioned Miscellaneous Applications are filed by the assessees seeking rectification of the Tribunal orders in ITA No. 2 64/Hyd/2017, dated 10/12/2021 and ITA No.1787/Hyd/2019, dated 14/12/2021 for the AY 2012-13. 2. The identical grievance of both the assessees are that the Tribunal vide its Order dated 10/12/2021 in the case of Ms. Kiran Bala Gupta in ITA N0.64/Hyd/2017 and vide Order dated 14/12/2021/- in the case of Shri Sanjay Gupta in ITA No. 1787/Hyd/2019 had eared in upholding the addition sustained by the Ld.CIT(A) towards disallowance of claim U/s. 10(38) of the Act because both the assesses had received the sale proceeds from sale of equity shares of Rs. 1,86,32,023/- in the case of Ms. Kiran Bala Gupta and Rs.2,50,87,430/- in the case of Shri Sanjay Gupta during the subsequent assessment year 2013-14 and therefore the additions cannot be made in the hands of both the assessees for the relevant assessment year 2012-13. If at all the additions have to be made, the addition ought to have been made for the assessment year 2013-14. 3. The Ld. AR submitted before us that both the assessees had claimed deduction U/s. 10(38) of the Act with respect to sale of equity shares which was disallowed by the Ld. Revenue Authorities, and it was confirmed by the Tribunal. Further, the Ld. AR submitted that it 3 was not clear whether the additions were made in the hands of the assessees by invoking the provisions of section 68 of the Act or by withdrawing the claim of deduction u/s. 10(38) of the Act. It was further submitted that both the assessees were individuals and they had not maintained books of accounts as they were not under obligation to do so as per the provisions of the Act because neither they had earned income under the head “business and profession” nor under the head “income from other source”. Reliance was placed in the provisions of section 145 of the Act. Hence, it was argued that the assessees had not credited the amount earned from sale of equity shares in their books of accounts during the relevant AY and therefore, the provisions of section 68 of the Act cannot be invoked. The Ld. AR further argued stating that the assessees had received the sale proceedings only during the subsequent assessment year and therefore if at all additions are to be made, it has to be made for the AY 2013-14 and not for the relevant assessment year 2012-13. It was further submitted that the assessee is liable to be taxed u/s. 45 of the Act as they have sold equity shares which was their long-term capital asset even if the exemption U/s. 10(38) of the Act is withdrawn. It was further argued that both the assessees are permitted to declare their income 4 chargeable to tax in cash system of accounting as per the provisions of the Act. It was therefore pleaded that the addition sustained by the Tribunal without considering these facts is mistake apparent on record which is required to be rectified. Accordingly, it was prayed that the addition made in the hands of both the assesses may be deleted. 4. The Ld. DR on the other hand argued by stating that there is no mistake apparent in the orders of the Tribunal which is required to be rectified. He further pointed out that both the assessees had themselves offered their sale proceeds of equity shares as their income by adopting mercantile system of accounting in their computation statement for the relevant assessment year 2012-13 and claimed it as deduction u/s. 10(38) of the Act in their return of income. He further argued that the Ld. AO has rejected the claim of deduction U/s. 10(38) of the Act in the case of both the assesses because it was revealed that the transactions with respect to sale of equity shares were bogus. Ld. DR further submitted that the transaction declared by both the assessee was a modus operandi to introduce unaccounted cash without attracting tax under the shelter of the provisions of Section 10(38) of the Act. Hence, it was pleaded, that the orders of the ld. Revenue Authorities were in order which were subsequently upheld by 5 the Tribunal. It was therefore pleaded that the MA filed by both the assesses may be dismissed. 5. We have heard the rival submissions and carefully perused the materials on record. From the facts on record, it is evident that both the assessees were indulging in bogus transactions with an intention to defraud the Revenue. These facts were confirmed by the Ld. CIT(A) as well as by the Tribunal in the respective Orders. In order to curb such kind of unscrupulous practices the Government of India has brought in reforms by introducing stringent measures in the Act and also graciously brought in Schemes by providing an opportunity to the defaulters to pay the due tax so as to ease them from the burden of penal action. However, both the assessees have failed to avail the benefit offered by the Government and indulging in protracted litigations by filing frivolous Miscellaneous Applications. 6. From the facts of the case, it is apparent that both the assessees have sold their equity shares and claimed deduction U/s. 10(38) of the Act in the return of income for the relevant assessment year and there is no dispute in that. The finding of the Revenue is that the sale transactions of the equity shares were bogus, and it was an unscrupulous method adopted by both the assessees to convert their 6 unaccounted cash into good money without paying tax. These facts were confirmed by the First Appellate Authority as well as by the Second Appellate Authority. From the Orders of the Revenue as well as the Tribunal it is apparent that the Ld. AO had made addition by withdrawing exemption claimed U/s. 10(38) of the Act and computed tax at the maximum rate invoking the provisions of Section 68 of the Act. It is also obvious from the assessment order that both the assessees were not charged to tax under Long Term-Capital Gain as the rate of tax would have been lesser in that case. Further, it is also evident that both the assessees had dealt with equity shares of several companies and cosseted in number of transactions. It is also obvious that unless the books of accounts are maintained, the assessees will not be able to arrive at their state of affairs. Precisely, computation statements can be prepared only from the data recorded by the assessees in some mode or the other because in the case of both the assessees, there are very many transactions and that mode in which date is recorded has to be construed as the books of accounts of the assessees. Hence, when both the assesses have themselves declared incomes from sale of shares in their return of income for the relevant assessment year, it is obvious that the amount is credited, in the data 7 recorded by them in any mode, which can also be taken as their books of accounts maintained in the mercantile system of accounting. Needless to mention that mercantile system of accounting is also a recognized system of accounting as per the provisions of the Act in the case of the assessee, which the assessees has followed and filed their return of income. Therefore, now the assessees cannot take a stand that they wish to follow cash system of accounting. In this situation, the provisions of section 68 of the Act will squarely apply in the case of both the assessees. The relevant portion of the provisions of section 68 of the Act is extracted herein below for reference: “Sec: 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided.......” 7. Further, it is pertinent to mention that what constitutes books of accounts are not defined in the Act. Therefore, to make the issue clear, it can be stated that any legible matter recorded in any mode stating the state of affairs of the assessee will be treated as the books of accounts of the assessee. Further, the Act has not stipulated for the books of accounts to be maintained in the double entry method of 8 book-keeping or by any other specified method. Provisions of section 68 of the Act talks about “where any sum is found credited in the books ...........” which implies that where a sum of money termed as revenue, receivables, amount received, including capital that are brought into the books of accounts, and where the assessee offers no explanation about the nature and source thereof or the explanation offered is not in the opinion of the Assessing Officer is satisfactory, will be liable to be charged to income tax as the income of the assessee for the relevant previous year U/s.68 of the Act. 8. In the case CIT vs. Abdul Haseeb, Prop. M.S.J.B. Silk [2014] 51 taxmann.com 48/[2015] 228 Taxman 71 (Mag.) (All.) the Hon’ble Allahabad High Court held that “the expression ‘any sum is found credited in the books of the assessee’ means all entries on the credit side as well as on the debit side in the books of accounts. The word ‘credited’ in relation to ‘any sum’ does not mean any entry only on the credit side but would also include an entry on the debit side as well. The word ‘credited’ means an entry of a sum in the books of account.” 9. In the case of CIT vs. Sophia Finance Ltd [1993] 70 Taxman 69/205 ITR 95 (Delhi) (FB) the Hon’ble Delhi High Court held that “the 9 use of the words ‘any sum found credited in the books’ in section 68 includes that the said section is very widely worded and an ITO is not precluded from making an enquiry as to the true nature and source thereof even if the same is credited as receipt of share application money.” 10. From the above it is crystal clear that the additions are made in the hands of both the assessees U/s. 68 of the Act by the Ld.AO and those facts we had found it to be appropriate in the case of both the assesses in our order dated 10 & 14/12/2021. The circumstances under which the additions are made by the Ld. AO which were further sustained by the Ld. CIT(A) and the Tribunal has been clearly stated in the assessment order as well as the appellate orders. It is also pertinent to mention that not quoting the section or quoting a wrong section will not vitiate the assessment order. Reliance is placed in the decision of the Hon’ble jurisdictional High Court of Andhra Pradesh in the case of Action for Welfare & Awakening in Rural Environment (AWARE) vs. Deputy Commissioner of Income Tax reported in [2003] 263 ITR 13 (Andhra Pradesh)/[2003] 130 Taxman 82 (Andhra Pradesh) wherein their lordships observed that: 10 “7........mere mentioning of a wrong provision itself would not be fatal to the assessment proceedings when the Assessing Officer was justified in his action under some other provisions of the Act.” 10.1. Further, the Hon’ble Supreme Court in Civil Appeal No. 2009 arising out of SLP (Civil) No. 2308 of 2009 in the case of P.K. Palanisamy vs. N. Arumugham and another, observed that: “..........Only because a wrong provision was mentioned by the appellant, the same, in our opinion by itself not be a ground to hold that the application was not maintainable or that the order passed thereon would be a nullity. It is a settled principle of law that mentioning of a wrong provision or non-mentioning of a provisions does not invalidate an order if the court and/or statutory authority had the requisite jurisdiction therefor.” 10.2 Similar view was held by the Hon’ble Supreme Court in the case of N. Mani vs. Sangeetha Theatre & Ors reported in [2004] 12 SCC 278] wherein the Apex Court held that: “....quoting of wrong provision of section 20 in the order of discharge of the appellant by the competent authority does not take away the jurisdiction of the authority under section 22 of the Army Act.” 11. Further, the decisions cited by the assessees in the case of Sri Tarun Kumar Gloyal & Sri Arun Kumar Goyal vs. CIT, CC-3(2), Hyderabad and Sri Arun Kumar Goyal (HUF) vs. ITO, Ward-14(5), 11 Hyderabad are not applicable to the case of the assessees because they are not on identical facts. 12. For the aforestated reasons, we find that the MAs filed by both the assessees do not have merit and it is only a mere exercise leading to waste of time and resources for the assesses, Revenue as well as the for the Tribunal. Hence, though both the Miscellaneous Applications deserve to be dismissed by levying cost, keeping in view of the fact that both the assessees may have acted on the ambitious advice of the professionals, we refrain from levying cost to the assessees, instead we hereby hold that the MA filed by both the assessees is devoid of merits. 13. In the result, both the Miscellaneous Applications filed by the assessees are dismissed. Order pronounced in the open court on the 22 nd March, 2022. Sd/- Sd/- (S.S. GODARA) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER Hyderabad, dated 22 nd March, 2022. Okk/sps 12 Copy to: S.No Addresses 1 Ms. Kiran Bala Gupta, Secunderabad, C/o. A.V. Raghu Ram, P. Vinod & M. Neelima Devi, Advocates, 610, Babukhan Estate, Basheerbagh, Hyderabad – 1. 2 The Dy. Commissioner of Income Tax, Circle – 10(1), Hyderabad. 3 Commissioner of Income Tax (Appeals) – 6, Hyderabad. 4 Principal Commissioner of Income Tax – 6, Hyderabad. 5 DR, ITAT Hyderabad Benches 6 Guard File S.No Addresses 1 Sri Sanjay Gupta, Flat No. 610, 6 th Floor, Babukhan Estate, Basheerbagh, Hyderabad – 500 001. 2 DCIT, Circle-3(1), Signature Towers, Kondapur Road, Hyderabad. 3 The CIT(A)-3, Hyderabad. 4 The Pr. CIT-3, Hyderabad. 5 DR, ITAT Hyderabad Benches 6 Guard File