SHAKTIMATA DEALCOM PVT. LTD.,KOLKATA V. I.T.O., WARD - 1(3), CURRENTLY I.T.O., WARD - 1(1), KOLKATA, KOLKATA

ITA 1697/KOL/2024

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The case involves Shaktimata Dealcom Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2014-15. The appeal was initially time-barred by 507 days, but the Tribunal condoned the delay based on the reasonable cause shown by the assessee. The primary contention in the appeal was the addition of Rs. 43,93,250 as alleged bogus purchase of quoted shares and a disallowance of Rs. 35,750 under section 14A of the Income Tax Act, 1961. The Tribunal found that the shares in question were purchased during the year under consideration, remained unsold, and were supported by credible evidence of genuine transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474481 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Other Referred Cases: Collector Land Acquisition Vs. MST Katiji (1987) 167 ITR 471 SC
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHUMITA DAS
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Bogus purchase; Capital Gains; Principle of natural justice; Rule 8D; Deduction for capital gain; Bogus
• Section: 144; 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES “SMC”, KOLKATA BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1697/KOL/2024 Assessment Year : 2014-15 Shaktimata Dealcom Pvt. Ltd., 29A, 3rd Floor, Weston Street, Bowbazar, Kolkata West Bengal-700 012 PAN :AARCS3395J V/s ITO, Ward – 1(3), Kolkata Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal pertaining to Assessment Year 2014-15 at the instance of assessee is directed against the order dated 23.01.2023 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (in short ‘the Act’) which in turn is arising out of Assessment Order dated 20.12.2016 passed u/s. 144 of the Act. 2. At the outset, I find that appeal is time barred by limitation by 507 days before the Tribunal. The assessee has filed condonation petition stating that the appellant was unaware of the appellate proceedings. It came to know only when the assessee received a call for payment of outstanding demand. Then the assesee took steps for filing the appeal. It Assessee by : Shri Miraj D. Shah, A.R. Revenue by : Smt. Madhumita Das, Addl. CIT Date of hearing : 27.11.2024 Date of pronouncement : 29.01.2025 ITA No.1697/Kol/2024 Shaktimata Dealcom Pvt. Ltd. was submitted that the delay was not intentional and therefore prayed for condoning the same. 3. I have gone through the averments made in the condonation petition and in the absence of anything contrary to disbelieve the said version I find that there was ‘reasonable cause’ which prevented the assessee in filing the appeal within the stipulated time. Therefore, the delay of 507 days in preferring the appeal before the Tribunal is condoned by virtue of decision of Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. MST Katiji (1987) 167 ITR 471 SC. 4. Assessee has raised following grounds of appeal : “1. For that in the facts and circumstances of the case the assessment order and appellate order passed was in violation of principals of natural justice hence is perverse, bad in law and be quashed. 2. For that in the facts and circumstance of the case the Learned Commissioner of Income Tax Appeals erred in upholding the addition of Rs. 43,93,250/- as alleged bogus purchase of quoted shares i.e., bogus investment. The addition is not called for and hence the same be deleted. 3. For that in the facts and circumstance of the case the Learned Commissioner of Income Tax Appeals erred upholding the disallowance of Rs.35,750 u/s 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules. The finding of Learned Assessing officer and upholding the same by the Learned Commissioner of Income Tax Appeals is bad in law and the same should be deleted. 4. For that in the facts and circumstances of the case the Learned Assessing officer issuing the notice in this case did not have jurisdiction over the case, hence the assessment order is bad in law and be quashed. 5. For that in the facts and circumstances of the case the assessment made u/s 144 of the Income Tax Act 1961 was bad in law and hence the appellate order passed by the Ld CIT(A) based on the assessment order is bad in law and be quashed. ITA No.1697/Kol/2024 Shaktimata Dealcom Pvt. Ltd. 6. For that in the facts and circumstance of this case the material based on which the Ld Assessment Officer passed the assessment order are collected behind the back of the assessee and which were not provided during the course of assessment proceeding, thus material should be excluded/ignored for the purpose of this case.” 5. Succinctly, the facts of the case are that the assessee is a company deriving income from Trading in Shares and Securities. It filed the return of income for the A.Y. 2014-15 declaring Nil income. The case selected for scrutiny through CASS following by issuance of statutory notices. There was no compliance by the assessee. Based on the information available with the department, the ld. Assessing Officer noticed that the assessee had done trading in quoted shares with the name of ASHIKACR and has purchased 60,000 Equity shares which resulted in huge loss. On perusal of scrips in which trade performed by the assessee which were available on the ITD platform, the AO noticed some discrepancies and stated that a larger scheme covering huge number of exactly similar cases in which large interest income has been offset with loss through trading in shares resulting in paltry returned income. AO disallowed the purchase of 60,000 Equity shares of Ashika Credit Capital Ltd. (in short ASHIKACR’) alleging that the investigation has recorded that the said receipt has been used for various entry operators for arranging bogus long term capital gains. 6. Before CIT(A) the assessee submitted that during the year under consideration, only 45000 shares have been purchased for Rs.33,37,627/- and the remaining have been purchased in the subsequent year. It was also contended that the Equity shares purchased during the year have not been sold and has been carried forward as closing stock. ITA No.1697/Kol/2024 Shaktimata Dealcom Pvt. Ltd. Therefore, the ld.CIT(A) gave part relief by deleting the addition made for the purchases made in subsequent year and confirmed the disallowance made for the purchases at Rs.33,37,627/-. 7. Aggrieved by the part relief, the assessee is now in appeal before the Tribunal. 8. I have heard the rival submissions made by both the sides and perused the record placed before me. It is not in dispute that assessee has purchased 45000 Equity shares of Ashika Credit Capital Ltd. during the year under consideration. It is also not in dispute that Equity Shares purchased have not been sold and remained as closing stock. The ld.CIT(A) in the impugned order has referred to the Contract Note through which the alleged Equity Shares purchased and the broker is registered with SEBI and the genuineness of purchases has not been disputed, source of making payments through banking channel for making the alleged purchase is also not in dispute. Disallowance has been made merely alleging that scrip is being used by the entry operators for arranging bogus long term capital gains and claimed exemption u/s.10(38) of the Act or bogus loss. However, in the year under appeal, no such sale transaction has taken place. No long term capital gain exemption has been claimed on the said scrip nor set off of losses. So far as the year under consideration is concerned since the purchases are duly explained with the help of Contract note issued by the registered Share Broker and payment made through banking channel and the shares having been credited to the Demat Account, I fail to find any justification in the orders of the lower authorities making purchase ITA No.1697/Kol/2024 Shaktimata Dealcom Pvt. Ltd. disallowance. Therefore, the impugned order is set-aside and the impugned addition made by the authorities below is directed to be deleted. Effective Grounds of Appeal raised by the assessee are allowed. 9. In the result, the appeal of the assessee is allowed. Order pronounced on this 29th day of January, 2025. - Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे/Pune; \u0001दनांक / Dated : 29th January, 2025 Satish आदेश क\u0002 \u0003ितिलिप अ\tेिषत / Copy of the Order forwarded to : 1. अपीलाथ\f / The Appellant. 2. \r\u000eयथ\f / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय \rितिनिध, आयकर अपीलीय अिधकरण, “(SMC)” ब\u0014च, Kolkata/ DR, ITAT, “(SMC)” Bench, Kolkata. 5. गाड\u0018 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar, ITAT, Kolkata "