Madras High Court
Smt. Tharakumari vs The Income Tax Officer on 11 February, 2019
Author: V.K
Bench: Vineet Kothari, C.V.Karthikeyan
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11.02.2019
CORAM
THE HON'BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON'BLE MR.JUSTICE C.V.KARTHIKEYAN
Tax Case Appeal No. 128 of 2019
And
C.M.P.No. 3353 of 2019
Smt. Tharakumari Appellant
Vs.
The Income Tax Officer
Non-Corporate Circle – 6,
AayakarBhawan
No.121, Nungambakkam High Road
Chennai – 600 034. Respondent
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Tax Case Appeal filed under Section 260A of the Income Tax
Act, 1961 against the order of the Income Tax Appellate Tribunal,
Madras 'B' Bench, Chennai, dated 21.12.2017 made in ITA
No.2502/Mds/2017.
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For Appellant : M/s. D.O.Kaviyanathan
for M/s. Nathan and Associates
For Respondent : Mr. T.Ravikumar
Senior Standing Counsel
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http://www.judis.nic.in
2
JUDGMENT
(Delivered by DR.VINEET KOTHARI, J.) This Tax Case Appeal arising from the order of the learned Income Tax Appellate Tribunal dated 21.12.2017 for the Assessment year 2013-2014 has been filed by the Assessee under Section 260A of the Income Tax Act, 1961. The learned Tribunal dismissed the appeal of the Assessee and upholding the order of CIT Appeals held that the long term capital gains brought to tax amounting to Rs.1,03,24,645/- by the Assessing Authority as unexplained income under Section 68 of the Act was justified. The Tribunal rejected the claim of the Assessee of Long Term Capital gains being exempt under Section 10(38) of the Act.
2. Thus, concurrently all the three authorities below held against the Assessee, that the transaction of sale of shares in question a Penny Stoks by the Assesee for earning the said alleged huge long term capital gains was not reliable because the information provided, by the statements recorded of one Mr.Deepak Patwari under Section 131 of the Act on 22.07.2013 to the effect that the transactions in the share of M/s. Luminairies Technologies Limited., in respect of which the long term capital gain was claimed by the http://www.judis.nic.in 3 Assessee, as exempt, appears in the data base of the Income tax Department as Penny Stocks, in tax evasion racket and the said Company was found to be a sham and shell company. Therefore disbelieving the claim of the Assessee, the authorities below have concurrently held against the Assessee that the said income was liable to be taxed as undisclosed income under Section 68 of the Income Tax Act and was not exempted under Section 10(38) of the Act as claimed by the Assessee.
3. The learned counsel for the Assessee Mr.D.O.Kaviyanathan vehemently urged before us that the Assessee was not given the opportunity of cross examination of the said Mr.Deepak Patwari regarding the sale of the shares by him in the said Company, including the payment of security tax transaction. The said request was brushed aside by the Assessing Authority. It was urged that the tax as imposed on the Assessee under Section 68 of the Act is not sustainable.
4. On the other hand, the learned counsel for the Revenue supported the impugned orders.
http://www.judis.nic.in 4
5. Having heard the learned counsels appearing for the parties and having perused all the records, we find on the contrary, that the Assessee does not seem to have even co-operated in the assessment proceedings before the Assessing Authority. The relevant extract of paragraph fromt establish order of the Assessing Authority and CIT Appeals are quoted below for ready reference:-
“The Assessee's reply was considered carefully. It is pertinent to mention here that the various judicial decisions cited by the Assessee are not of jurisdictional High Court. Further, the Assessee's case is one in which creation of bogus LTCG has been reported. Subsequently, a summons U/s. 131 of the Income Tax Act, 1961 was issued to Shri Deepak Patwari was issued on 08.02.2016 requesting him to appear before the undersigned on 26.02.2016 at 11.00 a.m. However, he did not appear on the said date and time. Hence, the issue is decided on the basis of the materials available on record. As mentioned above, from the statement given by http://www.judis.nic.in 5 Shri Deepak Patwari on oath on 22.07.2013 before the DDIT (Inv.) Unit 1(3), Kolkatta, the Assessee has taken entries for bogus Long Term Capital Gains. Further the transactions in shares in M/s. Luminairine Technologies Limited., in respect of which Long Term Capital Gain is claimed also appear in the data base of the Income Tax Department as Penny Stock Trade. Hence, the claim for Long Term Capital Gains by the Assessee in M/s.
Luminairire Technologies Ltd., is not
acceptable. Accordingly, a sum of
Rs.1,03,24,645/- is hereby added to the total income of the Assessee as taxable Capital Gain penalty proceedings under Section 271(1)(c) of the Income Tax Act 1961 are also initiated for concealing particulars of income/furnishing inaccurate particulars of income.” From the order of the CIT Appeals, the non appearance of the Assessee and the relevant extract of the para are as follows:-
“The case was posted 5 times for hearing. However, the Assessee or his A.R., neither appeared nor filed any written submission as under:-
http://www.judis.nic.in 6 S.No. Date of Notice Date of hearing Remarks
1. 10.04.2017 20.04.2017 Did not appear and did not file adjournment letter
2. 2.5.2017 20.05.2017 Did not appear and did not file adjournment letter
3. 24.05.2017 20.06.2017 Did not appear and did not file adjournment letter
4. 27.6.2017 19.7.2017 Did not appear and did not file adjournment letter
5. 24.7.2017 7.8.2017 Did not appear and did not file adjournment letter
8. The Assessee's reply was considered carefully. It is pertinent to mention here that the various judicial decisions cited by the Assessee are not of jurisdictional High Court.
Further, the Assessee's case is one in which creation of bogus LTCG has been reported.
Subsequently, a summons under Section 131 of the Income Tax Act, 1961 was issued to Shri. Deepak Patwari was issued on 08.02.2016 requesting him to appear before the undersigned on 26/0/2016 at 11.00 a.m. However, he did not appear on the said date and time. Hence, the issue is decided on the basis of the materials available on record. As mentioned above, from the statement given by Shri. Deepak Patwari on oath on 22.07.2013 http://www.judis.nic.in 7 before the DDIT (Inv.), Unit-1(3), Kolkatta, the Assessee has taken entries for bogus Long Term Capital Gains. Further, the transactions in shares in M/s. Luminaireire Technologies Limited in respect of which Long Term Capital Gain is claimed also appear in the data base of the Income Tax Department as Penny Stock Trade. Hence, the claim for Long Term Capital Gains by the Assessee in M/s.
Luminairie Technologies Limited., is not acceptable. According, a sum of Rs.1,03,24,645/- is hereby added to the total income of the Assessee as taxable Capital Gain.”
6. Similarly the learned Tribunal has also held that the notice served upon the Assessee was returned unserved as is seen from paragraph No.5 of the order passed of the learned Tribunal. The Assessee seems to have filed a Miscellaneous Application before the learned Income Tax Appellate Tribunal for setting aside the ex-parte order and for condoning the delay in filing such Miscellaneous Application. These also came to be rejected by the learned CIT vide communication dated 31.08.2018. The relevant findings of the learned Tribunal from the impugned order are quoted below for ready reference:-
http://www.judis.nic.in 8 “7. We have perused the orders and heard the contention of the Id. Departmental Representative. Assessee had not brought in any evidence before the Id. Assessing Officer or Id. Commissioner of Income Tax (Appeals) to show that the statement given by Shri. Deepak Patwari on oath on 22.07.2013 before the Directorate of Income Tax (Inv) Kolkata was incorrect, except for saying that she had no knowledge about the said person. Nothing was forthcoming from the Assessee as to how she identified Luminaireire Technologies Limited for investment and how she sold its shares. Assessee failed to bring in any evidence to show that long term capital gains claimed by it was correct. In our opinion the lower authorities were justified in taking a view that such claim arise from sham transactions made through entry providers. We do not find any reason to interfere with the orders of the lower authorities.” http://www.judis.nic.in 9
7. Thus it appears that while it was for the Assessee to appear and adduce the relevant evidence for the genuineness of the transaction of sale of the shares, the Assessee was not vigilant and co-operative enough and did not produce the relevant evidence before the authorities below and did not even appear before the appellate authorities concerned to contradict the case against her, as set up by the Revenue during the course of assessment proceedings. This has resulted in the impugned findings of facts against the Assessee about the nature of the transactions of sale of shares of a shell company as sham and the same being taxed as 'undisclosed income' under Section 68 of the Act. Thus these findings of facts, cannot be said to be perverse in any manner and therefore we do not find any substantial question of law to be arising under Section 260-A of the Act before this Court, requiring our further consideration in this case and hence the appeal filed by the Assessee is liable to be dismissed.
8. Accordingly, the appeal filed by the Assessee is dismissed. Consequently, connected Miscellaneous Petition is also closed. No costs.
(V.K., J.) (C.V.K., J.)
11.02.2019
Index : Yes/No
Internet : Yes/No
vsg
http://www.judis.nic.in
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DR.VINEET KOTHARI, J.
and
C.V.KARTHIKEYAN, J.
vsg
Tax Case Appeal No. 128 of 2019
And
C.M.P.No. 3353 of 2019
11.02.2019
http://www.judis.nic.in