Income Tax Appellate Tribunal - Mumbai
Dy. Cit -34(1), Mumbai vs Amit Burakia, Mumbai on 14 October, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "A" MUMBAI
BEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER) AND
SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
ITA No. 1590/MUM/2020
Assessment Year: 2015-16
Dy. CIT-34(1), Amit Burakia,
Kautilaya Bhavan, 8th floor, 1203-1204, Gardenia, B-Wing,
Room No. 802, BKC, Vs. Vasant Valley, Film City Road,
Mumbai-400051. Malad (East),
Mumbai-400097.
PAN No. ABUPA 6908 N
Appellant Respondent
Revenue by : Mr. Manoj Sinha, DR
Assessee by : Mr. Haridas Bhat, AR
Date of Hearing : 23/08/2022
Date of pronouncement : 14/10/2022
ORDER
PER OM PRAKASH KANT, AM
This appeal by the Revenue is directed against the order dated 23.01.2020 passed by the Ld. Commissioner of Income-tax (Appeals)-46, Mumbai [in short 'the Ld. CIT(A)'] for assessment year 2015-16, raising following grounds :
Amit Burakia 2 ITA No. 1590/M/2020
1. "Whether in the facts and circumstances of the case, the Ld.CIT(A) is justified in not upholding the action of the AO in rejecting the Claim exemption u/s 10(38) of Rs 40716372/-
40716372/ on transactions in penny Stock shares of PSIT Infrastructure & Services Ltd and assessing the same as assessee's Business income.
2. Whether in the facts and circumstances of the case, the Ld. the action of the AO in CIT(A) had failed appreciate that the rejecting the claim exemption u/s 10(38) of Rs. 40716372/-
40716372/ was based on attending circumstances and human probabilities which does not get vitiated if there are compelling reasons to reject the frontage of a transaction based on the so s called evidence which is nothing more than a mere paper work?
3. Whether in the facts and circumstances of the case, the Ld. CIT(A) ought to have upheld the action of the AO in denying ssessing same as exemption u/s 10(38) of Rs.407163724 and assessing business profits by relying on the ratio laid down by the Hon'ble Supreme Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) & Sumati Dayal v. CIT (1995) 214 ITR 801(SC)?
4. Whether in the facts and circumstances of the case, the Ld.CIT(A) was justified deleting the addition made by the AO rather than taking the investigation / enquiries further either by himself or cause to get it done as per section 250(4) of the I T Act, especially ignoring the circumstantial evidences conclusions brought out by the Assessing officer in his order that the claim of LTCG are part of major scheme of accommodation entries to generate bogus long term capital gains?"
Amit Burakia 3 ITA No. 1590/M/2020
5. "Whether in the facts and circumstances of the case and in law, the Ld.CIT(A) is correct in deleting the addition of Rs. 80,00,000/ without fulfilling the obligation of the first 80,00,000/-
appellate authority to have ensured that effective enquiry was carried out as held by the Hon'ble Delhi High Court in the case of M/s. Jansampark Advertising & Marketing (P) Lt Ltd. in ITA 525/2014 delivered on 11.03. 2015
6. "The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the Assessing Officer be restored."
7. "The appellant craves leave to add, amend or alter all or any of the grounds of appeal"
2. Briefly stated, facts of the case are that the assessee filed return of income for the year under consideration on 31.08.2015 declaring total income of ₹43,70,070/- including long term capital gain on sale of the shares M/s PSIT Infra Ltd. amounting to ₹4,07,16,372/- which was claimed as exempt u/s 10(38) of the Income-tax tax Act, 1961 (in short 'the Act'). In the assessment completed u/s 143(3) of the Act dated 30.12.2017, the Assessing Officer rejected the claim of the assessee of "long long term capital c gain"
Amit Burakia 4 ITA No. 1590/M/2020 and assessed the income under the head "profit profit and grain of business or profession"
profession".
3. On further appeal, the Ld. CIT(A) reverse finding of the Ld. Assessing Officer and directed to assess the said amount under the head 'capital gain', subject subject to exemption u/s 10(38) of the Act.
4. Aggrieved, the Revenue is in appeal raising the grounds as reproduced above.
5. Before us, the Ld. Departmental Representative (DR) filed fi an application under Rule 29 (sic) for admitting statement of Shri Rajkumarr Kedia i.e. one of the employee working Shri Soumen Sen who was the Director with M/s PSIT Infra Ltd. For ready reference same is reproduced as under:
Kindly refer to the hearing in the above case fixed for today.
"Kindly
2. The issue involved in this case is assessee's claim of long term capital gain to 4,07,16,372/ being exempt u/s 10(38) of the IT Act. The scrip in which the tune of Rs. 4,07,16,372/-
the assessee claimed the LTCG is M/s PSIT Infra Ltd. The assessment was made after Amit Burakia 5 ITA No. 1590/M/2020 discussing in detail the price movement and the inherent strength of the scrip, the circumspect way of the transaction carried out by the assessee and reliance was placed on certain legal decisions.
3. During the course of assessment proceedings in another case, it was found that M/s PSIT Infra Ltd. was admitted to be a penny stock used for providing accommodation entry by the operators. It was specifically admitted by the main operator Shri Rajkumar Kedia and one of the employees working under him Shri Soumen Sen who was Director with M/S PSIT Infra Ltd. in the statement recorded us 131 of the IT Act during the course of survey action u/s 133A of the I T Act.
4. The above admission juxtaposed with the matching circumstances in the assessee's case and the scrip having been specifically identified as an instrument for providing accommodation entry, there is no two opinion about the fact that the assessee's claim is nothing but laundering of his unaccounted income masquerading an accommodation entry as a genuine LTCG transaction. Copies of the relev relevant statements and other relevant facts specifically of the scrip are bring enclosed herewith for ready reference.
5. In this background, the additional evidence may kindly be admitted and the same may please be considered."
considered.
5.1 It is the shares of this co company mpany which has been held by the Assessing Officer as penny stock and accordingly he has denied long term capital gain u/s 10(38) of the Act to the assessee. The Ld. DR submitted that the statement of Shri Rajkumar Kedia is having bearing on the issue issue-in-dispute ispute and therefore, same might be Amit Burakia 6 ITA No. 1590/M/2020 admitted as additional evidence and matter may be restored back to the Ld. Assessing Officer for deciding afresh. The Ld. Counsel of the assessee also did not object seriously for restoring the matter to the AO but requested examination of Shri Rajkumar Kedia sted that cross-examination might be provided if same is relied upon by the Assessing Officer.
6. We have heard rival submission of the parties on the issue-in-
issue dispute of admissibility of additional evidence. The statement by Shri Rajkumar ajkumar Kedia is in relation to the shares of PSIT Infra Ltd.
which the assessee has claimed to have sold during the year under consideration and shown long term capital gain on the same.
Therefore, in n the facts of the case,, the additional evidence is having havi bearing on the issue issue-in-dispute before us. Accordingly, we feel it appropriate to restore the issue to the file of the Ld. Assessing Officer for deciding afresh. If the Assessing Officer rely solely on the said statement then following the principles of natural justice, the assessee should be provided opportunity of cross-
cross-examination of Amit Burakia 7 ITA No. 1590/M/2020 the said witness of the Revenue. It is needless to mention that assessee shall be afforded adequate opportunity of being heard.
7. In the result, the appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced /10/2022.
nounced in the open Court in 14/10/2022.
Sd/- Sd/
Sd/-
(KULDIP
KULDIP SINGH)
SINGH (OM
OM PRAKASH KANT)
KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 14/10/2022
Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A)-
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
BY ORDER, //True Copy// (Sr. Private Secretary) ITAT, Mumbai