Income Tax Appellate Tribunal - Delhi
Sanjay Gupta, Delhi vs Acit Circle- 59(1), New Delhi on 19 April, 2023
THE INCOME TAX APPELLATE TRIBUNAL
DELHIBENCH 'B', NEW DELHI
Before Smt Diva Singh, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
ITA No. 4916/Del/2019 : Asstt. Year: 2014-15
Sanjay Gupta, Vs. ACIT,
E-24, Preet Vihar, Circle-59(1),
New Delhi-110092 New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AAHPG3047Q
Assessee by : Sh. Rajat Jain, CA &
Sh. Akshat Jain, CA
Revenue by : Sh. Nitin Kumar Jaiman, Sr. DR
Date of Hearing: 11.04.2023 Date of Pronouncement: 19.04.2023
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT(A)-37, New Delhi dated 15.04.2019.
2. The assessee has raised the following grounds of appeal:
"1. On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the eyes of law and on facts.
2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not admitting the additional grounds raised by the assessee.
3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in passing the order without affording adequate opportunity of being heard to the assessee.2 ITA No. 4916/Del/2019
Sanjay Gupta
4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the order has been passed by the AO without communicating the reasons for initiating limited scrutiny.
5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the same having been made going beyond the scope of limited scrutiny, without complying the statutory procedure laid down in this regard.
6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 19,02,413/- for transactions in the scrip of Jolly Plastic in which scrip the appellant did not enter into any transaction at all during the previous year ended 31.03.2014.
7. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition made by the AO on account of amount received on sale of shares of Rs.19,02,413/- holding the same to be not genuine.
8. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the assessee had placed on record all evidences and material to prove the genuineness of the transaction.
9. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 19,02,413/- by indulging in surmises without bringing on record any direct evidence against the assessee, only on the basis of presumptions and assumptions.
10. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the transactions were done through proper banking channels and as per the rules and regulations of the Stock Exchange.3 ITA No. 4916/Del/2019
Sanjay Gupta
11. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition by misinterpreting the financials of the company whose shares were sold by the assessee.
12. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not appreciating the fact that the subject shares were allotted to the appellant in IPO and the sale of those shares was executed on the screen based platform of the Stock Exchange through a Stock Broker registered with SEBI after holding the shares for more than twelve months from the date of acquisition.
13. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not holding that the long term capital gain on sale of shares is exempt from tax u/s 10(38) of the Income Tax Act.
14. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in making addition of Rs. 1,50,000/- being cost of the shares acquired in the IPO and paid by the appellant in an earlier assessment year by account payee cheque out of appellant's tax paid income through banking channels.
15. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 19,02,413/- despite the fact that the addition has been made by the AO relying on the report of the investigation wing without any application of his own mind.
16. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition made by the AO despite the same having been made on the basis of extraneous and irrelevant material collected at the back of the assessee / appellant without giving him an opportunity to rebut the same.
17. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition made by the AO despite the same having been made on the basis of statement of outside 4 ITA No. 4916/Del/2019 Sanjay Gupta parties recorded without giving the assessee / appellant an opportunity to cross examine."
3. The assessee is an individual engaged in the business of share trading under the name and style of M/s Nirmal Commodities. The assessee filed return of income on 30.07.2014 declaring income at Rs.2,78,23,780/-.
4. At the outset, the ld. AR raised the ground no. 5 pertaining to the jurisdiction of the AO going beyond the scope of limited scrutiny. The ld. DR could not submit any evidence regarding the permission of ld. PCIT has been taken to convert the limited scrutiny case to complete scrutiny as per the directions of the CBDT. The said directions of CBDT are as under:
Instruction No. 20/2015Government o f India Ministry o f F inance Department o f Re venue Central Bo ard o f Direct Taxes North Block, New Delhi, the as" of December, 2015 Subject: Scrutiny Assessments-some important issues and scope of scrutiny in cases selected through Computer A ide d Scrutiny Se lection ('CASS ')-reg.-
The Central Board of Direct Taxe s ('CBDT), vide Instruction No. 7/2014 dated 26.09.2014 had clarified the e xte nt of enquiry in certain catego ry of cases specified therein, which are selecte d for scrutiny through CASS. Further clarificatio ns have been sought regarding the sco pe and applicability of the aforesaid Instruction to cases being scrutinize d.5 ITA No. 4916/Del/2019
Sanjay Gupta
2. In o rde r to facilitate the co nduct of scrutiny assessments and to bring furthe r clarity on some of the issues eme rging from the aforesaid I nstruction, fo llowing clarifications are being made:
i. Year of applicability: As stated in the Instructio n No. 7/2014, the said I nstruction is applicable only in respect of the cases selected fo r scrutiny through CASS-2014.
ii. Whethe r the said Instruction is applicable to all cases selected under CASS: The said I nstruction is applicable where the case is selected fo r scrutiny under CASS only on the paramete r(s) of AIR/CIB/26AS data. I f a case has been selected under CASS for any o the r reaso n(s)/param eter(s) besides the AIR/ CIB/26AS data, then the said Instruction would not apply.
iii. Scope of Enquiry: Specific issue based e nquiry is to be conducted only in those scrutiny cases which have been selected on the parameter(s) o f AIR/ CIB/26AS data. I n such cases, the Assessing Officer, shall also confine the Questionnaire only to the specific issues pertaining to AIR/CIB/26AS data. Wider scrutiny in these cases can only be conducte d as per the guide lines and proce dures stated in Instruction No. 7/ 2014.
iv. Reason fo r selection: In cases unde r scrutiny fo r verification of AIR/CIB/26AS data, the Assessing Officer has to intimate the reason fo r selection o f case for scrutiny to the assessee concerne d.
3. As far as the returns selected for scrutiny through CASS-2015 are conce rned, two type o f cases have bee n selected for scrutiny in the curre nt Financial Year- one is ' Limite d Scrutiny' and othe r is 'Complete Scrutiny'. The assessee' s concerned have duly been 6 ITA No. 4916/Del/2019 Sanjay Gupta intimate d about their cases falling eithe r in 'Limite d Scrutiny' or 'Complete S crutiny' through notices issue d unde r section 143( 2) of the Income-tax Act, 1961 ('Act') . The proce dure for handling 'Limite d Scrutiny' cases shall be as unde r:
a. In 'Limited Scrutiny' cases, the reaso ns/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142(1) of the Act in 'Limited Scrutiny' cases shall remain confined only to the specific reasons/ issues for which case has been picke d up for scrutiny. Further, the sco pe of enquiry shall be restricte d to the 'Limite d Scrutiny' issues.
c. These cases shall be completed e xpeditiously in a limite d number of hearings.
d. During the course of assessment proceedings in 'Limited Scrutiny' cases, if it comes to the notice of the Assessing Office r that there is pote ntial escape ment of income exceeding Rs. five lakhs ( for metro charges, the monetary limit shall be Rs. ten lakhs) re quiring substantial verificatio n on any othe r issue(s) , then, the case may be taken up fo r 'Complete Scrutiny' with the approval o f the Pr. CIT/CIT co ncerne d. However, such an approval shall be accorde d by the by the Pr. CIT/CIT in writing after be ing satisfie d abo ut merits of the issue(s) necessitating 'Comple te Scrutiny' in that particular case. Such cases shall be monito red by the Range Head concerne d. The procedure indicate d at points (a) , (b) and (c) above shall no lo nger remain binding in such cases. (For the present purpo se, ' Metro charges' wo uld mean De lhi, Mumbai, Chennai, Ko lkata, Bengaluru, Hyde rabad and Ahmadabad).
4. The Board further desires that in all cases under scrutiny, where the Assessing Office r pro po ses to make additions o r disallo wances, the assessee wo uld be give n a fair opportunity 7 ITA No. 4916/Del/2019 Sanjay Gupta to explain his position on the pro posed additions/ disallowances in accordance with the principle of natural justice . In this regard, the Assessing Officer shall issue an appro priate show-cause notice ' duly indicating the reasons for the proposed additions/disallo wances alo ng with necessary e vidences/reasons fo rming the basis of the same.
Before passing the final o rde r against the propose d additions/ disallowances, due consideration shall be give n to the submissions made by the assessee in response to the show-cause notice.
5. The contents of this Instructio n should be immediately brought to the notice o f all co ncerne d for strict compliance.
6. Hindi version to fo llow.
Sd/-
(Ankita Pandey) Unde r Secretary to the Go vernment of India (F.No. 225/269/ 2015-ITA .II)
5. Since, the AO failed to adhere to the instructions given by the CBDT, the appeal of the assessee deserves to be allowed on this ground alone.
6. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 19/04/2023.
Sd/- Sd/-
(Diva Singh) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 19/04/2023
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR