AJAY KUMAR,GHAZIABAD vs. DCIT, CIRCLE- 1, GHAZIABAD

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ITA 3275/DEL/2018Status: DisposedITAT Delhi24 November 2022AY 2014-155 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal found that the assessee failed to provide convincing explanations for the premium received on share sales and did not appear to contradict the departmental authorities' findings. Therefore, the Tribunal found no reason to interfere with the lower authorities' decision.

What were the facts?

The assessee claimed exemption for long-term capital gains on the sale of shares of a penny stock company. The Assessing Officer found the share transaction to be bogus, treating the gain as an unexplained cash credit. The CIT(A) upheld this addition.

What were the issues?

Whether the long-term capital gain from the sale of shares was genuine or an unexplained cash credit, and whether the assessee provided sufficient evidence to justify the transaction.

Which sections of the Income-tax Act were involved?

Section 68,Section 10(38),Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI

For Respondent: Shri Om Parkash, Sr. DR
Hearing: 29.08.2022Pronounced: 24.11.2022

ORDER This is an appeal by the assessee against the order dated 09.01.2018 of learned Commissioner of Income-Tax (Appeals), Ghaziabad pertaining to assessment year 2014-15.

2.

When the appeal was called for hearing, none appeared on behalf of the assessee to represent the case. Even, there is no application by the assessee seeking adjournment.

3.

Perusal of record reveals, though, multiple opportunities were given to the assessee earlier, however, on none of the occasions, the assessee did appear. It is further evident, notice of hearing repeatedly issued to the assessee have returned back unserved with the postal remarks ‘left’, though, notices were issued in the address provided in the appeal memo. These facts reveal complete lack of interest of assessee in pursuing the present appeal. Since, sufficient opportunities have been given to assessee, which he has failed to avail, I proceed to dispose of the appeal ex parte qua the assessee after hearing the learned Departmental Representative.

4.

Common issue raised in ground nos. 2, 3 & 4 relates to addition of Rs.28,28,061 under Section 68 of the Income-Tax Act,1961.

5.

Briefly, the facts relating to the disputed issue are, assessee is a resident individual deriving income from salary and other sources. For the assessment year under dispute, assessee had filed his return of income on 29.12.2015 declaring income of Rs.19,51,030.

6.

In course of assessment proceedings, the assessing officer noticed that in the year under consideration, assessee has derived income from long term capital gain on sale of shares of M/s.

Cressanda Solutions which was claimed as exempt under Section 10(38) of the Act. After calling for necessary details relating to share transaction and examining them, the assessing officer found that while assessee had purchased the shares at the face value of Rs.10 per each share on 02.08.2012, however, the shares were sold with huge premium and assessee received sale consideration of Rs.28,28,061 on sale of 56,000 equity shares having face value of Rs,10 per share. On further verification, he found that the company whose shares were sold by the assessee is penny stock company. Further, as observed by the assessing officer, the broker through whom the share transaction was undertaken, though, was called upon to furnish information under Section 133(6) of the Act, however, the notice came back un-served.

On further inquiry, the assessing officer found that the share price of the company was very low till early 2013 and suddenly spiked thereafter. Thus, in absence of any convincing explanation by the assessee, the assessing officer concluded that the share transaction is bogus and in the nature of accommodation entry to convert unaccounted money to explained money. Accordingly, he treated the long term capital gain of Rs.28,28,061 as unexplained cash credit under Section 68 of the Act and added back to the income of the assessee.

7.

Assessee contested the aforesaid addition before learned Commissioner (Appeals). However, learned Commissioner (Appeals) agreed with the decision of the assessing officer.

8.

I have heard learned Departmental Representative and perused the material on record.

9.

On carefully going through the respective orders of the departmental authorities, it is observed that assessee had sold shares of a particular company having face value of Rs.10 per share with a huge premium and claimed to have derived long term capital gain, which is exempt under Section 10(38) of the Act. However, in course of assessment proceedings, assessee did not furnish convincing reply to justify the premium received from sale of shares. Even, the inquiry conducted by the assessing officer with the stock broker did not bear any result as he did not respond the notice issued under Section 133(6) of the Act. It is also evident, both the assessing officer and learned Commissioner (Appeals) after making in depth analysis have concluded that the share transaction is non-genuine.

10.

Before me, the assessee has failed to appear and bring on record any evidence to contradict the findings of the departmental authorities.

11.

In view of the aforesaid, I do not find any reason to interfere with the decision of the departmental authorities. Grounds are dismissed.

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