SHRI BHIM SAI JAIN ,BALLABGARH FARIDABAD vs. ITO,WARD 1(1)FARIDABAD , HARYANA FARIDABAD
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘SMC’ NEW DELHI
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No.1640/Del/2021 Assessment Year: 2014-15 Shri Bhim Sain Jain, Vs. ITO, Ward-1(1), Prop. Of M/s. Gomti Food Ballabgarh, Products, Ballabgarh, (Haryana) PIN:121004
PAN :ABUPJ6954B (Appellant) (Respondent)
Appellant by Shri Vijay K. Gupta, Adv. Respondent by Shri Om Parkash, Sr. DR
Date of hearing 19.07.2022 Date of pronouncement 14.10.2022
ORDER This is an appeal by the assessee against order dated 30.09.2021
passed by National Faceless Appeals Centre (NFAC), Delhi for the
assessment year 2014-15.
The dispute in the present appeal is confined to addition of an
amount of Rs.23,70,761 as unexplained cash credit under Section 68
of the Income-Tax Act,1961.
2 ITA No.1640/Del./2021
Briefly, the facts are, the assessee is a resident individual. For
the assessment year under dispute, assessee had filed his return of
income on 29.09.2014 declaring income of Rs.17,85,350. In the return
of income so filed, the assessee had offered long term capital gain of
Rs.23,25,961 from sale of shares of M/s. Pawansut Holdings Ltd. At
the same time, he claimed such income to be exempt under Section
10(38) of the Act.
In course of assessment proceedings, the assessing officer called
upon the assessee to furnish the details relating to sale of shares of
Pawansut Holdings Ltd. After verifying the material available on
record, the assessing officer ultimately concluded that the so called
share transaction relating to sale of shares of Pawansut Holdings Ltd.
is a sham transaction aimed only to bring unaccounted money in the
guise of exempted long term capital gain. Accordingly, he added back
the amount of Rs.23,70,761 to the income of the assessee as
unexplained cash credit under Section 68 of the Act. The addition so
made was upheld by learned Commissioner (Appeals).
Against the order of first appellate authority, the assessee
preferred an appeal before the Tribunal. While deciding the appeal,
3 ITA No.1640/Del./2021
the Tribunal restored the issue to the file of the assessing officer to
decide assessee’s claim of long term capital gain after verifying the
period of holding of shares by the assessee. While giving effect to the
order of the Tribunal, the assessing officer repeated the addition made
earlier by alleging that the assessee did not furnish audited balance
sheet to establish the period of holding of shares. The addition was
sustained by Commissioner (Appeals), as well.
I have considered rival submissions and perused the material
available on record.
As could be seen, while deciding assessee’ appeal contesting the
addition of long term capital gain as unexplained cash credit under
Section 68 of the Act, the Tribunal in ITA No.5576/Del/2018 dated
11.01.2019 restored the issue to the assessing officer with following
observations:
“11.1 It is an admitted fact that the 12700 shares of M/s Pawansut Holdings Ltd. were sold on 10th March, 2014 for a total consideration of Rs.23,74,138/-. The shares were sold through recognized stock exchange and STT has been paid. The amount has been received by cheque. It is also an admitted fact that the shares were dematerialized prior to its sale. Thus, the sale of shares is not in dispute and, therefore, the amount cannot be added u/s 68 of the IT Act. However, the question that arises in the instant case is regarding the date of purchase of the
4 ITA No.1640/Del./2021
shares. It is the allegation of the Assessing Officer that the shares were purchased off market and the payment has been made in cash. Although the assessee has filed a voluminous paper book, however, the balance sheet or statement of affairs for the year ending 31st March, 2013 has not been filed. Therefore, it is not discernible from the records as to whether the assessee has shown such purchase of shares in the balance sheet or statement of affairs as on 31.03.2012. If the assessee has shown the shares in the balance sheet or statement of affairs as on 31st March, 2013, then, it can be safely presumed that the shares were purchased in financial year 2012-13. Since the shares were sold on 10th March, 2014, therefore, the shares can be held to be for a period of more than 12 months and accordingly exemption u/s 10(38) of the IT Act can be allowed to the assessee. Since the balance sheet or statement of affairs for the year ending 31st March, 2013 is not available in the paper book, therefore, considering the totality of the facts ITA No.5576/Del/2018 of the case and in the interest of justice, I deem it proper to restore the matter to the file of the Assessing Officer for the limited purpose of verifying the balance sheet or statement of affairs of the assessee as on 31st March, 2013 to find out if the shares are appearing in the balance sheet or statement of affairs of the assessee as on 31st March, 2013 to allow the claim of the long-term capital gain u/s 10(38) of the IT Act. In absence of the same he can also ask the assessee to prove to his satisfaction by any other evidence that the shares were in fact purchased during F.Y. 2012-13. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.”
A reading of the aforesaid observations of the Tribunal would
clearly reveal that, in so far as, the issue whether the long term capital
5 ITA No.1640/Del./2021
gain can be added under Section 68 of the Act, the Tribunal has given
a categorical finding that the long term capital gain offered by the
assessee cannot be added under Section 68 of the Act. The only aspect
which the Tribunal directed the assessing officer to verify is, whether
the gain derived by the assessee from sale of shares qualifies as long
term capital gain. For this purpose, the Tribunal had directed the
assessing officer to verify the balance sheet of the assessee or
statement of affairs of the assessee as on 31.03.2013. The aforesaid
being the specific direction of the Tribunal, the departmental
authorities cannot again make the addition under Section 68 of the
Act.
As regards the issue, whether the gain derived from sale of
shares can be treated as long term capital gain, it is observed, before
the assessing officer, the assessee had furnished personal balance
sheet to demonstrate that the shares were held as on 31.03.2013.
However, the assessing officer has disbelieved the claim of the
assessee on the ground that the balance sheet is not audited. This, in
my view, is unacceptable. While restoring the issue, the Tribunal has
clearly directed that the assessee can prove the period of holding of
6 ITA No.1640/Del./2021
shares by furnishing either balance sheet or statement of affairs.
Nowhere, the Tribunal has directed the assessee to furnish any audited
balance sheet. Therefore, the assessing officer could not have insisted
upon an audited balance sheet to accept assessee’s claim.
In view of the aforesaid, I delete the addition made by the
assessing officer.
In the result, the appeal is allowed.
Order pronounced in the open court on 14th October, 2022. Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Dated: 14th October, 2022. Mohan Lal Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
