THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 vs. PARASBEN KASTURCHAND KOCHAR

TAXAP/204/2020HC GujaratGJHC24038178202017 September 2020Author: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH,HONOURABLE MR. JUSTICE J.B.PARDIWALA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the proposed question of law was not a substantial question of law warranting an appeal under Section 260A of the Act. The Tribunal had recorded findings of fact that the assessee discharged their onus by furnishing all relevant details, including Demat account details and bank transactions for share purchases. The Tribunal also noted that some shares remained in the assessee's account. Crucially, the Tribunal found that the assessee was not provided with statements from the investigation wing and was denied an opportunity for cross-examination, which was relied upon in a coordinate bench decision in Mohan Polyfab Pvt. Ltd. Vs. ITO. Therefore, the Tribunal concluded that the assessee had discharged their onus and no addition could be sustained. The High Court agreed with the Tribunal's assessment of the facts and the assessee's discharge of onus, leading to the dismissal of the appeal.

What were the facts?

The Revenue has filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, dated February 20, 2020, for Assessment Year 2014-15. The appeal challenges the ITAT's deletion of an addition of Rs. 9,70,468/- made by the Assessing Officer (AO) on account of Long Term Capital Gains (LTCG) claimed as exempt under Section 10(38) of the Act. The Revenue contends that the transactions were pre-arranged, sham, and carried out through penny/paper companies. The assessee, Parasben Kasturchand Kochar, had claimed this LTCG as exempt.

What were the issues?

1. Whether the Appellate Tribunal was right in law and on facts in deleting the addition of Rs.9,70,468/- made on account of LTCG claimed as exempt u/s. 10(38) of the Act without appreciating that the transaction was pre-arranged, sham, and carried out through penny/paper companies? Assessee's Contentions (as inferred from the Tribunal's findings): - The assessee discharged their onus by placing all relevant details of the transactions. - Some of the shares remained in the assessee's account even after earning the LTCG. - The assessee was not provided with any statement from the Investigation Wing that referred to them. - The AO did not grant an opportunity to cross-examine the persons whose statements were the basis for the allegations of bogus LTCG. - The assessee furnished details of their Demat account with ICICI Securities Ltd. and bank transactions for share purchases. Revenue's Contentions: - The transaction was pre-arranged, sham, and carried out through penny/paper companies, making the claimed LTCG not genuine.

Which sections of the Income-tax Act were involved?

Section 260A,Section 10(38)

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Cause title — parties, addresses and appearances
C/TAXAP/204/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 204 of 2020 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 Versus PARASBEN KASTURCHAND KOCHAR ========================================================== Appearance: MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH and HONOURABLE MR. JUSTICE J.B.PARDIWALA Date : 17/09/2020

ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)

1.

This appeal under Section 260A of the Income Tax Act, 1961 (for short ‘the Act 1961”) is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench dated 20-2-2020 in the ITA No.549/Ahd/2018 for the A.Y. 2014-15. The Revenue has proposed the following question of law for the consideration of this Court:- “Whether the Appellate Tribunal was right in law and on facts in deleting the addition of Rs.9,70,468/- made on a

The order continues below.

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