The Chief Commissioner Of Income Tax (Osd) 1 vs. Shri Jayesh Kumar Javia Huf

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ITA/108/2021HC Madhya Pradesh16 May 2024Bench: HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI2 pages
For Petitioner: Veena Mandlik
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the revenue. The Court noted that this issue had come up for consideration in a bunch of appeals, with the main case being ITA No.56 of 2021. The High Court had previously dismissed the revenue's appeals in that batch of cases via a common order dated 30.04.2024. Therefore, in view of the aforesaid, the present appeal was also dismissed, and the order passed in ITA No.56 of 2021 was made applicable mutatis mutandis to the facts and circumstances of the present case. The specific reasoning of the order dated 30.04.2024 is not detailed in this judgment, but it led to the dismissal of the revenue's appeals on similar grounds. No issue was expressly left undecided.

What were the facts?

The appeal is filed by the Chief Commissioner of Income Tax (OSD) against an order dated 25.05.2021 passed by the Income Tax Appellate Tribunal (ITAT), Bench Indore. The ITAT's order, in ITA No.465/Ind/2019 for Assessment Year 2014-15, deleted an addition of Rs.14,09,939/- made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The addition pertained to long-term capital gains claimed as exempt under Section 10(38) of the Income Tax Act, 1961, based on the sale of shares in Kappac Pharma Ltd., which the Investigation Wing, Kolkata, identified as a bogus penny stock company.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the ITAT was justified in deleting the addition of Rs.14,09,939/- made by the AO, which was confirmed by the CIT(A), ignoring the findings of the Investigation Wing, Kolkata, that Kappac Pharma Ltd. was clearly established as a bogus penny stock script company used for claiming bogus Long Term Capital Gain as exempt Under Section 10(38) of the Income Tax Act, 1961? Assessee's Contention: The judgment does not record any specific arguments made by the assessee (Shri Jayesh Kumar Javia HUF) before the High Court. However, the ITAT's deletion of the addition implies that the assessee likely argued that the long-term capital gains were genuine and that the shares were not penny stocks or that the findings of the Investigation Wing were not applicable or properly considered. Revenue's Contention: The revenue, represented by the Chief Commissioner of Income Tax (OSD), argued that the ITAT was not justified in deleting the addition. They contended that Kappac Pharma Ltd. was a bogus penny stock company, and the long-term capital gains claimed as exempt under Section 10(38) were therefore bogus.

Which sections of the Income-tax Act were involved?

Section 260A,Section 10(38)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF MADHYA PRADESH AT INDORE BEFORE HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI & HON'BLE SHRI JUSTICE GAJENDRA SINGH ON THE 16th OF MAY, 2024 INCOME TAX APPEAL No. 108 of 2021 BETWEEN:- THE CHIEF COMMISSIONER OF INCOME TAX (OSD) 1 THE CHIEF COMMISSIONER OF INCOME TAX (OSD) 1 AAYKAR BHAWAN, CGO COMPLEX, OPP. WHITE CHURCH (MADHYA PRADESH) .....PETITIONER (BY MS. VEENA MANDLIK, ADVOCATE) AND SHRI JAYESH KUMAR JAVIA HUF 40, ASHOK NAGAR, BEHIND ICICI BANK (MADHYA PRADESH) .....RESPONDENTS (BY SHRI ADITYA GOYAL, ADVOCATE) This appeal coming on for admission this day, Justice Sushrut Arvind Dharmadhikari passed the following: ORDER This appeal is filed by the appellant under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961') being aggrieved by the order dated 25.05.2021 passed by the Income Tax Appellate Tribunal (ITAT), Bench Indore in ITA No.465/Ind/2019 for the Assessment Year - 2014 - 15 proposing following substantial question of law in this appeal:- Whether on the facts and in the circumstances of the case and in law the ITAT was justified in deleting the addition of Rs.14,09,939/- made by AO, which was confirmed by CIT(A), ignoring the findings of 1 Signed by: RAVI PRAKASH Signing time: 16-05-2024 18:38:47 Signature Not Verified (S. A. DHARMADHIKARI) JUDGE (GAJENDRA SINGH) JUDGE Investigation Wing, Kolkata that Kappac Pharma Ltd was clearly established as a bogus penny stock script company which was used for claiming bogus Long Term Capital Gain as exempt Under Section 10(38) of the Income Tax Act, 1961 ? 02. This issue came up for consideration in bunch of appeals, main case is ITA No.56 of 2021 and this Court has dismissed the appeals filed by the revenue vide common order dated 30.04.2024. 03. In view of the aforesaid, the present appeal is dismissed and the order dated 30.04.2024 passed in ITA No.56 of 2021 shall be applicable mutatis mutandis in the facts and circumstances of the present case also. Ravi

2 Signed by: RAVI PRAKASH Signing time: 16-05-2024 18:38:47 Signature Not Verified

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