GAYATHRI DEVI vs. INCOME TAX OFFICER

T.C.A.No.463 of 2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 18.12.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.463 of 2020

Gayathri Devi .. Appellant Versus Income Tax Officer, Non-Corporate Ward 9(3) Chennai .. Respondent Prayer:- Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai, dated 07.12.2018 made in I.T.A.No.2175/Mds/2018 relating to the Assessment Year 2014-2015. For Appellant : Mr.S.P.Chidambaram for M/s Pass Associates For Respondent : Mrs.R.Hemalatha Senior Standing Counsel 1/9 https://www.mhc.tn.gov.in/judis/ T.C.A.No.463 of 2020 J U D G M E N T [Judgment of the Court was made by

T.S.SIVAGNANAM

, J.]

This appeal has been filed by the assessee under Section 260 A of the Income Tax Act, 1961 ('the Act' for brevity), challenging the order dated 07.12.2018 passed by the Income Tax Appellate Tribunal, Chennai, 'C' Bench ('the Tribunal' for brevity) in I.T.A.No.2175/Mds/2018 for the Assessment Year 2014-2015. 2. The following Substantial Questions of Law were raised for consideration: "1. Whether the Income Tax Appellate Tribunal is right in law in disallowing the claim of the appellant under Section 10(38) of the Income Tax act when neither the AO or the CIT(A) anywhere in its order has pointed out or discussed non fulfilment or non-compliance of any conditions under 10(38) of the Income tax Act to disallow the appellant claim? 2.Whether the Income Tax Appellate is right in law in treating the transaction of purchase and sale of shares are bogus in nature when the shares were allotted by the company after obtaining merger order from the Hon'ble High in May 2013 and after obtaining prior approval of BSE as per SEBI issue of capital and disclosure Requirements Regulation, 2009? 2/9 https://www.mhc.tn.gov.in/judis/ T.C.A.No.463 of 2020 3. Whether the Income tax Appellate Tribunal being the final fact finding authority is right in law in confirming the order of the lower authorities which was primarily based on modus operandi, generalisation, preponderance of human possibilities without bringing in specific evidenes to controvert the validity and correctness of the documentary evidences produced by the appellant to substantiate the transaction? 4. Whether the Income Tax Appellate Tribunal is right in law in sustaining the disallowance of claim made by the revenue authorities under Section 10(38) on the basis of suspicion, surmise and conjectures when it is a settled law that suspicion however strong cannot take the place of evidence? 5. Whether the Income tax Appellate tribunal being the final fact finding authority is right in law in confirming the order of the lower authorities even when the revenue authorities failed to discharge its onus by proving that the transaction is bogus by adducing legal evidences which would directly prove the fact of bogusness of a transaction? 6. Whether the Income Tax Appellate Tribunal is right in law in treating the transaction of purchase and sale of shares are bogus in nature when the appellat has provided documentary evidences to prove that the appellant received sale proceeds of shares directly from her broker M/s Anush Shares and Securities Pvt., Ltd., by credit to his Indian Overseas Bank a/c. as on date of 3/9 https://www.mhc.tn.gov.in/judis/ T.C.A.No.463 of 2020 settlement and that the sale transaction of shares are covered by contract note evidencing that the transactions have suffered expenses like brokerage, service tax, STT, stamp duty, exchange and SEBI turnover charges etc., which are specifically shown in the contract note issued by the Broker? 7. Whether the Income Tax Appellate Tribunal is right in law in disallowing the claim of the appellant under Section 10(38) on the basis of the report of the investigation wing prepared with respect to bogus capital gains and where there is no finding that the appellant by the revenue authorities that the appellant has been investigated or that the appellant has been a part of any arrangement for purpose of generating bogus long term capital gain to disallow the claim of appellant the appellant under section 10(38) of IT Act? 8. Whether the Income tax appellate Tribunal is right in law in disallowing the claim of the appellant under Section 10(38) of the Income Ta Act when there is no specific finding against the appellant in the investigation wing report? 9. Whether the Income Tax Appellate Tribunal is right in law in sustaining the addition made by the assessing officer under section 68 despite the fact that the appellant had satisfied all the ingredients of Section 68 such as identigy of the party, genuiness of the transaction and credit worthiness of the transaction." 4/9 https://www.mhc.tn.gov.in/judis/ T.C.A.No.463 of 2020 2. We have heard Mr.S.P.Chidambaram, learned counsel for M/s Pass Associates, learned counsel for the appellant/assessee and Mrs.R.Hemalatha, learned Senior Standing counsel for the respondent/Revenue. 3. The learned counsel for the appellant / assessee, on instructions, submitted that the appellant / assessee intends to avail the benefit of Vivad Se Vishwas Scheme ('VVS Scheme' for brevity) and in this regard, the assessee is taking steps to file the application / declaration in Form No.I. 4. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. 5. In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different 5/9 https://www.mhc.tn.gov.in/judis/ T.C.A.No.463 of 2020 levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India. Under Section 2(j) “disputed tax” has been defined. In terms of Section 3, where a declarant means a person, who files a declaration under Section 4 on or before the last date files a declaration to the designated authority in accordance with the provisions of Section 4 in respect of tax arrears, then, notwithstanding anything contained in the Income Tax Act or any other law for the time being in force, the amount payable by the declarant shall be determined in terms of Section 3(a-c) thereunder. 6. The First Proviso to Section 3 states that in case, where an Appeal or Writ Petition or Special Leave Petition is filed by the Income Tax authority on any issue before the Appellate Forum, the amount payable shall be one-half of the amount in the table stipulated in Section 3 calculated on such issue, in such a manner as may be prescribed. The second proviso deals with the cases, where the matter is before the Commissioner (Appeals) or before the Dispute Resolution Panel. The third proviso deals with cases, where the issue is pending before the Income Tax Appellate Tribunal. The filing of the declaration is as per Section 4 of the Act and the particulars to be furnished are also mentioned in the Sub Sections of Section 4. Section 5 of the Act deals with the time and manner 6/9 https://www.mhc.tn.gov.in/judis/ T.C.A.No.463 of 2020 of the payment and Section 6 deals with Immunity from initiation of proceedings in respect of offence and imposition of penalty in certain cases. Section 9 of the Act deals with cases, where the Act 3 of 2020 will not be applicable. 7. As observed, the assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. 8. In the light of the above, We direct the appellant / assessee to file the Form No.I and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form. 7/9 https://www.mhc.tn.gov.in/judis/ T.C.A.No.463 of 2020 9. With this direction, the Tax Case Appeal stands disposed of with the aforementioned liberty and Consequently, the Substantial Questions of Law are left open. No costs. (T.S.S.,J) (V.B.S.,J) 18.12.2020 Index: Yes / No; Internet: Yes / No Speaking Order/Non-Speaking Order 8/9 https://www.mhc.tn.gov.in/judis/ T.C.A.No.463 of 2020 T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN, J. ssd To The Income Tax Appellate Tribunal, 'C' Bench, Chennai. T.C.A.No.463 of 2020 18.12.2020 9/9 https://www.mhc.tn.gov.in/judis/