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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee challenging the impugned order dated 30/04/2022, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2014–15.
In its appeal, the assessee has raised the following grounds:
“1. The National Faceless Appeal Centre, hereinafter referred to as "NFAC" has erred in deciding the appeal of the appellant ex-parte on 30th
Kundanlal Keshrimalji Dhakad ITA No.1692/Mum./2022 April, 2022 ignoring the fact that the adjournment request of the appellant dated 25th April, 2022 requesting for adjournment till 10th May, 2022 was already on records and the same was pending as on the date of deciding the appeal.
2. Without any prejudice to Ground 1 above, the NFAC has erred in confirming the addition of Rs.90,95,589/- as made by the assessing officer by treating the sale proceeds of shares as bogus and assessing the same as Income from other Sources and thereby denying the exemption u/s. 10(38) in relation to the long term capital gains on sale of the shares.
The appellant respectfully submits that the impugned addition is based only on conjectures, surmises and suspicions and the same is in complete disregard of the documentary evidences available on records. In view of this, the appellant submits that the said addition is not justified.
Without prejudice to Ground 1 above, the NFAC has erred in confirming the order of the assessing officer by which the assessing officer had not allowed the deduction of Rs.1,15,000/- as cost of the shares sold and has taxed the amount of sale consideration as the Income from other Sources.
The brief facts of the case as emanating from the record, are: The 3. assessee is an individual and is a wholseller of silver articles. For the year under consideration, the assessee filed its return of income on 24/11/2014, declaring a total income of Rs.7,24,000. The return of income filed by the assessee was selected for scrutiny under CASS based on inputs from Investigation Wing regarding suspicious long-term capital gain on shares. During the course of assessment proceedings, on verification of ITD information related to trade in penny stock, it was noticed that the assessee is a beneficiary of accommodation entries of long-term capital gain in respect of scrips of SRK Industries as per the report of Directorate of Investigation, Kolkata. As per the aforesaid information, the assessee has sold 51,050 shares of SRK Industries for a total consideration of Rs.90,95,589. In order to verify the correctness of the transaction, a summons under section 131 was issued Page | 2
Kundanlal Keshrimalji Dhakad ITA No.1692/Mum./2022 to the assessee. In his statement, the assessee surrendered the long-term capital gain claimed in respect of the scrips of SRK Industries and stated that as per the provisions of IDS scheme, he could not declare the income arising from capital gain, therefore, he opted to offer the same for taxation during the assessment proceedings as regular income. The assessee also paid the tax of Rs.27,78,000. In view of the above, the Assessing Officer, vide order dated 08/12/2016, passed under section 143(3) of the Act treated the capital gain received on accommodation entry in respect of penny stock of Rs.90,95,589, as income from other sources.
4. In appeal before the learned CIT(A), despite various notices being issued, no reply/submission was filed on behalf of the assessee. Accordingly, vide impugned ex–parte order dated 30/04/2022, the learned CIT(A) dismissed the appeal filed by the assessee by upholding the addition made by the Assessing Officer in the absence of any contradictory material being available on record. Being aggrieved, the assessee is in appeal before us.
During the hearing, the learned Authorised Representative for the assessee (“learned A.R.”) submitted that the transaction of sale of shares by the assessee was a genuine transaction and, therefore, the addition as made by the Assessing Officer be deleted.
On the other hand, the learned Departmental Representative (“learned D.R”) submitted that the assessee voluntarily surrendered the long-term capital gain arising from the sale of scrips of SRK Industries and also paid the tax thereon. Page | 3
Kundanlal Keshrimalji Dhakad ITA No.1692/Mum./2022
We have considered the rival submissions and perused the material available on record. It is evident that the learned CIT(A) has passed the order ex-parte due to the non-appearance of/on behalf of the assessee. Further, now in appeal before us, the assessee is duly represented by the learned A.R. and wishes to pursue the litigation against the addition made by the Assessing Officer. In view of the above, we are of the considered opinion that in the larger interest of justice, the assessee be hereby granted one more opportunity to represent its case on merits before the learned CIT(A). Consequently, we deem it fit and proper to restore the matter to the file of the learned CIT(A) for de novo adjudication of the appeal on merits after consideration of all the details/submissions as may be filed by the assessee. Needless to mention that no order shall be passed without affording reasonable opportunity of hearing to the parties. As the matter is being restored to the file of the learned CIT(A) for adjudication on merits, the other grievances raised by the assessee on merits do not call for adjudication at this stage. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 01/12/2022