POONAM RANI SINGH,NEW DELHI vs. ITO, NEW DELHI

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ITA 381/DEL/2016Status: DisposedITAT Delhi25 October 2021AY 2003-046 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the AO's enquiry was based on wrong facts, as the purchase of shares had been decided in a prior AY. The Tribunal also noted that the assessee had not claimed exemption under Section 10(38) but paid tax on LTCG. Furthermore, the AO failed to provide an opportunity to be heard on other additions.

What were the facts?

The assessee appealed a CIT(A) order concerning AY 2003-04, challenging additions made by the AO regarding LTCG on shares and disallowance of interest. The AO had treated the entire sale consideration of shares as income from undisclosed sources, alleging bogus transactions.

What were the issues?

Whether the AO's rejection of LTCG on shares was based on correct facts, and whether the assessee was provided adequate opportunity to be heard on all additions.

Which sections of the Income-tax Act were involved?

Section 68,Section 10(38)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI

Before: SHRI R.K. PANDA & SHRI KULDIP SINGH

For Appellant: Shri P.C. Yadav, Advocate
For Respondent: Shri Parikshit Singh, Senior DR
Hearing: 25.10.2021

ASSESSEE BY : Shri P.C. Yadav, Advocate REVENUE BY : Shri Parikshit Singh, Senior DR Date of Hearing : 25.10.2021 Date of Order : 25.10.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : Assessee by filing application for condonation of delay sought to condone the delay of 600 days in filing the appeal on the ground that assessee being not conversant in the tax matter was under bonafide belief that complete relief has been granted by the lower Revenue authorities and when confronted by the Recovery Officer with demand she came to know that her appeal was partly allowed. Keeping in view the bonafide of the assessee as no adverse facts to the contention of the assessee has come on record, we find “sufficient cause” for not filing the appeal within limitation, hence delay of 600 days is condoned and appeal is being accordingly heard on merit.

2.

Appellant, Ms. Poonam Rani Singh (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 03.12.2013 passed by the Commissioner of Income-tax (Appeals)-XVII, New Delhi qua the assessment year 2003-04 on the grounds inter alia that :-

“1. The order of CIT (A) is bad in law and on facts.

2. On the facts and under circumstances of the case, the ld. CIT (A) has erred in confirming the order of the AO wherein the AO has enhanced the income of assessee from Rs.57,87,990/- to Rs.72,66,525/- without any basis.

3.

The Ld CIT (A) has erred in confirming the addition of Rs.30,17,661/- made by the AO under section 68, the CIT(A) has grossly erred in discarding the claim of the assessee vis-a- vis long term capital gain on the sale of shares of listed company.

4. The Ld CIT(A), while affirming the addition of Rs.30,17,661/- has further erred in observing that there are contradictions in the submissions of the assessee vis-a-vis this addition.

5. The Ld CIT(A) has erred in not appreciating that purchase price of the shares in respect of the issue of capital gain has been accepted by the department.

6. The Ld CIT(A) has erred in law and on facts in sustaining the addition of Rs.9,54,500, CIT(A) has completely

ignored the submissions and relevant documents in this regard. 7. The Ld CIT(A) has erred in confirming the disallowance of Rs.1,50,000/- on account of interest paid to ICICI Bank, in respect of home loan.” 3. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee has filed return declaring total income of Rs.57,87,900/- having income from salary, income from house property and income from other sources. AO noticed that assessee has declared Long Term Capital Gain (LTCG) of Rs.28,88,791.50 on sale of 31,800 shares of Suma Finance Limited for a sum of Rs.30,17,661/- having been purchased on 02.04.2001 from M/s. S.J. Capital Limited. AO after calling information u/s 133(6) of the Income-tax Act, 1961 (for short ‘the Act’) from the share broker, M/s. Diwaker Securities Limited thrashed the facts at length and proceeded to conclude that assessee in collusion with broker entered into a bogus transaction in order to reduce the incidence of tax which she otherwise would have to pay and also relied upon the report in ‘The Economic Times’ that, “there are people who are generating long term capital gains by fabricating the documents and showing the rate of the defunct or ordinary companies having no worth at fabricated prices.” The assessee has conveniently adopted this system and earned the bogus LTCG.

Consequently, AO rejected the plea of earning LTCG by the assessee and treated the entire sale consideration of Rs.30,17,661/- as assessee’s income from undisclosed sources.

4.

AO also made disallowance of Rs.1,50,000/- on account of interest paid to ICICI Bank in respect of home loan and thereby framed the assessment on a total income of Rs.72,66,525/-.

5.

Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has partly allowed the appeal. Feeling aggrieved by the order passed by the ld. CIT (A), the assessee has come up before the Tribunal by way of filing the present appeal.

6.

We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.

7.

Ld. AR for the assessee challenging the impugned order contended inter alia that AO has conducted the entire enquiry in this case on the basis of wrong date of purchase of shares i.e. 15.04.2002 whereas assessee has purchased the shares on 02.04.2001 from Magadh Stock Exchange (MSE) and accordingly shown the purchase in the investment schedule of balance sheet on 2002-03 and for the said year, assessment was framed u/s 143(3) of the Act; that in the impugned year, LTCG was not exempt rather same was taxable at 15% and accordingly assessee has not claimed any exemption u/s 10(38) of the Act; that AO has overlooked the fact that the issue as to the purchase of shares has already been exempted u/s 143(3) of the Act in AY 2002-03; that ld. CIT (A) has decided the issue by calling the remand report from the AO who has reiterated the assessment already framed by him; that the AO has not called upon the assessee to explain as to the second issue of Rs.9,54,500/- being the stamp paper duty paid by the assessee for purchase of the property; that so far as third issue is concerned, assessee claimed deduction to the tune of Rs.3,55,170/- . but ld. CIT (A) has allowed deduction to the tune of Rs.1,50,000/- whereas the entire deduction being capital loss to the assessee was allowable.

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