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Facts
The assessee claimed exempt income under section 10(38) from sale of shares, but the AO initiated proceedings under section 148, believing income escaped assessment. The assessee contended they incurred a loss on share sales, not a gain, and that specific amounts were not credited in their books.
Held
The Tribunal held that the delay in filing the appeal was condoned after considering the assessee's affidavit and the principle of substantial justice. The Tribunal further found that the AO's additions were not sustainable as the assessee had incurred a loss, not a gain, and the amounts were not credited in their books.
Key Issues
Whether the AO was justified in making additions when the assessee claimed a loss on share transactions, and if Section 68 or 69A of the Income Tax Act are applicable in such circumstances.
Sections Cited
250, 10(38), 148, 68, 69A
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Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAINSmt Vimladevi Parasmal
Assessee by Shri Vimal Punmiya Revenue by Shri Sunny Kachhwaha – Sr. DR Date of Hearing 21.01.2025 Date of Pronouncement 28.01.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the assessee challenging the impugned order 06.02.2024, passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (‘Ld. CIT(A)’) for the assessment year 2014-15. 2 Smt. Vimladevi Parasmal Jain, Mumbai
There is a delay in filing the appeal, and in this regard, the assessee has requested for the condonation of delay and the reasons given are supported by an affidavit.
After having heard the counsels for both the parties and going through the contents of the application for seeking condonation of delay and also taking into consideration the principles as laid down by Hon’ble Supreme Court in the case of Land Acquisition Collector Vs. Mst. Katiji & Ors., [1987] AIR 1353 (SC) wherein it has been held that where substantial justice is pitted against technicalities of non deliberate delay, then in that eventuality the cause of substantial justice is to be preferred.
Thus, considering these principles and also taking into account that the application for seeking condonation of delay is supported by an affidavit. Whereas, on the contrary no affidavit has been filed by the department to rebut or controvert the facts, contained in the affidavit filed by the assessee. Therefore the contention of the affidavit filed by the assessee went un-rebutted. Considering the totality of facts and legal preposition as discussed above, the delay in filing the appeals stands condoned.
Ground No. 1 & 2 raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming the 3 Smt. Vimladevi Parasmal Jain, Mumbai additions made by the AO. Therefore I have decided to take up both these grounds jointly and dispose of the same through the present consolidated order.
I have heard the counsels for both the parties and have also perused the material placed on record, judgement cited before me and the orders passed by the revenue authorities.
As per the facts of the present case, assessee has shown exempt income under section 10(38) of the Act of Rs. 10,12,375/- in his return of income from sale of shares of M/s DMC Education, however, AO was of the view that income chargeable to tax has escaped assessment. Therefore, initiated proceedings under section 148 of the Act .
Ld. AR drawn my attention to the fact that the assessee has not earned long term capital gain rather on the contrary made loss of Rs. 37,932/- and in this regard referred to page number 11 and 12 of the paper book which contains statement of purchases and sales of shares of DMC international Ltd and statement with effect from 01.04.2010 to 31.03.2011 of Nirmal Bang securities Private Limited through which shares were purchased and sold.
After analyzing the documents placed on record I found that assessee suffered loss of Rs.37,932/- instead of gain.
4 Smt. Vimladevi Parasmal Jain, Mumbai Even otherwise the assessee has not maintained books of account and credit of Rs.10,12,375/- has not been found credited in the books of accounts. Therefore in my view, the provisions of section 68 of the act are not applicable where the assessee has not maintained books of accounts and the same is not found credited in the books of accounts. For this proposition, I rely upon the following case laws:
Cit Vs Bhaichand N Gandhi, 141 ITR 67 (BOM) 2. Anand Ram Raitani Vs. CIT, 223 ITR 544 3. Smt Shanti Devi Vs. CIT, 171 ITR 532 4. Smt Manasi Mahendra Pitkar, of 2015 5. ITO Vs. Kamal Kumar Mishra ITA No. 398/LKW/2012. 10. I also found that no amount Rs. 10,12,375/- has been found credited in the books of account, therefore, no addition could have been made under section 68 of the act by the Ld.AO. Even otherwise Ld. CIT(A) while dealing with the appeal of the assessee adjudicated the provisions of section 69A instead Sec. 68 of the Act. Therefore the impugned order of CIT(A) is contrary to the provisions of law. Thus, the order of Ld. CIT(A) is not sustainable and consequently as discussed above the additions made by the AO are directed to be deleted.
5 Smt. Vimladevi Parasmal Jain, Mumbai
In the result the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 28.01.2025. Mumbai, Dated 28/01/2025 KRK, PS