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Facts
The assessee, a private limited company, filed its return for A.Y. 2014-15 declaring NIL income. During scrutiny, the Assessing Officer disallowed a loss of Rs. 5,81,674/- claimed from share transactions, suspecting price rigging and lack of demat account details. The ld. CIT(Appeals) dismissed the assessee's appeal ex-parte due to non-submission of supporting evidence.
Held
The ITAT, finding that the CIT(A) had passed an ex-parte order without providing sufficient opportunity, set aside the CIT(A)'s order. The matter was remitted back to the Addl./JCIT(Appeals) with directions to grant the assessee one more opportunity to be heard, while also cautioning the assessee to cooperate.
Key Issues
1. Whether the ld. Addl./JCIT(Appeals) was justified in dismissing the appeal ex-parte without providing sufficient opportunity to the assessee. 2. Whether the disallowance of loss from share transactions by the Assessing Officer was justified.
Sections Cited
143(2), 142(1)
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2014-2015 Kailas Regency Private Limited,.……………Appellant 2, Ashutosh Mukherjee Road, Kolkata-700020 [PAN:AACCK2122Q] -Vs.- Income Tax Officer,…………………………..…..Respondent Ward-12(3), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 Appearances by: Shri B.C. Jain, A.R., appeared on behalf of the assessee Shri Kallol Mistry, JCIT, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing: June 23, 2025 Date of pronouncing the order: July 22, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of Id. Addl./Joint Commissioner of Income Tax (Appeals)-1, Chandigarh dated 30.03.2025 passed for Assessment Year 2014-2015.
The facts in brief are that the assessee is a Private Limited Company, which filed its return of income electronically for the (A.Y. 2014-2015) Kailas Regency Private Limited assessment year 2014-15 on 29.09.2014 declaring total income at Rs. NIL. The case was selected for scrutiny assessment. Accordingly, notices under section 143(2) and 142(1) of the Income Tax Act were issued and duly served on the assessee. In compliance to such notices, ld. A.R. of the assessee appeared and explained the return. During the relevant previous year, the assesse has shown to have earned its income mainly from investment in shares. During the course of hearing, books of account were produced which were test checked. Details of bank accounts, script wise details of share transactions and fixed assets and other relevant details were produced. From the computation of income, it was found that the assessee claimed loss of Rs.5,81,674/- and adjusted it with interest receipt on loan and other income. During the year, the assessee purchased 2700 shares of Firstfin @ Rs.296/- per share valuing at Rs.7,99,206/- and sold these shares @Rs.80.56 per share at a cost of Rs.2,17,532/- resulting in loss of Rs.5,81,674/-. When asked for details of these transactions, the assessee produced ledger account of share transactions and contract notes. From the receipt of payment after sale, it was stated that the amount of Rs.2,17,532/- was received on 28.01.2014 and sale was made on 24.01.2014. No details of demat accounts were produced. When enquired about the investigation done by the Income Tax Investigation Wing regarding rigging of price in the script of Firstfin, the assessee-company could not offer any explanation. When the price reaches the desired level the beneficiary who bought the shares at a nominal price are made and sell it to a dummy paper company of the operator. For this, unaccounted (A.Y. 2014-2015) Kailas Regency Private Limited cash was provided by the beneficiary, which was routed through a few layers of paper companies by the operator and finally parked with the dummy paper company that will buy the shares. Hence, ld. Assessing Officer disallowed the loss of Rs.5,81,674/- and added to the total income of the assessee and finally ld. Assessing Officer determined the taxable income of the assessee at Rs.5,13,929/-. Being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals).
The ld. Addl./JCIT(Appeals) dismissed the appeal of the assessee ex-parte as the assessee did not bring on record any supporting evidence in support of ground raised by it after providing sufficient opportunities.
On being aggrieved, the assessee preferred appeal before the ITAT. At the time of hearing, the ld. Counsel for the assessee argued before the Bench that the ld. Addl./JCIT(Appeals) passed the ex-parte order without going into merit of the case and giving sufficient opportunity of being heard. Therefore, ld. Counsel pleaded to set aside the order passed by the ld. Addl./JCIT(Appeals).
On the other hand, ld. Departmental Representative brought to my notice that the assessee did not produce the relevant documents as asked by the ld. Assessing Officer at the time of assessment proceedings and ld. Addl. /JCIT (Appeals) during the appellate proceedings. The ld. Addl. /JCIT (Appeals) has given many opportunities to the assessee and the assessee neither filed (A.Y. 2014-2015) Kailas Regency Private Limited written submission nor any evidence before the Addl. /JCIT (Appeals). He further submitted that before the ITAT, the assessee did not substantiate its claim. Therefore, he pleaded to uphold the orders passed by the revenue authorities.
I have heard both the sides and perused the material available on record. Considering the facts and circumstances of the case, I am inclined to set aside the order passed by the Addl. /JCIT (Appeals) in order to meet the principle of natural justice, and remit the matter back to the file of ld. Addl. /JCIT (Appeals) with a direction to provide one more opportunity of being heard to the assessee. At the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the ld. Addl. /JCIT (Appeals) failing which the Ld. Addl. /JCIT (Appeals) shall be at liberty to pass appropriate order in accordance with law and merits of the case, based on the materials available on the record. Thus, the grounds raised by the assessee in the appeal are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 22/07/2025.