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Facts
The assessee filed a return for AY 2014-15, which was selected for scrutiny. The Assessing Officer denied the exemption under Section 10(38) for Long-Term Capital Gain (LTCG) of Rs. 63,20,942/- from share sales, considering them as accommodation entries, and also added Rs. 5,256/- for commission expenses. The CIT(A) upheld these additions.
Held
The Tribunal observed that the assessee did not appear and had also contested that the CIT(A) passed the order without considering their submissions. Acknowledging this procedural lapse and in the interest of justice, the Tribunal set aside the CIT(A)'s order and restored the matter for a fresh decision, allowing the assessee another opportunity to be heard and file submissions.
Key Issues
Denial of exemption for long-term capital gain under Section 10(38) on share sales treated as accommodation entries; and procedural fairness regarding the CIT(A) passing an order without considering the assessee's submissions.
Sections Cited
250, 143(3), 10(38), 68, 271(1)(c), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI DUVVURU RL REDDY(KZ) & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2014-15 dated 27.10.2023, which has been passed against the assessment order u/s 143(3) of the Act, dated 27.12.2016. I.T.A. No.: 1297/KOL/2023 Assessment Year: 2014-15 Kusum Tater
The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. On the facts and in the circumstances of the case and in law the order of the Hon’ble CIT(A) is invalid, illegal and contrary to the provisions of the law since the Hon’ble CIT(A) passed the order before the date of hearing fixed that too without considering the submissions filed by the assessee.
Without prejudice, On the facts and in the circumstances of the case and in law the matter be restored back to the Hon’ble CIT(A) as the order was passed on the date of hearing fixed by the Hon’ble CIT(A) without considering the submissions filed by the assessee.
On the facts and in the circumstances of the case and in law the Hon’ble CIT(A) erred in upholding addition of Rs. 63,20,942/- made by the Ld. AO to the returned income by treating genuine LTCG earned on purchase and sale of shares claimed as exempt u/s 10(38) of the LT. Act as unexplained credit u/s 68 of the IT act 1961 and the reason assigned for doing so are wrong and contrary to the Provisions of Income Tax Act and rides made there under.
On the facts and in the circumstances of the case and in law Hon’ble CIT (A) erred in upholding addition of Rs. 5,256/- made by the Ld. AO to the returned income by -wrongly assuming that commission has been paid to earn LTCG and the reason assigned for doing so are -wrong and contrary to the Provisions of Income Tax Act and rules made there under.
On the facts and in the circumstances of the case and in law the Ld. AO erred in initiating penalty u/s. 271(l)(c) of the IT Act 1961 and the reason assigned for doing so are wrong and contrary to the Provisions of Income Tax Act and Rides made there under.
Your Appellant crave, leave to add, alter, amend or modify any or all grounds of appeal on or before the date of hearing.”
Brief facts of the case are that the return of income declaring total income of Rs. 3,19,020/- was filed on 29.03.2015. Later on the case was selected for scrutiny through CASS. The assessee had shown income from long-term capital gain and other sources and the exemption u/s 10(38) of the Act for long-term capital gain on sale of shares of Rs. 63,20,942/- was denied as the Ld. AO found on the basis of information that the assessee had taken accommodation entries I.T.A. No.: 1297/KOL/2023 Assessment Year: 2014-15 Kusum Tater through sale of long-term capital gains. The assessment order was passed u/s 143(3) of the Act dated 27.12.2016 making additions on account of long-term capital gains in respect of Unno Industries Ltd., which was treated as income from other charges at Rs. 63,20,942/- and another addition of Rs. 5,256/- was also made on account of undisclosed commission expenses treated as income from other sources and the total income was assessed at Rs. 66,45,220/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who relied upon several judicial pronouncements and as the assessee even after getting considerable time and opportunities did not furnish any documentary evidence for the relief claimed, therefore, the Ld. CIT(A) upheld the additions of Rs. 63,20,942/- and Rs. 5,256/- made by the Ld. AO and dismissed the appeal of the assessee. Aggrieved with the order of the Ld. CIT(A) the assessee has preferred the appeal before the Tribunal.
Before us none appeared on behalf of the assessee, therefore, the case was heard with the assistance of the Ld. Sr. DR. It was noted that proper representation was not made even before the Ld. AO as well as before the Ld. CIT(A). Hence, in the interest of justice it was deemed appropriate that another opportunity of being heard may be allowed to the assessee to which the Ld. Sr. DR did not raise any serious objection.
Hence as proper representation could not be made before the Ld. CIT(A) and the assessee has contested in ground no. 1 that the Ld. CIT(A) passed the order before the date of hearing fixed and without considering the submissions filed by the assessee and in ground no. 2 the assessee has requested that the matter may be restored back to the Ld. CIT(A) as the order was passed on the date of hearing fixed by the Ld. CIT(A) without considering the submissions filed by the assessee, I.T.A. No.: 1297/KOL/2023 Assessment Year: 2014-15 Kusum Tater therefore, in the interest of justice the order of the Ld. CIT(A) is set aside and the appeal is restored to him to be done de novo. The assessee shall be granted an opportunity of being heard and shall be at liberty to make submissions in support of the grounds of appeal raised and the Ld. CIT(A) after considering the submissions of the assessee and the evidence filed shall decide the appeal as per the provisions of section 250(6) of the Act in accordance with law and after complying with Rule 46A of the Income Tax Rules, 1962, if required.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 6th March, 2025. [Duvvuru RL Reddy] [Rakesh Mishra] Vice President (KZ) Accountant Member Dated: 06.03.2025 Bidhan (P.S.) I.T.A. No.: 1297/KOL/2023 Assessment Year: 2014-15 Kusum Tater Copy of the order forwarded to:
Kusum Tater, 1401, 14th Floor, Shiv Tapi Apts, H G Road, Gamdevi, Mumbai, Maharashtra, 400007. 2. ITO, Ward-47(2), Kolkata.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order