Loading judgment…
Facts
The assessee, a NBFC engaged in share trading, filed a return declaring a loss. The AO added Rs. 13,80,500/- under Section 69 of the Act on account of alleged investment in penny stock. The CIT(A) allowed the assessee's appeal.
Held
The Tribunal held that the AO failed to provide any details or evidence regarding the alleged transaction in penny stock, making the addition without basis. The appeal of the revenue was dismissed.
Key Issues
Whether the addition made by the AO on account of investment in penny stock is sustainable without providing any supporting details or evidence? Whether the tax effect below the prescribed monetary limit warrants dismissal of the revenue's appeal?
Sections Cited
133(6), 148, 69
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM:
This is the appeal preferred by the revenue against the order of Commissioner of Income Tax (Appeal)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 20.01.2023 for AY 2013-14.
Assessment Year: 2013-14 Third Wave Business Aids Pvt. Ltd.
Brief facts of the case of the assessee being registered NBFC company with Reserve Bank of India was engaged in share trading and investment business and rendering financial services. For the AY 2013-14 return has been filed by declaring a total loss of Rs. 3802662/-. A notice u/s 133(6) was issued to the company requesting for details and more specifically details of transaction in the scrip M/s Esser India Ltd. In response to the notice u/s 148, return of income was filed. The assessee has also submitted responses before the AO. The AO after considering the submission added Rs. 1380500/- u/s 69 of the Act.
3. The said order has been challenged by the assessee before the Ld. CIT(A) wherein the appeal of the assessee has been allowed.
Being aggrieved and dissatisfied the department has preferred the instant appeal.
4. The Ld. Sr. DR has challenged the impugned order of the Ld. CIT(A) thereby submitting that the Ld. CIT(A) has erred in deleting the addition of Rs. 1380500/- made by the AO on account of transaction in penny stock. The Ld. D.R has further submitted that the present case falls under the exceptional clause. Therefore, the same needs to be verified.
5. Contrary to that the Ld. A.R challenges the submission of the Ld. D.R by saying that in the present case the tax effect is below the monetary limit prescribed by the department and further submitted that there is nothing in the Ld. CIT(A) that the assessee has engaged in any transaction in the shares of M/s Esser India Ltd. during the year and that has duly been held by the Ld. CIT(A) in its order.
6. We have perused the memo of appeal and find that the tax effect in the present case is only Rs. 426574/- i.e. less than prescribed limit of Rs. 60 lacs. We have gone through the order of Ld. CIT(A) and find that the assessee company has continuously and repeatedly refuted the contentions of the AO that assessee did not enter any transaction in the share of M/s Esser India Ltd. during the year. It is pertinent to mention here that the AO has made addition u/s 69 of the Act on account of unexplained Assessment Year: 2013-14 Third Wave Business Aids Pvt. Ltd. investment in penny stock of M/s Esser India Ltd.. It is further important to mention therein that the assessee company has produced all the books of accounts, bank statement, brokerage statement and demat statement during the re-assessment proceedings in support of that there is no transaction/investment in the alleged penny stock M/s Esser India Ltd. The Ld. CIT(A) in its order has clearly held thus:
“Despite continuous denials by the assessee that it had not entered into any transaction in the share of M/s Essar India during the year, the AO has disregarded above reply for the reason that his office had credible information that the assessee had entered into transaction in the penny stock of M/s Essar India to the tune of Rs.13,80,500/-. However, the AO, has not given any details of the information in his possession, even in the assessment order. When the assessee is repeatedly denying that it has not entered into any transaction in the share of M/s Essar India and the AO proceeds to make an addition on this issue, it was incumbent upon the AO to give at least basic details of the transaction undertaken by the assessee in the share of M/s Essar India by giving details of – 1. Date of purchase of shares of M/s Essar India in F.Y. 2012-13.
2. Date of sale of shares of M/s Essar India in F.Y. 2012-13.
Quantity of shares of Essar India purchased and the rate at which the shares have been purchased.
Demat Account in which the shares of Essar India have been kept.
Quantity of shares of Essar India sold and the rate at which the shares have been sold.
Contract note of purchase/sale of shares of Essar India in F.Y. 2012-13.
Date on which sale proceeds have been received.
Bank account in which sale proceeds have been deposited. However the AO has not given any details on any of the points mentioned above which could refute the contention of the appellant that it has not undertaken any transaction in the share of M/s Essar India during the year. When the assessee is repeatedly denying having undertaken any transaction in the shares of M/s. Essar India during the year and the A.O. makes addition on this issue, it was incumbent on the A.O. to give evidence of such transaction undertaken by the assessee; if not evidence then at least some basic details of the transaction, as enumerated above should have been mentioned in the assessment order which the A.O. has failed to do. Without any details whatsoever being supplied by the A.O. about the alleged transaction of the assessee in the shares of M/s. Essar India, it is held that the addition made by the AO is without any basis. The Assessing Officer has also not disposed off the objection of the assessee to the re-opening (dated 11.11.2020) in violation of the process given by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd vs ITO 259 ITR 19(SC). In view of the above discussion, the addition made by the A.O. of Rs. 13,80,500/- u/s. 69 is directed to be deleted.”
Assessment Year: 2013-14 Third Wave Business Aids Pvt. Ltd. 7. Going over the facts of the case as well as the order passed by the Ld. CIT(A), we do not find any infirmity in the impugned order. Accordingly, the appeal of the revenue is hereby dismissed on both the counts i.e. on merit as well as on tax effect.
In the result, the appeal filed by the revenue is dismissed.
Order is pronounced in the open court on 23rd January, 2025
Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 23rd January, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- ITO, Kolkata 2. Respondent – Third Wave Business Aids Pvt. Ltd.,Ground Floor, 28, Southend Park, Prime Residency, Kolkata-700029 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)