SIKHA KUNDALIA,SILIGURI vs. D.C.I.T.,CIRCLE-2, SILIGURI

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ITA 2188/KOL/2019Status: DisposedITAT Kolkata22 November 2022AY 2014-154 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the Revenue Authorities' decision to reject the claim of LTCG, following the jurisdictional High Court's judgment in similar cases involving M/s. Cressanda Solutions Limited shares. The Tribunal found no merit in the assessee's appeal.

What were the facts?

The assessee claimed exemption for Long Term Capital Gains (LTCG) on shares of M/s. Cressanda Solutions Limited, alleging the gain was bogus. The Assessing Officer (AO) treated the LTCG as an unexplained cash credit and added it to the total income. The CIT(A) confirmed the AO's action.

What were the issues?

Whether the Long Term Capital Gains claimed on shares of M/s. Cressanda Solutions Limited were bogus and thus liable to be added as unexplained cash credit.

Which sections of the Income-tax Act were involved?

Section 10(38),Section 68

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “C” BENCH KOLKATA

Before: SHRI SANJAY GARG & SHRI GIRISH AGRAWAL

For Respondent: Smt. Ranu Biswas, Addl. CIT, DR
Hearing: 17.11.2022Pronounced: 22.11.2022

O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of Ld. CIT(A), Siliguri vide Appeal No. 50/CIT(A)/SLG/2016-17 dated 31.07.2019 passed against the assessment order by the DCIT, Circle-2, Siliguri u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) dated 29.12.2016.

2.

None appeared on behalf of the assessee. Smt. Ranu Biswas, Addl. CIT, DR appeared on behalf of the revenue.

2. We have gone through the record carefully. The grievance of the assessee is that ld. CIT(Appeals) has erred in dismissing the appeal filed by the assessee and in Sikha Kundalia, AY: 2014-15. confirming the addition of LTCG alleged to be bogus on the basis of report received from DIT (Investigation) Kolkata in respect of shares of M/s. Cressanda Solutions Limited amounting to Rs.78,15,767/- u/s. 68 of the Act which was claimed exempt u/s. 10(38) of the Act on the ground that assessee has earned bogus long-term capital gain. During the course of assessment proceedings, Ld. AO observed that as per contract note, submitted by the assessee, the sale of those shares were made on 20.11.2013 (2500 units), 26.11.13 (2000 units), 02.12.2013 (1000 units), 14.03.2014 :(10000 units), 26.03.2014 (40000) and 31.03.2014 (45000 units), through a single broker named M/s Ashika Stock Broking Ltd. (member: Bombay Stock Exchange) . The rate of sale is stated to be Rs.54.90 to Rs.506.10. On further examination it is seen that the assessee has shown to have purchased 15000 nos. of shares of M/s Smartchamps IT and Infra Limited on15.10.2011. According to Ld. AO, the assessee has stated that she had purchased 15000 nos. of shares of Smartchamps IT and Infra Limited, however, she has furnished that the total number of shares sold is 100500. The assessee in her written submission has mentioned that she purchased 15,000 Shares of Smartcharnps IT and Infra Limited @ Rs. 10/- each. After amalgamation, she was allotted 15,000 shares of Cressanda Solutions Limited against the shares of Smartchamps and Infra Limited as per the order of Hon’ble Bombay High Court. Out of 15,000 shares, she sold 5,500 shares. Remaining 9500 shares got converted into 95,000 shares after split. Ld. Assessing Officer disbelieved the same and stated that the claim of LTCG u/s. 10(38) of the Act is established to be bogus and added the same to the total income of the assessee as unexplained cash credit u/s. 68 of the Act. On appeal, Ld. CIT(A) after elaborate discussion in his order

Sikha Kundalia, AY: 2014-15. confirmed the action of AO holding the claim of LTCG of Rs.78,15,767/- as bogus. Aggrieved, assessee is in appeal before the Tribunal.

4.

We find that there are large number of assessees, who have transacted with equity shares of M/s. Cressanda Solutions Limited and claimed exemption under section 10(38) of the Act. Apart from this scrip, there are other scrips also in Kolkata, who were found to be penny stock and transactions on papers only. The Hon’ble Calcutta High Court has recently considered this aspect in its judgment in the case of Swati Bajaj & Others (2022) 139 taxmann.com 352(Cal.). In a number of appeals, we have also rejected the claim of the assessees, where the assessee transacted in the shares of M/s. Cressanda Solutions Limited. All these transactions have been held as bogus by the Hon’ble Jurisdictional High Court. Therefore, respectfully following the decision of the Hon’ble Calcutta High Court, we affirm the view taken by the Revenue Authorities who have rejected the claim of the assessee and made the additions. We do not find any merit in this appeal. Accordingly, it is dismissed.

5.

In the result, appeal of the assessee is dismissed.

Order pronounced in the open Court on 22nd November, 2022

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