JASMINKUMAR PARESHBHAI SHAH,AHMEDABAD vs. THE ITO, WARD-7(2)(1), AHMEDABAD

The brief facts of the case are that the assessee did not file his return of income for the A.Y. 2012-13. The case of the assessee was reopened on the basis of information that the assessee had traded in penny stock scrip of M/s. VMS Industries Limited, on which bogus Long Time Capital Gain (LTCG) was derived, which was claimed as exempt under Section 10(38) of the Act. Accordingly, a notice under Section 148 of the Act was issued on 31.03.2019. In the course of assessment proceedings, no compliance was made by the assessee. Therefore, the entire share trading receipt of Rs.11,77,529/- in respect of scrip of M/s. VMS Industries Limited was treated as unexplained and held as deemed income of the assessee. The assessment was completed under Section 144 r.w.s. 147 of the Act on 24.12.2019 at a total income of Rs.11,77,530/-

Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided vide the impugned order and the appeal of the assessee was dismissed.

The assessee is now in second appeal before us. The following grounds have been taken in this appeal: -

The learned CIT(A) erred in law and on facts in confirming the addition of Rs.11,77,529/- made by AO considering the same as unaccounted Your appellant prays for leave to add, to alter and/or to amend the above ground before the final hearing of the appeal.”

Shri Pritesh Shah, Ld. AR of the assessee, submitted that the Ld. CIT(A) had dismissed the appeal for the reason that there was delay of 775 days in filing the appeal by the assessee. He explained that the assessee was appointed as a pilot with Blue Ray Aviation Pvt. Ltd., Bangalore since 01.06.2020 and due to his pre-occupation, he could not access his e-mail account. As a result, there was a delay in filing the appeal. The Ld. AR submitted that the Ld. CIT(A) was not correct in dismissing the appeal on the ground of delay without examining the addition made by the Assessing Officer on merits. He explained that there was no capital gain derived by the assessee in the trading of shares of M/s. VMS Industries Limited, rather the assessee had incurred a loss. had passed the order ex-parte. Before the Ld. CIT(A) also, there was delay of 775 days in filing the appeal. We are not convinced with the explanation of the assessee for the delay in filing the appeal before the Ld. CIT(A). However, from the evidences as brought on record in the paper-book, it is found that the assessee had purchased 31200 shares of M/s. VMS Industries Limited on 14.07.2021 for a consideration of Rs.14,31,558.96, which was sold on the same day for a consideration of Rs.11,76,749.15, resulting into loss of Rs.2,55,447/-. Under the circumstances, there cannot be any question of claim of exemption of LTCG u/s 10(38) of the Act, as held by the Assessing Officer in the assessment order. The contention of the assessee is that the loss of Rs.2,55,447/- was also not eligible for carry forward, as no original return of income was filed by the assessee. Considering these facts, we are of the considered opinion that the addition of Rs.11,77,529/- as made by the Assessing Officer requires to be re-examined. In fact, the order passed by the Assessing Officer is also found to be cryptic and no cogent reason has been given for making the addition. We, therefore, deem it proper to set aside the matter to the file of the Assessing Officer with a direction to allow another opportunity to the assessee to explain the transactions in the shares of M/s. VMS Industries Limited, subject to payment of cost of Rs.5,000/- by the assessee which should be deposited to the Prime Minister’s National Relief Fund, within a period of 15 days of receipt of this order. The assessee is also directed to make compliance before the Assessing Officer and provide the documents and evidences in support of his contentions and also comply to the directions of the AO, failing which the AO will be at liberty to decide the matter on merits on the basis of materials on record. PBN/* Copies to: (1) The appellant (2) The respondent