SUJATA AGARWAL,KOLKATA vs. I.T.O.,WARD-46(1), KOLKATA

PDF · subscribers
ITA 1682/KOL/2019Status: DisposedITAT Kolkata17 October 2022AY 2014-153 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal, relying on the Calcutta High Court's decision in Swati Bajaj & Others and its own previous orders, held that the transactions involving Kailash Auto Finance Limited shares were indeed bogus. Therefore, the rejection of the exemption claim and the consequent additions were upheld.

What were the facts?

The assessee claimed exemption under Section 10(38) for long-term capital gains on the sale of shares of Kailash Auto Finance Limited. The Assessing Officer and CIT(Appeals) rejected this claim, treating the transaction as bogus and related to penny stocks.

What were the issues?

Whether long-term capital gains claimed on the sale of penny stock shares, specifically Kailash Auto Finance Limited, are eligible for exemption under Section 10(38) when the transactions are deemed bogus.

Which sections of the Income-tax Act were involved?

Section 10(38)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, ‘A(SMC

Before: Shri Rajpal Yadav, Vice-(KZ) & Dr. Manish Borad

Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals)-14, Kolkata dated 04.04.2019 passed for assessment year 2014-15.

2.

This appeal was listed on the Board on 26.11.2019. Thereafter it has been fixed almost more than twenty times. There is no response at the end of the assessee to the notices issued by the Tribunal on the address given in Form No. 36 i.e. Appeal Form. The Bench Clerk has informed the assessee through mail as well as through Mobile No. i.e.

1.

Assessment Year: 2014-2015 Sujata Agarwal 89104304709. Information was also given on the Phone No. 8584872815, but none appeared.

3.

With the assistance of ld. D.R., we have gone through the record carefully. The grievance of the assessee is that the ld. CIT(Appeals) has erred in confirming the addition of Rs.10,12,825/-, which was claimed by the assessee as exemption under section 10(38) of the Income Tax Act on the ground that she has earned long-term capital gain on sale of shares of Kailash Auto Finance Limited. Ld. Assessing Officer disbelieved this transaction and estimated a commission expenditure of Rs.30,385/- for arranging this transaction.

4.

A perusal of the record would suggest that in May, 2012, the assessee had purchased equity shares of M/s. CAPL from M/s. Jatadhari Marketing (P) Limited @ Rs.1/- per share. This CAPL later on amalgamated with M/s. Kailash Auto Finance Limited (KAFL). Thus ultimately in Accounting Year relevant to A.Y. 2014-15, the assessee has sold shares of M/s. Kailash Auto Finance Limited. She has earned a capital gain of Rs.9,87,825/-, which was claimed as exempt. This claim of the assessee was rejected on the ground that Kailash Auto Finance Limited and other erstwhile was penny stock, who were artificially inflating the sale price of these penny stock shares. In brief, it was treated as a bogus claim.

5.

Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee.

6.

We find that there are large number of assessees, who have transacted with equity shares of Kailash Auto Finance Limited and claimed exemption under section 10(38) of the Income Tax 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

Assessment Year: 2014-2015 Sujata Agarwal High Court has recently considered this aspect in its judgment in the case of Swati Bajaj & Others (2022) 139 taxmann.com 352(Cal.). One of the scrips dealt with by the Hon’ble High Court relates to Kailash Auto Finance Litmited. In a number of appeals, we have also rejected the claim of the assessees, namely 1122/KOL/2018, 2093/KOL/2019, 2104/KOL/2018, 868/KOL/2019, 341/KOL/2018, 1673/KOL/2019. In ITA No. 2093/KOL/2019, the assessee transacted the shares of M/s. Kailash Auto Finance Limtied. All these transactions have been held as bogus. Therefore, relying upon the decision of the Hon’ble Calcutta High Court coupled with various orders of the ITAT, we are of the view that Revenue Authorities have rightly rejected the claim of the assessee and made the additions. We do not find any merit in this appeal. It is dismissed.

7.

In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on October 17, 2022.

More judgments on Section 10(38)

All 3,113 judgments and leading authorities on Section 10(38) →

Recent GST High Court judgments

Search GST case law →