SHRI. SANJIV BHUTRA,BANGALORE vs. THE INCOME TAX OFFICER, WARD- 5(2)(4), BANGALORE

The Ld. Counsel appearing for the assessee submitted that the appeal filed by Shri Sanjiv Bhutra is barred by limitation by 998 days and the appeal filed by Shri Rajiv Kumar Bhutra is barred by limitation by 1013 days. The Ld. A.R. submitted that both the assessees have filed petitions requesting the bench to condone the delay. The Ld. A.R. submitted that both the assessees are related to each other and their cases were earlier handled by a Chartered Accountant named Shri Muralidhara. These appellants had given the orders of Ld. CIT(A) to the above said CA with a request to file appeals before the Tribunal. The assessees were under the bonafide belief that the appeals would have been filed in time. However, only after receiving the reminder for payment of tax due, they came to know that the Chartered Accountant has not filed appeals. Hence, they approached another Chartered Accountant, who advised them to file appeal with a petition for condonation of delay. The Ld. A.R. submitted that the earlier Chartered Accountant Shri Muralidhara has since expired and hence, the assessees could not get any letter from him in support of their averments. The Ld. A.R. submitted that there is reasonable cause for the assessees in not filing appeals in time. Accordingly, he prayed that the delay in filing the appeals by both the assessees may kindly be condoned. He also placed his reliance on some certain case laws.

The Ld. D.R. on the contrary, strongly opposed the petition filed by the assessees. The Ld. D.R. submitted that the assessees have simply put the blame upon a Chartered Accountant without obtaining any letter from him in support of their submissions. He submitted that it is the duty of the assessees to substantiate their

I heard the rival contentions on this preliminary issue and perused the record. It is stated in the petition that there was certain mis-communication between the assessees and their authorized representative. It is further stated that the assessees were under bonafide belief that their earlier Chartered Accountant would have filed appeal in time. But it came to their notice later that the appeals have not been filed and by that time the due date for filing appeals has elapsed. It is stated that the earlier Chartered Accountant has expired and hence they could not get any letter from him in support of their averments. Before me, the Ld. A.R. placed reliance on the decision rendered by Hon’ble Supreme Court in the case of Concord of India Insurance Company Ltd. Vs. Smt. Nirmala Devi, wherein it was held that a legal advice tendered by a professional and the litigant acting upon it one way or the other could be a sufficient cause to seek condonation of delay. The Ld. A.R. also placed reliance on the decision rendered by Hon’ble Bombay High Court in the case of Vijay Vishin Meghani Vs. DCIT, wherein the Hon’ble Court condoned the delay of 2984 days. I notice that, since the assessees had believed that the earlier Chartered Accountant would have filed appeals as per their request, they did not follow up the matter. Once they realized that the appeals have not been filed, the present appeals have been filed with delay. Under these set of facts and circumstances of the case, I am of the view that there is sufficient cause for not filing the appeals in time. However, as contended by Ld D.R, it is also the duty of the assessees to follow up their earlier CA with regard to filing of appeal in time. No prudent businessman would remain so inactive

The solitary issue urged in both the appeals relate to assessment of longterm capital gain arising on sale of shares as income of the assessee rejecting the claim of long term capital gain.

The assessee Shri Sanjiv Bhutra had purchased 6000 shares of Cresanda Sales Ltd. (earlier known as M/s Smartchamps IT and infra Limited) for a sum of Rs.60,000/- on 17.11.2011 and sold the same on 4.4.2013 for Rs.24,52,044/-, which resulted in capital gain of Rs.23.80 lakhs. Since, it was long term capital gains, the assessee claimed the same as exempt.

The assessee Shri Rajiv Kumar Bhutra had purchased 2000 shares of NCL Research & Financial Services Ltd. for Rs.5,38,225/- and sold the same on 24.5.2013 for a sum of Rs.34,04,874/-, resulting in gain of Rs.28.66 lakhs. Since, it was long term capital gains, the assessee claimed the same as exempt.

The A.O. noticed both the above said companies have been categorized as Penny stock. The A.O. also noticed that the Chairman & Managing Director of M/s. NCL Research & Financial Services Ltd., named Shri Vijay Jay Deo Poddar, had admitted that the above said

I heard the parties and perused the record. The main contention of Ld. A.R. was that the A.O. has assessed the capital gain declared by the assessees as their taxable income without confronting the materials relied upon by the A.O. with the assessees. Further, the A.O. has not given opportunity of cross examining the Chairman and MD of M/s. NCL Research & Financial Services Ltd. Accordingly, the Ld. A.R. submitted that the issues may be restored to the file of the A.O. for examining them afresh after offering opportunity of rebutting various evidences which were relied upon by A.O. for making the impugned additions. The Ld. A.R. submitted that the assessees may also be provided with an opportunity to cross examine any person whose statement has been relied on by the A.O.

On the contrary, the Ld. D.R. submitted that the assessees have not proved that the capital gain declared by them is genuine, since they have dealt with penny stocks which are used only to create bogus long term capital gains.

Having heard the rival submissions, I am of the view that the assessees should be provided with an opportunity to rebut the evidences/statements relied upon by the A.O. for treating the

In the result, both the appeals are allowed for statistical purposes. Order pronounced in the open court on 23rd Apr, 2021