DCIT CENTRAL CIRCLE 1(1) AHMEDABAD, AHMEDABAD vs. PINAC STOCK BROKERS PRIVATE LIMITED, AHMEDABAD

Per contra Ld. Counsel Shri Deepak R. Shah appearing for the assessee submitted that the Hon’ble High Court of Gujarat have only admitted the Questions of Law and not decided the quantum appeal. There is no stay application by the Revenue before Hon’ble High Court to stay the operation of the order passed by the Tribunal in the quantum appeal. That apart impugned tax portion having been deleted by the Tribunal, computation mechanism fails in the penalty proceedings. Thus Ld. CIT(A) has considered the quantum order as well as Miscellaneous Application order passed by the Tribunal and deleted the penalty levied by the Assessing Officer. Therefore the penalty order passed has no legs to stand, since the addition made in the quantum appeal are deleted by the Co- ordinate Bench of this Tribunal and this appeal filed by the Revenue is liable to be dismissed.

A.Y. 2011-12 Page No 3 DCIT Vs. Pinac Stock Brokers Pvt. Ltd.

of the assessee is hereby allowed. (ii) As regards the disallowance of loss claimed of Rs 55,63,457/-, confirmed by the CIT(A), it is allowed by the Hon'ble ITAT holding as under:-

16. We have heard the rival contentions of both the parties and perused the materials available on record. On perusal of the order of the AO, we note that the impugned loss has been disallowed by the AO on the presumption that the assessee has made sales of the shares. The relevant finding of the AO to this effect is reproduced as under: "Further, the assessee has not produced any evidence for the sale of share in the physical form and to whom these shares were sold of Rs. 1,06,80,312/- In view of above facts, the lass booked of Rs.55.63,457/- by assessee on sale of shares of Chandani Textile A.Y. 2011-12 Page No 4 DCIT Vs. Pinac Stock Brokers Pvt. Ltd.

Engineering Industries Ltd. in physical form is treated as bogus and disallowed." 16.1 However, the undisputed fact is this that the assessee has not made any sales of the shares of the impugned company. Therefore, in our considered view the addition has been made by the AO which was consequently confirmed by the ld. CIT(A), on wrong assumption of facts. 16.2 It is also pertinent to note that the loss was shown by the assessee on account of valuation of the shares determined as on 31/03/2011, which can be verified from the copy of the ledger placed on record. It is a settled position of law that the closing stock of one year becomes the opening stock of subsequent year meaning thereby there is no effect on the income of the assessee on account of difference in valuation of closing stock except shifting of the profit from one year to another year barring exception circumstances. 16.3 In view of the above, and after considering the facts in totality we do not find any reason to uphold the order of the Ld. CIT(A). Accordingly, we set aside the finding of Ld. CIT(A) and direct the AO to delete the addition made by him Hence, the ground of appeal of the assessee is hereby allowed" (ii) The Hon'ble ITAT in para 17 of its order has allowed the issue of addition of Rs. 1,03,57,900/- made u/s 68 of the Act has partly allowed in favour of the appellant as under 18. The assessee in the year under consideration has shown the receipt of loan from the following parties: Sr. Name of the Party Amount No.

1. Shri Shital M. Sheth 41,57,900/-

2. GGF Mercantile Pvt. ltd. 52,00,000/-

3. Microtech IT Systems Pvt. 10,00,000 Ltd. …………… …………… 28.5 In view of the above elaborated discussion and after considering the facts in totality, we hereby hold that the assessee discharged the onus cast under section 68 of the Act with respect to the loan received from the parties, namely Shri Shital M. Sheth and M/s. Microtech IT Systems Pvt Ltd. Hence, we do not find any reason to uphold the finding of the learned CIT/A) fort the loan received from the aforesaid parties.

A.Y. 2011-12 Page No 5 DCIT Vs. Pinac Stock Brokers Pvt. Ltd.

28.6 As regard to the loan token from the party namely GGF Mercantile Pvt Ltd., we note that the assessee has not filed any of the document either before the lower authorities or before us to justify the amount of loan received from GGF Mercantile Pvt Ltd. Hence, in the absence of necessary details, we do not find any reason to deviate from the findings of the Ld. CIT(A). Accordingly we confirm the addition of Rs.52 lacs under the provision of section 68 of the Act Hence, the ground of appeal of the assessee is hereby portly allowed." (iii) The appellant against the addition of Rs 52,00,000/-confirmed by the Hon'bie ITAT, as discussed in para 5.1 (iii) above, a Miscellaneous Application was filed by the assessee claiming that the Hon'ble ITAT has inadvertently overlooked documents in respect to the loan received from M/s. GGF Mercantile Pvt Ltd and that the finding was on wrong assumption of facts. After considering the materials again, the Hon'ble ITAT in its order in MA No 84/Ahd/2023 in pronounced on 08/12/2023 has held as under: “……4 We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the documents in the form of loan confirmation and bank statement were available on record which can be verified from the details available on pages 777 to 780 of the paper book which were not considered for adjudicating the appeal of the assessee. Accordingly we hold that the findings of the Tribunal are based on wrong assumptions of act which amounts to a mistake apparent from the record within the meaning of the provisions of section 254/2) of the Act. Accordingly. We modify para number 28.6 of the order of the ITAT in the manner as discussed below, “28.6 As regard to the loan taken from the party namely GGF Mercantile Pvt Ltd., we note that the assessee has filed the additional documents in the form of confirmation and bank statement Consideration of these additional documents at the level of the AO is very necessary to render justice under the provisions of low. Accordingly, we admit the additional documents filed by the assessee and restore the issue to the file of the AO for fresh adjudication as per the provision of law. Hence, the ground of appeal of the assessee is partly allowed for the statistical purposes. 28.7 In view of the above, the Miscellaneous Application filed by the assessee is allowed in the manner as discussed above

5. In the result, the Miscellaneous Application filed by the assessee is allowed." 5.3. Respectfully following the decision of the Hon'ble ITAT reproduced above, when the very addition on which penalty has been levied u/s 271(1)(c) has been A.Y. 2011-12 Page No 6 DCIT Vs. Pinac Stock Brokers Pvt. Ltd. deleted/set-aside for fresh adjudication, the penalty levied U/s. 271(1)(c) also does not survive. Therefore, the penalty levied u/s. 271(1)(c) of the Act of Rs.2,72,76,410/- is directed to be deleted. The ground of appeal is therefore allowed.

5.1. We do not find any infirmity in the order passed by the Ld. CIT(A) who has duly followed the Co-ordinate Bench order of this Tribunal. As rightly pointed out by the Ld. Counsel for the assessee, there is no Stay Petition filed by the Revenue before the Hon’ble High Court of Gujarat to stay the operation of the quantum order passed by this Tribunal. Further Hon’ble High Court of Gujarat admitted the Questions of Law on 11-06-2024 and directed the Department to file Paper Book within a period of four weeks. Further development of the above Tax Appeal are not placed before us. Therefore in the above circumstances, we do not find any infirmity in the order passed by the Ld. CIT(A) who has duly followed the Co-ordinate Bench decision of this Tribunal and deleted the penalty levied by the Assessing Officer.

5.2. With due respect to the Tax Appeal pending before the Jurisdictional High Court, further Section 275(1A) of the Act provides that the Assessing Officer to impose or enhance or reduce or cancel penalty pursuant to the quantum appeal before Commissioner (Appeals) passed u/s. 246A or appeal before Appellate Tribunal passed u/s. 253 or appeal before High Court passed u/s. 260A or appeal before Supreme Court passed u/s. 261 or Revision order passed u/s. 263 of the Act by giving effect to the quantum order. For ready reference section 275 [1A] is reproduced as under:

A.Y. 2011-12 Page No 7 DCIT Vs. Pinac Stock Brokers Pvt. Ltd. “… [(1-A) In a case where the relevant assessment or other order is the subject matter of an appeal to the Commissioner (Appeals) under section 246 or section 246-A or an appeal to the Appellate Tribunal under section 253 or an appeal to the High Court under section 260-A or an appeal to the Supreme Court under section 261 or revision under section 263 or section 264 and an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty is passed before the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the Chief Commissioner or the Commissioner or the order of revision under section 263 or section 264 is passed, an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to such order of the Commissioner (Appeals) or, the Appellate Tribunal or the High Court, or the Supreme Court or order of revision under section 263 or section 264:Provided that no order of imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty shall be passed-(a)unless the assessee has been heard, or has been given a reasonable opportunity of being heard;(b)after the expiry of six months from the end of the month in which the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the Chief Commissioner or the Commissioner or the order of revision under section 263 or section 264 is passed…”

A.Y. 2011-12 Page No 8 DCIT Vs. Pinac Stock Brokers Pvt. Ltd.

Order pronounced in the open court on 04.02.2025 Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER (True Copy) Ahmedabad : Dated 04.02.2025 आदेश क� �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद