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Facts
The assessee filed returns for AY 2012-13 and 2014-15, reporting LTCG from share transactions. The AO reopened the cases, alleging bogus LTCG entries from penny stocks based on information from the Directorate of Investigation. Additions were made under sections 68 and 69 of the Act.
Held
The assessee requested to withdraw the appeals under the Direct Tax Vivad Se Vishwas Scheme, 2024. The Tribunal considered the request and allowed the application, treating the appeals as dismissed.
Key Issues
Whether the appeals are dismissed as withdrawn under the Vivad Se Vishwas Scheme, despite the grounds of appeal challenging additions made by the AO based on alleged bogus LTCG entries from penny stocks.
Sections Cited
250, 139(1), 148, 143(2), 142(1), 132(4), 131, 68, 69, 69C, 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “A”, JAIPUR
Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYAL
PER GAGAN GOYAL, A.M: These two appeals by the assessee are directed against the order of NFAC, Delhi dated 20.03.2024 & 31.03.2024 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Ys. 2014-15 & 2012-13.
the assessee has raised the following grounds of appeal:-
1. 1 .That on the facts and in the circumstances of the case and in law the Ld. CIT(A) grossly erred in confirming the action of the AO who has not given any adverse comments on the facts given by the assessee on the sale and purchase of shares and as such accepted the facts given by the assessee regarding purchase and sale of shares b) That accepting the facts given by the assessee, the Ld. CIT(A) grossly erred in confirming the arbitrary addition made by the AO u/s. 68 of the Act of Rs. 82,27,828/- which is the LTCG after deducting the cost of purchases of these equity shares of Rs. 1,52,447/- which is illegal c) That without revoking the purchases and sales of the shares the Ld. CIT(A) grossly erred in confirming the action of the AO in arbitrarily applying the modus operandi narrated by the broker in the statement recorded by the Investigation Wing Kolkata d) That the Ld. CIT grossly erred in not giving the opportunity for cross examination of the brokers on whose statement the AO has made the addition of LTCG u/s 68 of the Act.
2 That on the facts and in the circumstances of the case and in law the Learned CIT(A) grossly erred in confirming the addition made by Ld. AO u/s. 69C of the Act of Rs. 1,67,605/- on account of commission paid which is purely based on assumption, presumption, conjectures and surmises.
3 That on the facts and in the circumstances of the case and in law the Learned CIT(A) grossly erred in confirming the action of the Ld. AO in making the entire assessment on assumption and presumption without any specific material except the modus operandi explained by the brokers in their statement recorded by D.I. wing, Kolkata.
4. That the appellant craves leave to add, alter, amends or withdraws any of the grounds of appeal before or at the time of hearing.” the assessee has raised the following grounds of appeal:-
1. That on the facts and in the circumstances of the case and in law, the Id. CIT (A) grossly erred in confirming the initiation of proceedings by ld. AO u/s. 147/148 of the Act as valid which is bad in law.
2 a) That the Id. CIT(A) grossly erred in confirming the action of the AO who has not given any adverse comments on the facts given by the assessee on the sale and purchase of shares and as such accepted the facts given by the assessee regarding purchase and sale of shares. b) That accepting the facts given by the assessee, the Id. CIT (A) grossly erred in confirming the arbitrary addition made by the AO u/s. 68 of the Act of Rs. 37,89,051/- which is bad in law. c) That without revoking the purchases and sales of the shares the Id. CIT(A) grossly erred in confirming the action of the AO in arbitrarily applying the modus operandi narrated by the broker in the statement recorded by D.I. Wing, Kolkata. d) That the Id. CIT(A) grossly erred in not giving the opportunity for cross examination of the brokers on whose statement the AO has made the addition of LTCG u/s. 68 of the Act. Hence, the order is bad in law. 3 That on the facts and in the circumstances of the case and in law, the Id. CIT(A) grossly erred in confirming the addition u/s. 69C of the Act of Rs. 75,781/- on account of commission which is purely based on assumption, presumption, conjectures and surmises. 4 That on the facts and in the circumstances of the case and in law, the Id. CIT(A) grossly erred in making the entire assessment on assumption and presumption without any specific material except the modus operandi explained by the brokers in their statement recorded by D.I. wing, Kolkata.
That the appellant craves leave to add, alter, amends or withdraws any of the grounds of appeal before or at the time of hearing.”
The issues involved in both the appeals are identical (Except the amounts and the names of the scrip involved), hence for sake of convenience we are taking appeal for Assessment Year 2012-13 first and the ratio of this year will be applied to the appeal of Assessment Year 2014-15 also. The brief facts of case are that the assessee has filed return of income u/s. 139(1) of the Act on 31.07.2012 declaring income of Rs. 2,59,730/-. As per the details available with the Department during the year under consideration the assessee has entered into sale transaction of Rs. 41,70,000/- of shares of M/s. Karma Ispat Ltd. and has booked a Long Term Capital gain to the tune of Rs. 38,04,956/-. On the basis of information available in the case of the abovementioned assessee was reopened u/s. 148 of the Act after taking due permission and notice u/s. 148 of the Act issued on 30/03/2019 calling the assessee to prepare a true and correct return of income in respect of which the assessee is assessable under the Income Tax Act, 1961 during the previous year relevant to assessment year 2012-13. In response to the same the assessee filed his ITR on 26.04.2019. Notice u/s. 143(2) of the Act issued on 02.09.2019. Reasons of reopening were supplied to the assessee on 17.09.2019 along with a notice u/s. 142(1) of the Act dated 17.09.2019 was issued along with a questionnaire fixing the case for hearing on 24.09.2019.
As per the information received from the Pr.DIT (Inv.), Kolkata, vide his office letter M. No. 81/2017-18/4193 dated 20.09.2017 that an organized racket of generating bogus entries of LTCG in penny stock has been unearthed as a result of investigation carried out through-out the country. The Directorate of Investigation has recorded statements u/s. 132(4)/131 of the Act and the Directorate has made available various confidential statements of entities involved in the transactions for generating such bogus claims of LTCG. On the basis of information collected during search/survey operations beneficiaries of such bogus LTCG were also identified. The assessee is also one of such beneficiary. The detail of share transaction in case of assessee from penny script during the year is as under:-
S. No. Name of Scrip Trade Value 1 KARMA ISP 4170000
Based on the above considering the submissions of the assessee and after thorough analysis of the scrip involved the case of the assessee was assessed at Rs. 42,92,983/-, i.e. addition of Rs. 38,04,956/- u/s. 68 of the Act and Rs. 2,28,297/- u/s. 69 of the Act. The assessee being aggrieved with this order of the AO preferred an appeal before the Ld. CIT (A), NFAC (Delhi), who in turn confirmed the order of the AO. The assessee being further aggrieved preferred the present before us. The case was fixed for hearing on various dates as per order-sheet but always adjourned on the request of the AR of the assessee. Ultimately, the AR of the assessee filed an application for withdrawal of appeal along with Form 2 under the Direct Tax Vivad Se Vishwas Scheme, 2024. We have considered the request of the assessee in the light of Form No. 2 mentioned supra and allowed the application of the assessee for withdrawal of appeal before us and treated the same as dismissed.
(A.Y 2014-15) are identical to the (A.Y 2012-13), our decision in this appeal also will be the same as pronounced (supra). In the result this appeal is also allowed for withdrawal and treated the same as dismissed.
In the result, both the appeals of the assessee are dismissed as withdrawn.
Order pronounced in the open court on 15th day of January 2025.