VINOD KOTHARI (HUF),BANGALORE vs. INCOME TAX OFFICER, WARD - 2(2)(1), BANGALORE

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ITA 698/BANG/2019Status: DisposedITAT Bangalore03 July 2019AY 2014-156 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee was denied a fair hearing as they were not provided with the investigation report or an opportunity for cross-examination. Following the Karnataka High Court's judgment, the matter was restored to the Assessing Officer for fresh adjudication.

What were the facts?

The assessee claimed exemption under section 10(38) for long-term capital gains on share transactions. The Assessing Officer disallowed this exemption, treating the amount as an unexplained cash credit under section 68. The assessee argued they were denied a fair hearing as they did not receive the investigation report or cross-examination.

What were the issues?

Whether the assessment order is valid when the assessee was denied a fair hearing by not being provided with the investigation report and cross-examination opportunities.

Which sections of the Income-tax Act were involved?

Section 10(38),Section 68,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC-A” BENCH : BANGALORE

Before: SHRI JASON P BOAZ

For Appellant: Shri. Prashanth G. S, CA
For Respondent: Shri. Priyadarshi Misra, JCIT
Hearing: 04.06.2019Pronounced: 03.07.2019

This appeal filed by the assessee is directed against the orders of the Commissioner of Income-tax (Appeals)-6, Bangalore, dated 31.01.2019 for Assessment Year 2015-16.

2.

Briefly stated, the facts of the case are as under:

2.1 The assessee filed its return of income for Assessment Year 2014-15 on 23.03.2015 declaring income of Rs.8,84,780/-. The case was taken up for scrutiny and the assessement was concluded under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) vide order dated 26.12.2016, wherein the assessee’s income was determined at Rs.42,94,952/-. This was, in view of the Assessing Officer (AO) disallowing the exemption of Rs.34,50,172/- claimed under section 10(38) of the Act towards LTCG on sale of 7340 shares of M/s. Sunrise Asian Ltd., and treating the same as unexplained cash credit under section 68 of the Act, in the year under consideration. The assessee’s appeal was dismissed by the CIT(A)-2, Bangalore vide order dated 31.01.2019.

3.

Aggrieved by the orders of CIT(A)-2, Bangalore, dated 31.01.2019 for Assessment Year 2014-15, the assessee has preferred this appeal before the Tribunal wherein he has raised the following grounds:

Assessment Year 2007-08

4.

Ground Nos.3 (a) to (d) 4.1 It was submitted by the learned AR of the assessee that in ground Nos.3(a) to (d) (supra), the assessee has disputed the validity of the assessment order passed by the AO which was upheld by the learned CIT(A) by relying on the findings and details of the report of the Kolkata Investigation Directorate in which it is alleged that the assessee’s share transactions (supra) were not genuine. It was submitted that neither the copy of the Report of the Kolkata Investigation Directorate relied on by the AO was made available to the assessee for rebuttal nor has the assessee been allowed cross-examination of the persons on the basis of whose statements and details based on which the authorities below have drawn adverse inference in the assessee’s case. The learned AR submitted that under these facts, judgments of Hon’ble Karnataka High Court rendered in the case of Chandra Devi Kothari in writ petition No.39370/2014 dated 2nd of Feb, 2015 (copy of which has been placed on record), is squarely applicable. She has particularly drawn my attention to Para No.8 of this judgment of Hon’ble Karnataka High Court, as per which, it was held that since the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details, the matter is required to be reconsidered by the AO by providing fair and reasonable opportunity of hearing to the assessee after furnishing details / copy of the details based on which the impugned assessment order has been passed. The learned AR submitted that in the light of the facts of the present case and as per this judgment of Hon’ble Karnataka High Court, in the case on hand also, the entire matter should be restored back to the file of the AO for fresh decision with same directions.

4.2 Per contra, the learned DR supported the orders of the authorities below.

4.3.1 I have considered the rival submissions and first of all, I reproduce Para No.8 of the judgment of Hon’ble Karnataka High Court rendered in the case of M/s. Chandra Devi Kothari (Supra) and this is as under: “8. In the light of the facts and circumstances as adverted to above and as the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details regarding the alleged share amount, I am of the view that the matter requires to be re-considered by the respondent by providing fair and reasonable opportunity of hearing to the petitioner and by furnishing the details / copy of the statement based on which the impugned assessment order has been passed.”

4.3.2 From the above Para 8 of the judgment of Hon’ble Karnataka High Court in the case of Chandra Devi Kothari (supra) it is seen that matter was restored back to the file of the AO for fresh decision after providing copy of the statement and other related details relied upon by the AO; in this case copy of the Report of Kolkata Investigation Directorate and other attendant details. As per the facts noted by the High Court in the earlier paras of judgment (supra) and as per the facts of the case on hand, there appears to be no difference in facts and therefore by respectfully following this judgment in the case of Chandra Devi Kothari (Supra), I set aside the impugned order of learned CIT(A) for Assessment Year 2014-15 and restore the matters to the file of the AO for fresh decision with the same directions as were issued by the Hon’ble Karnataka High Court in the case as per Para No.8 of the judgment reproduced above. In view of this decision, no adjudication is called for at this stage regarding the merits of the addition.

5.

In the result, the assessee’s appeal for Assessment Year 2014-15 is allowed for statistical purposes.

Order pronounced in the open court on this 3rd day of July, 2019.

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