ABHISHEK AGARWAL ,BANGALORE vs. THE INCOME TAX OFFICER WARD-4(3)(1), BANGALORE

Per Shri Jason P Boaz, A.M. : This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-4, Bangalore, dt.26.06.2018 for the Assessment Year 2015-16.

3.1 Aggrieved by the order of the CIT (Appeals) – 4, Bengaluru, dt.26.06.2018 for Assessment Year 2015-16, the assessee has preferred this appeal wherein it has raised the following grounds :-

3.2 During the course of hearing, the ld.AR for the assessee submitted that on similar facts and circumstances, the matter for consideration is squarely covered by the decision of the ITAT, Kolkata Bench in its order in in the case of Prakash Chand Butoria. It is submitted that in the cited case (supra) also, the assessee, an individual, filed his return of income claiming income on sale of shares as exempt u/s 10(38) of the Act. The Assessing Officer (AO) treated the receipt of sale consideration as unaccounted income and made an addition u/s 68 of the Act. On appeal the CIT(A) upheld the AO’s order. However, on further appeal, the ITAT, Kolkata Bench allowed the assessee’s appeal observing that the addition was unsustainable since the AO made the addition in a routine and mechanized manner: merely on suspicions based on Report of enquiries made by the Investigation Directorate of DIT, Kolkata, without bringing the same on record or confronting the assessee with OR supplying the assessee copies of the documents relied upon for making the addition and providing him opportunities for rebuttal. It is prayed that in view of the above, the orders of the authorities below be set aside and the assessee’s appeal be allowed.

3.3 Per contra, the ld. DR for Revenue submitted that on similar facts and circumstances as in the case on hand, issue for consideration is covered by the decisions of the Bengaluru ITAT in the cases of Arvind Kumar Moolchand in and Pukhraj Hasmukhlal in the file of the AO having observed that the additions were made based on reports of the Investigation Directorate at Kolkata and statements of various persons without confronting OR making them available to the assessee for rebuttal. In those cases, the Tribunal restored the matter to the file of the AO with the direction to confront the assessee with the reports/documents/ statements proposed to be used against the assessee, allow rebuttal thereof and cross examination of parties on whose testimony is proposed to be relied upon and the matter be adjudicated afresh after affording the assessee adequate opportunity of being heard and to also file details/submissions in this regard.

3.4 In Rejoinder, the ld.AR for the assessee did not dispute the proposition put forth by the ld. DR for restoring this issue to the file of the AO for de novo adjudication.

3.5 I have heard both parties and perused and carefully considered the material on record including the judicial decisions cited and the orders of the authorities below. Taking into consideration the facts and circumstances of the case and the judicial decisions cited, I find that the issue for consideration is squarely covered by the orders of the Bengaluru ITAT in the cases of Arvind Kumar Moolchand (supra) and Pukhraj Hasmukhlal (supra). Following the aforesaid orders (supra), I set aside the orders of the AO and restore the matter of treatment of profit declared on sale of shares, claimed as exempt u/s 10(38) of the Act, to the file of the AO to re-adjudicate the issue afresh; after making available to the assessee for rebuttal all documents; including Statements, Investigation Reports, etc. relied upon by Revenue for making the additions/disallowances and providing adequate opportunity to the assessee for cross-examination of persons whose statements are being relied upon. It is accordingly ordered.

Order pronounced in the open court on the 27th day of Nov.,2018.