VIJAY KUMAR MAHESWARI,CHENNAI vs. ITO NON CORPORATE WARD 9(4), CHENNAI

PDF · subscribers
ITA 2177/CHNY/2018Status: DisposedITAT Chennai07 December 2018AY 2014-158 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal confirmed the orders of the revenue authorities, holding that the assessees failed to justify the genuineness of the transactions and did not effectively controvert the findings of the AO and CIT(A). The grounds regarding opportunity for cross-examination and furnishing of investigation reports were not raised before the lower authorities.

What were the facts?

The assessees claimed exemption on long-term capital gains from the sale of equity shares, which the Assessing Officer (AO) treated as sham transactions. The AO relied on SEBI findings and investigation reports indicating price manipulation and bogus transactions.

What were the issues?

Whether the claim of exemption on long-term capital gains from share transactions is valid when the transactions are considered sham and manipulated, and whether the assessees were denied proper opportunities.

Which sections of the Income-tax Act were involved?

Section 68,Section 10(38),Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, ‘C’ (SMC

Before: SHRI JOGINDER SINGH & SHRI A.MOHAN ALANKAMONY

Hearing: 06.12.2018Pronounced: 07.12.2018

Heard together (4 matters)

I.T.A.No.2175/CHNY/2018
I.T.A.No.2177/CHNY/2018
I.T.A.No.2178/CHNY/2018
I.T.A.No.2179/CHNY/2018

Read from the judgment's own cause title. This page is filed under one of them.

आदेश / O R D E R

Per A. Mohan Alankamony, AM:-

1.

These appeals by the assessees are directed against the respective orders passed by the learned Commissioner of Income Tax (Appeals)-10, Chennai for the assessment year 2014-15 passed U/s.250(6) r.w.s.143(3) of the Act.

Appeal No. Assessee Order of the Ld.CIT(A)-12, Chennai No. Dated ITA 2175 of 2018 Smt. Gayathri Devi 07.06.2018 17/CIT(A)-10 ITA 2176 of 2018 Shri Vinay Kumar ITA No.145/16- 21.05.2018 Maheshwari 17/CIT(A)-10 ITA 2177 of 2018 Shri Vijay Kumar ITA No.145/16- 21.05.2018 Maheshwari 17/CIT(A)-10 ITA 2178 of 2018 Smt. Laxmi Devi ITA No.125/16- 12.02.2018 Maheshwari 17/CIT(A)-10 ITA 2179 of 2018 M/s. Damodaran & ITA No.154/16- 07.06.2018 Sons 17/CIT(A)-10 Since the issues in all these appeals are identical, they have been taken up for hearing together and disposed off by this common order.

2.

The appeal was filed by the assessee with a delay of 98 days in ITA No.2178/Chny/2018. The Ld.AR has submitted that the assessee was under the treatment for jaundice coupled with urinary tract infection and was advised bed rest for a period of four months because of his illness. It was therefore submitted that the assessee could not pursue his appeal because he was incapacitate by his illness. Hence it was pleaded that the delay may be condoned in filing the appeal. The Ld. DR strongly objected to the submission of the Ld. AR. However, after hearing both sides, we are of the considered view that the delay of 98 days in filing the appeal is requires to be condoned because of the genuine hardships faced by the assessee due to his illness. Accordingly we hereby condone the delay of 98 days in filing

3.

The assessees have raised several grounds in their appeals however the cruxes of the issues are that :- (i) The Ld.CIT(A) has erred in confirming the addition made by the Ld.AO U/s.68 of the Act, by rejecting the assessees claim of exemption U/s.10(38) of the Act, on the Long Term Capital Gains arising out of the purchase & sale of equity shares of the company M/s. Kailash Auto Finance Ltd., by holding that the transactions are sham and tailored to bring the unaccounted money as the legitimate gain in the guise of Long Term Capital Gain. (ii) The assessees object to the levy of interest U/s.234B & 234C of the Act.

4.

The brief facts of the case in all these appeals are that the assessees cases were selected for scrutiny and orders were passed U/s.143(3) of the Act, wherein the Ld.AO treated the purchase and sale of shares of M/s. Kailash Auto Finance Ltd., as sham transaction and thereby the claim of exemption U/s.10(38) of the Act, with respect to the Long Term Capital Gain earned by the assessees on those

5.

While doing so, the Ld.AO analyzing the issue in detail arrived at the conclusion that the following findings of the wing corroborates with the findings of the SEBI:- (i) The company in which the assessees had purchased the equity shares had no creditability and no prudent investor would make such investment. (ii) As per the finding of the investigation report of the investigation wing, the purchase and sale of shares of M/s. Kailash Auto Finance Ltd., by various assessees were bogus. (iii) The ultimate beneficiary of all the price manipulation is the beneficiaries like the assessees who sold the shares when the share price was sufficiently brought to a high level and could take the benefit of Section 10(38) of the Act. (iv) Brokers facilitate such bogus transactions in the case of all the assessees. (v) But for the price rigging and manipulative actions of the brokers the assessee would not have earned such Long Term Capital Gain.

6 to 2179/Chny/2018 (vi) The motive of the price manipulation is only to bring out their black money as legitimately earned Long Term Capital Gain for which exemption U/s.10(38) of the Act is available.

6.

On appeal the Ld.CIT(A) confirmed the order of the Ld.AO after detailed deliberations and placing reliance in the decision of the Hon’ble Apex Court in the case P. Mohankala reported in 291 ITR 278, in the decision of the Hon’ble Kerala High Court in the case Diza Holdings reported in 255 ITR 573 and in the decision of the Hon’ble Kolkata High Court in the case Precision Finance reported in 208 ITR 265 etc., wherein it was held that mere fact that transactions are through banking channel is of no consequence by itself.

7.

Before us the Ld.AR submitted that the assessees were not provided with an opportunity to cross-examine the witness who were relied by the Revenue and further failed to furnish the investigation report of the intelligence wing of the Revenue before concluding the assessment. The Ld.AR further argued that the assessees were not provided with proper opportunity of being heard. It was therefore pleaded that the matter may be remitted back to the file of Ld.AO for fresh consideration. The Ld.DR strongly opposed to the submission of the Ld.AR and requested for confirming the orders of the Ld.Revenue Authorities.

8.

We have heard the rival submissions and carefully perused the materials on record. At the outset we must say that the Ld.AR could not justify before us any of their claims made before the Ld.Revenue Authorities that the transaction was genuine. Further the Ld.AR could not successfully controvert to any of the findings of the Ld.Revenue Authorities before us which are against the assessees. Instead the Ld.AR has only come out with the plea that the assessees were not provided with opportunity of cross-examining the witness, the investigation report was not furnished and proper opportunity was not provided of being heard. However we find that all these arguments raised by the Ld.AR before us was never alleged before the Ld.Revenue Authorities when the matter was before them. In this situation we do not have any other option but to confirm the orders of the Ld.Revenue Authorities in the case of all the assessees because the Ld.AO as well as the Ld.CIT(A) have arrived at their respective decisions after considering the issues in the appeal in detail and there is nothing before us to disturb their findings. Accordingly we hereby confirm the Order of the Ld.Revenue Authorities on this issue. Thus the first ground raised by the assessees herein above in all the appeals are held against the assessees.

8 to 2179/Chny/2018 9. Levy of interest U/s.243B of the Act is consequential in nature and therefore this ground raised by the assessees is devoid of merits.

10.

In the result all the appeals raised by the assessees in to 2179/Chny/2018 are dismissed.

Order pronounced on the 7th December, 2018 at Chennai.

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →