PRINCIPAL COMMISSIONER OF INCOME TAX 5,KOLKATA vs. M/S S. N. SODHANI HUF

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ITAT/150/2022HC CalcuttaWBCHCO004296202231 October 2022Bench: HON'BLE JUSTICE T. S. SIVAGNANAM,HON'BLE JUSTICE HIRANMAY BHATTACHARYYA3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court condoned the delay and allowed the Revenue's appeal. It held that the ITAT erred in cancelling the disallowance of LTCG by relying on a coordinate bench decision which was later overturned by the High Court in a similar case.

What were the facts?

The Revenue filed an appeal against an ITAT order that allowed the assessee's claim of Long Term Capital Gains (LTCG) and exemption. The assessee's notice was returned unclaimed, and there was a significant delay in filing the appeal by the Revenue.

What were the issues?

Whether the ITAT erred in allowing LTCG and exemption by ignoring evidence of share price manipulation and round-tripping of unaccounted money. Whether the ITAT's decision was perverse due to overlooking the stage-managed nature of share transactions.

Which sections of the Income-tax Act were involved?

Section 260A,Section 10(38)

AI-generated summary — verify with the full judgment below

OD-13 IN THE HIGH COURT AT CALCUTTA SPECIAL JURISDICTION (INCOME TAX) ORIGINAL SIDE ITAT/150/2022 IA No.GA/1/2022; GA/2/2022 PRINCIPAL COMMISSIONER OF INCOME TAX, -5, KOLKATA Vs M/S. S.N. SODHANI HUF BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAM And THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA Date : 31st October 2022. Appearance : Mr. Tilak Mita, Adv. ..for appellant RE: GA/1/2022 The Court:- Heard Mr. Tilak Mitra, learned Advocate for the appellant / revenue. Though notice was sent to the respondent/assessee the same was returned unclaimed. There is a delay of 964 days in filing the appeal. Since the legal issue involved in this appeal is covered by a earlier decision of this Court in favour of the revenue we exercise discretion and condone the delay in filing the appeal. ITAT/150/2022 This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961, is directed against the order dated 14th November, 2018 passed by the Income Tax Appellate Tribunal “SMC” Bench, Kolakata in I.T.A. No. 1566/Mkol/2018 for the assessment year 2014-2015. The revenue has raised the following substantial question of law for consideration:- (ii) Whether on the facts and circumstances of the case the Learned Income Tax Appellate Tribunal erred in ignoring the direct and circumstantial evidence brought on record by the Assessing Officer

2 in the form of modus operandi contrived by the accommodation entry providers who manipulated the share price of SRK Industries Ltd. and provided facility for round tripping of assessee’s unaccounted money to record fictitious Long Term Capital Gains of Rs.19,48,385/- in favour of the instant assessee which is also claimed as exempted income tax u/s 10(38) of the Income Tax Act, giving rise thereby to the vice of perversity in the process of decision making ? (ii) Whether on the facts and the circumstances of the case the Learned Income Tax Appellate Tribunal erred in cancelling the disallowance of Long Term Capital Gain of Rs.19,48,385/- overlooking the fact that the share transactions were stage managed with the object to facilitate the assessee to plough back its unaccounted income in the form of fictitious Long Term Capital Gains of Rs.19,48385/- and claim bogus exemption thereupon, thereby giving rise to the vice of law in the decision making processes? We have heard Mr. Tilak Mitra, learned standing Counsel for the appellant. Though notice was sent to the respondent the notice was returned unclaimed and the respondent has not taken any steps for entering appearance. Therefore, we have heard learned standing Counsel for the appellant and proceeded to decide the appeal. We find from the order passed by the learned Tribunal that no independent reasoning has been given by the learned Tribunal but the Tribunal chose to follow the decision of the Coordinate Bench in I.T.A. No.

3 354/Kol/2018 dated 24th August, 2018. In fact, in the said decision the earlier decision was affirmed. Those decisions were appealed against in the case of Principal Commissioner of Income Tax Vs. Swati Bajaj, SCC online Cal 1572 the appeal filed by the revenue were allowed and the substantial questions of law were answered in favour of the revenue. The said decision will squarely apply to the case on hand. Thus applying the case of Swati Bajaj, the appeal filed by the revenue is allowed and the substantial questions of law of law are answered in favour of the revenue. (T.S. SIVAGNANAM, J.)

(HIRANMAY BHATTACHARYYA, J.) Pkd/GH.

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