PRINCIPAL COMMISSIONER OF INCOME TAX 5 KOLKATA vs. SHRI SAWANKUMAR T JAJOO

This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act) challenging the order dated 13.03.2023 passed by the Income Tax Appellate Tribunal, “E” Bench, Mumbai (the Tribunal) in ITA/6489/MUM/2018 for the assessment year 2013-14. 2. The revenue has raised the following substantial questions of law for consideration :

We have heard Mr. Soumen Bhattacharjee, learned Standing Counsel for the appellant and Ms. Aratrika Roy, learned senior Advocate appearing for respondent/assessee. There is a delay of 432 days in filing the appeal. Though the explanation which is submitted by the revenue is not fully satisfactory, yet this is an appeal under Section 260A of the Act, wherein the Court is required to consider whether any substantial question of law arises for consideration we are persuaded to exercise discretion and condone the delay in filing of the appeal. 4. The assessee preferred an appeal challenging the orders under Section 143(3) read with Section 153A of the Act dated 30.12.2017. The Appellate Authority namely the Commissioner of Income Tax (Appeals) 49, Mumbai allowed the appeal. 5. Aggrieved by the same, revenue preferred an appeal before the learned Tribunal which has been dismissed. This order has been put to challenge by the revenue in this appeal. 6. Before the CIT(A) the assessee challenged the addition made by the assessing officer as being perverse and contrary to the facts and circumstances of the case and without following proper procedure and that the addition under Section 68 of the Act was made on surmises, presumption and conjecture without any incriminating evidence being found during the course of search without bringing on record any material evidence in support of the addition. Further it was contended that assessing officer erred in law in relying upon third party statement against the assessee without providing any opportunity of being heard in this regard despite the fact that the name of the assessee does not appear in the statement given by the third party.

On the first aspect as to the procedural irregularities pleaded by the assessee, the CIT(A) found that adequate opportunity was granted to the assessee to make a submission and the assessment was completed after considering the submission of the assessee and, therefore, there was no violation of any procedural law while completing the assessment. Thus, this ground was triggered against the assessee. The CIT(A) thereafter took up for consideration the merits of the matter and by a very detailed order after analyzing all the contention the appeal was allowed. The learned Tribunal has elaborately considered factual position and found that the assessee had submitted in detail in respect of allotment of shares with supporting share application form with bank statement and demat statement and broker ledger account and discharged the onus cast upon the assessee and all those materials were placed in the form of a paper book before the Tribunal. 8. After going through the document the Tribunal held that the assessing officer made the addition solely on the ground that the scrips are in the stock whereas the assessee was able to demonstrate that the shares of the company in which the assessee has invested does not appear in the AIR report of the revenue which related to trading in penny stock. Further the name of the alleged company did not appear in the list of 331 suspended companies and no adverse inference was drawn by the SEBI. 9. Thus, the Tribunal found that the assessing officer committed a mistake which is apparent on the face of the assessment order. The Tribunal also noted that the assessee had submitted details to substantiate the claim and the transaction of the assessee was found to be not in the nature of speculation and the assessee has purchased scrips for long term holding. The Tribunal faulted the assessing officer in not considering the voluminous information placed by the assessee