NAINA DHANANIA,HOWRAH vs. ITO, WARD - 46(4), KOLKATA, KOLKATA

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ITA 1543/KOL/2018Status: DisposedITAT Kolkata16 November 2018AY 2014-153 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that additions should be based on evidence, not on generalizations, human probabilities, suspicion, or conjectures. Since the revenue authorities relied on a general report without confronting the assessee with specific material, and the assessee's evidence remained unchallenged, the additions were deleted.

What were the facts?

The assessee claimed long-term and short-term capital gains on the sale of shares. The Assessing Officer (AO) rejected this claim, deeming the gains bogus based on a general report and modus operandi. The AO added the entire sale proceeds to the assessee's income.

What were the issues?

Whether the AO was justified in rejecting the claim of capital gains based on general reports and circumstantial evidence, without confronting the assessee with specific material.

Which sections of the Income-tax Act were involved?

Section 10(38)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA

Before: Sri J. Sudhakar Reddy

Appearances by: Shri S.S. Gupta, FCA, appeared on behalf of the assessee. Shri Saurav Kumar, Addl. Sr. D/R. appearing on behalf of the Revenue. Date of concluding the hearing : October 30th, 2018 Date of pronouncing the order : November 16th , 2018 ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals)-14, Kolkata, (hereinafter the ‘Ld. CIT(A)’), dt. 25/06/2018, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Year 2014-15.

2.

The sole issue that arises for my adjudication is whether the Assessing Officer was right in rejecting the claim of the assessee that he had earned Long Term Capital Gains of Rs.14,75,963 and Short Term Capital Gain of Rs.3,55,258/- on purchase and sale of the shares of M/s. Kailash Auto Finance Ltd. The AO based on a general report and modus operandi adopted generally in these cases and on general observations has concluded that the assessee has claimed bogus long term & short term capital gain. He made an addition of the entire sale proceeds of the shares as income and rejected the claim of exemption made u/s 10(38) of the Act. The evidence produced by the assessee in support of the genuineness of the transaction was rejected.

Assessment Year: 2014-1 Naina Dhanania 3. The assessee carried the matter in appeal and the ld. CIT(A), Kolkata, had upheld the addition. The ld. CIT(A) has in his order relied upon “circumstantial evidence” and “human probabilities” to uphold the findings of the AO. He also relied on the so called “rules of suspicious transaction”. No direct material was found to controvert the evidence filed by the assessee, in support of the genuineness of the transactions. In other words, the overwhelming evidence filed by the assessee remains unchallenged and uncontroverted. The entire conclusions drawn by the revenue authorities, are based on a common report of the Director of Investigation, Kolkata, which was general in nature and not specific to any assessee. The assessee was not confronted with any statement or material alleged to be the basis of the report of the Investigation Wing of the department and which were the basis on which conclusion were drawn against the assessee. Copy of the report was also not given.

4.

Under the circumstances, in a number of cases this bench of the Tribunal has consistently held that decision in all such cases should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. We have in all cases deleted such additions. Some of the cases were detailed finding have been given on this issue are listed below:- Sl.No of the Assessee Date of order /Judgment 1. 1236-1237/K/17 Manish Kumar Baid & Others vs ACIT 18.08.2017 ITAT - Kolkata 2 443/Kol/2017 Kiran Kothari (HUF) vs ITO 15.11.2017 3. 22 of 2009 CIT, Kolkata-III vs Bhagwati Prasad Agarwal 29.04.2009 Calcutta High Court 4. 456 if 2007 CIT vs Shri Mukhesh Ratilal Marolia 07.09.2011 Bombay High Court 5. 18 of 2017 Punjab Pr. C.I.T. (Central)Ludhiana vs Sh.Hitesh 16.02.2017 and Haryana High Gandhi, Court 6. 95 of 2017 Pr. C.I.T. vs Prem Pal Gandhi 18.01.2018. Punjab and Haryana High Court 7. 2281/Kol/2017 Navneet Agarwal, Legal Heir of Late Kiran 20.07.2018 ITAT - Kolkata Agarwal vs ITO,Ward-35(3),Calcutta

Assessment Year: 2014-1 Naina Dhanania

5.

We are bound by the proposition of law laid down in these case law by the Jurisdictional High Court as well as by the ITAT Kolkata. They are squarely applicable to the facts of the case. The ld. Departmental Representative, though not leaving his ground, could not controvert the claim of the ld. Counsel for the assessee that the issue in question is covered by the above cited decisions of the Hon’ble High Courts and the ITAT.

6.

In view of the above discussion the additions in question are deleted.

8.

In the result the appeal of the assessee is allowed.

Kolkata, the 16th day of November, 2018.

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