DCIT(CC)-2(4),MUMBAI, MUMBAI vs. RENUDEVI HISARIA, MUMBAI
Facts
The Revenue filed an appeal against the order of the Ld. CIT(A) which deleted an addition made on account of commission paid by the assessee. This commission was considered consequential to an addition for bogus long-term capital gain on alleged penny stock. The addition was made by the AO for AY 2015-16 under section 147 of the Income-tax Act.
Held
The Tribunal noted that a coordinate bench had previously quashed the original assessment regarding the bogus long-term capital gain. Therefore, the addition of commission, being consequential to the quashed addition, did not have a legal basis to stand. The CIT(A) had rightly deleted this consequential addition.
Key Issues
Whether the addition of commission, being consequential to a quashed addition of bogus long-term capital gains, is sustainable in law.
Sections Cited
147, 68, 153A, 143(3), 132
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: SHRI SATBEER SINGH GODARA & SHRI GIRISH AGRAWAL
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH MUMBAI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER
ITA No.1268/MUM/2024 Assessment Year: 2015-16
Deputy Commissioner of Income Renudevi Hisaria, Tax, 74/80, 3rd floor, Souri Central Circle – 2(4), Building, Mumbai Vs. Babu Genu Road, Kalbadevi, Mumbai – 400 002
(PAN : AABPH1487R) (Appellant) (Respondent)
Present for: Assessee : Shri Neelkanth Khandelwal, Advocate
Revenue : Smt. Mahita Nair, Sr. DR
Date of Hearing : 02.07.2024 Date of Pronouncement : 27.09.2024
O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of Ld. CIT(A)- 48, Mumbai, vide order no. ITBA/APL/M/250/2023- 24/1059314386(1), dated 03.01.2024, against the assessment order passed by the Deputy Commissioner of Income Tax, Central Circle – 2(4), Mumbai, u/s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 23.03.2022 for Assessment Year 2015-16.
Grounds taken by the Revenue are reproduced as under:
2 ITA No.1268/Mum/2024 Renudevi Hisaria, AY 2015-16 i) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO on account of commission paid by assessee, which is consequential to addition of bogus LTCG on penny stock made by the AO in assessee's case". ii)"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that vide order dated 09.12.2019 passed u/s 153A r.w.s 143(3) the AO has rightly disallowed the bogus LTCG on penny stock claimed as exempt by the assessee based on the detailed enquiry conducted during the search proceedings u/s 132 on 16.11.2017".
In the present appeal, Revenue is aggrieved by deletion of addition made on account of commission paid by the assessee which is consequential to addition to bogus long term capital gain on alleged penny stock. In this respect at the outset, ld. Counsel for the assessee submitted that the Coordinate Bench of ITAT, Mumbai in assessee’s own case for the year under consideration i.e., AY 2015-16 in ITA No. 1287/Mum/2021 had deleted the addition in quantum on the legal issue of there being no incriminating material found during the course of search relating to alleged bogus long term capital gain on penny stock. Ld. AO had made addition towards commission by taking 3% on the total sales value of Rs.96,29,100/- which comes to Rs.2,88,873/-. According to the ld. AO, assessment was initially completed by making addition of Rs.96,29,100/- u/s. 68 of the Act towards long term capital gain on penny stock. However, no addition was made in respect of commission which according to him must have been given to the broker on sale of such bogus shares. Re-assessment proceedings u/s. 147 was initiated for the same and accordingly the addition was made.
3.1. As noted above, the original assessment in which addition towards bogus long term capital gain was made on the penny stock had been quashed by the Co-ordinate Bench. The addition of commission in the present case by way of undertaking re-assessment u/s.147 of the Act does not have legs to stand on. The addition of commission is
3 ITA No.1268/Mum/2024 Renudevi Hisaria, AY 2015-16 consequential to the addition towards long term capital gain on the alleged penny stock which has been quashed.
Ld. CIT(A) has taken note of the decision of the Co-ordinate Bench as stated above in para 8.4 and 8.5 of the impugned order and thus delete the consequential addition of Rs.2,88,873/- made by the ld. AO in the impugned order passed u/s. 147. In the given set of facts which are undisputed, we do not find any reason to interfere with the findings given by the ld. CIT(A) in this respect. Accordingly, the grounds taken by the Revenue in this respect are dismissed.
In the result appeal of the Revenue is dismissed.
Order pronounced on day of 27 September, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963
Sd/- Sd/- (Satbeer Singh Godara) (Girish Agrawal) Judicial Member Accountant Member
Dated: 27 September, 2024 MP, Sr.P.S. Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai
