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Facts
The assessee challenged additions made by the Assessing Officer for AY 2018-19, including treating long-term capital gains from the sale of shares in OASIS TRADELINK and MONOTYPE INDIA as unexplained income under Section 68 (penny stock transactions) and an addition for unexplained expenditure under Section 69C. The assessee contended that the transactions were genuine, STT was paid, and disputed the validity of notices/orders under Section 148A(b) and 148A(d).
Held
The Income Tax Appellate Tribunal (ITAT) observed that the CIT(A) failed to adjudicate the legal grounds raised by the assessee and did not provide independent findings on the evidence submitted regarding the genuineness of capital gains. Therefore, the ITAT restored the matter to the file of the CIT(A) for fresh adjudication of all grounds of appeal, including the validity of Section 148A notices/orders and capital gains claims, ensuring a fair opportunity for the assessee.
Key Issues
Whether the addition of long-term capital gain from share sales as unexplained income under Section 68 was justified, whether the notices and orders under Section 148A(b) and 148A(d) were valid, and the propriety of the addition for unexplained expenditure under Section 69C.
Sections Cited
68, 148A, 10(38), 69C, 254(1)
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of Ld. CIT(A)/NFAC dated 09.06.2025 for assessment year (AY) 2018-19. The assessee has raised following grounds of appeal: (1) That the Learned Commissioner of Income Tax Appeal has not justified in not giving the finding on following grounds: (i) The Learned Assessing Officer has erred in law as well as on fact in making addition u/s
1. 1. 1. 68. (ii) That the provision of section 68 is not applicable because the transaction has not been recorded in books of account. (iii) That the notice issued u/s 148A(b) and order u/s 148 A(d) are bad in law. (2) That the Learned Lower authorities' has not justified in making and retaining the addition of sale consideration of share on suspicion that price has been increase in multiple and against human probability and overlooking the facts which are as under: a. The appellant had purchased shares from OASIS TRADELINK and MONOTYPE INDIA, the companies which are registered at stock exchange for share trading. b. The shares so acquired held in demat account.c. The shares were sold /purchased through the brokers. d. The sale of shares was supported by the bills and contract notes issued by the brokers and further supported by corresponding movement in demat account. e. The price on which sale consideration had been realized was in full conformity with the rates prevalent in the stock exchange at the relevant time. f. The transactions were Security Transaction Tax (STT) paid and thus, requirement of condition for exemption as contained in section 10(38) had been fully complied with. g. In addition to payment of brokerage, service tax had also been paid by the "appellant" through bills issued by the brokers. h. Other material, facts and circumstances of the case, the appellant's claim for exemption under section 10(38)was liable to be allowed. i. That the appellant has shown STCG on sold of share of MONOTYPE INDIA and shown in computation of income. j) The amount received, being properly explained, neither being unexplained nor undisclosed. Without prejudice to above (3).The Learned lower authorities' has not justified in making and retaing the addition of Rs. 1463600 (sale price) instead of capital gain of Rs. 390484 (28982 STCG+361502 LTCG) shown by appellant. (4). That the Learned lower authorities' has not justified in making addition of Rs. 29272/- as unexplained expenditure u/s 69C.
2. Rival submissions of both the parties have been heard and record perused. The ld. Authorized Representative (ld. AR) of the assessee submits that Assessing Officer while passing assessment order made additions by taking view that long term capital gain earned/ shown by the assessee is on account of sale of penny scrip. Such view of the Assessing Officer is based on the report of investigation wing. The Assessing Officer merely relied upon third party information without discussing the issue on merit and giving any finding of various evidence furnished by assessee to substantiate the genuineness of long term capital gain. The ld. CIT (A) also upheld the order of Assessing Officer in an unreasoned order. There is no detailed discussion on the legal issue raised by the assessee and on various evidences furnished by assessee to substantiate the capital gain on account of sale of share of Monotype India and Oasis Tradelink. The ld AR of the assessee submits that there was no abnormal profit in the sale of such scrip. The assessee is beneficiary of genuine transaction; the assessee has furnished completed evidence to prove such transactions. The AR for the assessee prayed that matter may be restored back to the file of ld CIT(A) for adjudication of all the issue afresh. He undertook on behalf of assessee to provide complete detail to substantiate short term capital gain and long term capital gain and sale of shares in both the scrips.
3. On the other hand, the ld. Sr. DR for the revenue after going through the findings of ld CIT(A) not opposed the plea of ld. AR of the assessee and submitted that matter may be restored back to the file of CIT(A) for adjudication of issue afresh.
I have considered the submissions of both the parties and have gone through the orders of lower authorities. I find that before ld. CIT(A) the assessee filed detailed written submissions including details of shares, sale price, purchase price and profit earned on sale of such shares. In respect of shares of Monotype India Pvt. Ltd., the assessee claimed short term capital gain and on sale of shares of Oasis Trade Link, the assessee claim long term capital gain. The assessee also relied on certain decision. Before CIT(A) the assessee raised legal issue about the issuance of notice under section 148A (b) as well as against the addition on merit. However, I find that ld. CIT(A) has not adjudicated the legal grounds of appeal. The ld. CIT(A) instead of giving an independence finding simply held that Assessing Officer clearly made out case that Oasis Trade Link and Monotype India Pvt. Ltd. were involved in providing long term capital gain. There is no finding of ld CIT(A) on various evidences furnished by the assessee. Therefore, considering the plea of ld AR of the assessee, I deem it appropriate to restore the matter back to the file of CIT(A) to adjudicate grounds of appeal qua notice under section 148A (b) and order under section 148A (d) and also consider support issue with regard to short term capital gain and long term capital gain claimed by assessee on sale of different scripts. Needless to direct that before passing the order afresh, the ld. CIT(A) allowed fair and reasonable opportunity to the assessee.
The assessee also directed to be more vigilant in future and may timely compliance before ld. CIT(A). In the result, grounds of appeal raised by assessee are allowed for statistical purpose.
5. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the by placing result on the notice board Delhi benches.
PAWAN SINGH JUDICIAL MEMBER