INCOME TAX OFFICER 30(1)(1), MUMBAI, MUMBAI vs. VIVEK RANJIT TANNA, MUMBAI

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ITA 2055/MUM/2024Status: DisposedITAT Mumbai22 August 2024AY 2012-13Bench: ITAT. - Please refer to Circular No. 5/2024, wherein there is a monetary limit for filing a departmental appeal before ITAT. Monetary limit set is Rs. 50,00,000/- (Rs. Fifty Lakhs Only) for filing an Appeal before ITAT. Relief Claimed: The Appeal filed by Income Tax Officer Ward 30(1)(1) should not be entertained and considered. The assessee craves the right to add, amend, alter, modify or redraft any or all grounds of the appeal at the time of hearing." 3. We heard the rival submission and1 pages

AI SummaryDismissed

Facts

The assessee's appeal arose from an order concerning the assessment year 2012-13. The Assessing Officer made an addition of Rs. 2,22,950/- on account of short-term capital gain and Rs. 11,147/- as commission for alleged penny stock transactions. The CIT(A) restricted the addition to Rs. 94,950/- and the commission to Rs. 4,747/-, allowing a deduction for the investment in shares.

Held

The Tribunal found that the CIT(A) had reasonably restricted the addition for STCG and commission, considering the investment in shares. The Tribunal upheld the order of the CIT(A) and did not interfere with it.

Key Issues

Whether the addition made on account of short-term capital gain and commission for penny stock transactions was justified after considering the investment in shares?

Sections Cited

68, 69C, 250, 143(3), 147

AI-generated summary — verify with the full judgment below

Instant appeal of the revenue and the cross objection filed by the assessee against the order of theLearned National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year 2012-13, date of order22.02.2024.The impugned order was emanated from the order of the Ld.Income-tax Officer- 17(3)(5), Mumbai passed under section 143(3) read with section 147, date of order 22/12/2019.

The following grounds are taken by the parties:-

Revenue’s appeal “1. "Whether on the facts and in circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition to Rs. 94.950/- on account of sale of shares without appreciating the fact that the transaction was pre-arranged as well as sham and was carried out through penny scrip company." 2. "Whether on the facts and in circumstances of the case and in law, the Id. CIT(A) has erred in restricting the addition to Rs. 4,747/- on account of commission paid to entry providers in penny stock scrip. 3. "Whether on the facts and in circumstances of the case and in law, , the Id. CIT(A) failed to appreciate the fact that the entry providers have accepted to providing accommodation entries in the form of LTCG/STCG in the statement recorded during the course of search. "

4. The appellant craves leave to amend or alter or add a new ground which may be necessary.

CO 155/Mum/2024 Vivek Ranjit Tanna Assessee’s Cross Objection “GROUNDS FOR CROSS OBJECTION: -Under the facts and circumstances of the case and in law, the Income Tax Officer Ward 30(1)(1) has erred in filing an appeal before ITAT. - Please refer to Circular No. 5/2024, wherein there is a monetary limit for filing a departmental appeal before ITAT. Monetary limit set is Rs. 50,00,000/- (Rs. Fifty Lakhs Only) for filing an Appeal before ITAT.

Relief Claimed: The Appeal filed by Income Tax Officer Ward 30(1)(1) should not be entertained and considered. The assessee craves the right to add, amend, alter, modify or redraft any or all grounds of the appeal at the time of hearing.”

We heard the rival submission and considered the documents available in record. The addition was made on the basis ofearning of short-term capital gain amount to Rs.2,22,950/- and Rs.11,147/- being 5% on Rs.2,22,950/- which is treated as commission provided to the entry operator. The grievance of the Learned Assessing Officer was that the assessee has transacted penny stock in respect of the shares of “M/s Divine Multi Media (India) Ltd” which is not a genuine transaction. Sothe entire short term capital gain amount to Rs.2,22,950/- was added back under section 68 and the calculated commission amount of Rs.11,147/- was added back under section 69C of the Act. The assessee filed an appeal before the ld. CIT(A) and the ld.CIT(A) had accepted the submission of the assessee and allowed the benefit of invest in the purchase of Shares amount to Rs.1,28,000/- on dated 31/12/2010 and the addition was restricted to Rs.94,950/- . The relevant paragraph of the appeal order, page 13 is reproduced as below: - CO 155/Mum/2024 Vivek Ranjit Tanna “This is a case where investigations were carried out and the modus operandi was unearthed. The appellant has not been able to rebut the findings and documentary evidence brought on record by the AO. In view of the same the sale proceeds received by the appellant are nothing but unaccounted money received by the appellant through colorful device. However, it is seen that the appellant has paid Rs.1,28,000/- for purchase of this share. The entry in the bank statement dated 31.12.2010 reveals payment of Rs.1,28,000/- to Dani Shares & Stock Pvt. Ltd. In view of the above, the addition is restricted to Rs.94,950/-. The commission paid to the entry operator is also reduced proportionately and restricted to Rs.4,747/-. In view of the above the appeal is partly allowed.”