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Facts
The assessee declared a short-term capital loss of Rs. 39.93 lakhs on the sale of shares of M/s. Raford Global Ltd., identified as a penny stock. The Assessing Officer considered the transactions bogus and assessed the loss as income. The assessee did not appear before the CIT(A), leading to the dismissal of their appeal.
Held
The Tribunal noted that the assessee's auditor's email was used for communication, and the auditor failed to inform the assessee of the hearing notices. To ensure natural justice, the Tribunal decided to give the assessee another opportunity to present their case.
Key Issues
Whether the short-term capital loss on sale of shares should be treated as unexplained income or allowed as a genuine loss.
Sections Cited
Sec 2(47) of the Income Tax Act
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Income Tax Appellate Tribunal, Mumbai “SMC” Bench, Mumbai.
Before: Justice (Retired) C.V. Bhadang & Shri B.R. Baskaran (AM)
The assessee has filed this appeal challenging the order dated 12.6.2023 passed by the learned CIT(A), National Faceless Appeal Centre, Delhi and it relates to A.Y. 2014-15. The assessee is aggrieved by the decision of the learned CIT(A) in confirming the order of Assessing Officer in assessing the short term capital loss incurred on sale of shares of M/s. Raford Global Limited as unexplained income of the assessee.
We heard the parties and perused the record. During the year under consideration the assessee had sold shares of M/s. Raford Global Ltd. and declared short term capital loss of Rs. 39.93 lakhs. Since the above said share was identified as one of the penny stocks, the Assessing Officer considered the share transactions carried on by the assessee as bogus in nature. Accordingly, the AO assessed the short term capital loss as income
2 Sagarika Infrastructure Private Limited of the assessee. Before the learned CIT(A) the assessee did not appear and hence the learned CIT(A) dismissed the appeal of the assessee. Aggrieved, the assessee has filed this appeal before the Tribunal.
The Learned AR submitted that the assessee has purchased shares of M/s Radford Global Ltd through its broker from stock exchange platform and also sold the shares through the stock exchange platform. He further submitted that the assessee has furnished all the evidences in support of the purchase and sale of shares. Accordingly, he submitted that there is no reason to doubt the genuineness of purchase and sale of shares. By placing reliance on the decision rendered by Hon'ble Bombay High Court in the case of PCIT Vs. Indravadan Jain (HUF) (ITA No. 454 of 2018 dated 12.7.2023), the Learned AR submitted that the tax authorities should have accepted the genuineness of the transactions. Accordingly, he submitted that the short term capital loss claimed by the assessee may be allowed.
The Learned DR, on the contrary, submitted that the assessee has not appeared before the learned CIT(A) and hence the Ld CIT(A) has dismissed the appeal of the assessee.
From the record, we notice that the assessee has given e-mail id of its auditor in Form no.35 filed before Ld CIT(A) and accordingly, the Ld CIT(A) has served the notice of hearing to the above said e-mail id. It appears that the auditor did not communicate the details of hearing notices sent by Ld CIT(A) to the assessee and none responded to the notices issued by Ld CIT(A). Under these set of facts, in the interest of natural justice, we are of the view that the assessee may be provided with one more opportunity to present its case properly before Ld CIT(A). Accordingly, we set aside the order passed by the learned CIT(A) and restore all the issues to his file for adjudicating them afresh on merits by duly considering various decisions that may be relied
3 Sagarika Infrastructure Private Limited upon by assessee before him. We also direct the assessee to fully cooperate with the learned CIT(A) for expeditious disposal of the appeal.
In the result, appeal filed by the assessee is treated as allowed.
Order pronounced on 17.1.2024.