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Assessee by : None Revenue by : Shri M.C Omi Ningshen (DR) Date of hearing : 25.04.2017 Date of Pronouncement : 25.04.2017 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal u/s 253 of the Income-tax Act (‘the Act’) is directed by assessee against the order of ld. CIT(A)-20, Mumbai dated 20.03.2014 for AY-2008-09. The assessee has raised the following grounds of appeal: “1. The Commissioner (Appeals) erred in ex parte disposing of the appeal of the assessee company vide his order dated 20th March, 2014 even though several hearings of the appeal were adjourned on the ground that the Remand Report of the Assessing Officer was not available and on the date of the order the Remand Report of the Assessing Officer was not available.
2. The Commissioner (Appeals) erred in disposing the appeal of the assessee without giving full opportunity of being heard and against the principles of natural justice.
3. The Commissioner (Appeals) without any evidence on record and purely on presumption held that with a view to reflect the loss in respect of sale of the shares by the assessee company, the sale price has been shown at lower rate against the purchase cost of the shares of five companies.
4. The Commissioner (Appeals) failed to take into consideration the evidence on record which show that the shares of M/s. Shirpur Gold Refinery Ltd., - M/s Maharaja Builders Pvt. Ltd. which are quoted at the stock exchange, were sold at the price higher than the price recorded at the Stock Exchange on the date of the sale.
5. The Commissioner (Appeals) erred in holding that the assessee company has not submitted the basis of valuation of shares of three companies viz., M/s. Shobhika Estate Pvt. Ltd., M/s. Shreyas Properties Pvt. Ltd. and M/s. Pratik Properties Pvt. Ltd.
6. The Commissioner (Appeals) erred in observing that according to the Assessing Officer the quantum of shares purchased does not tally with the records available in the Income-tax Department inasmuch as the quantum of shares purchased referred to by the Assessing Officer is from a copy of the audited accounts which contain an incomplete zerox copy of Schedule 'E'.
7. The Commissioner (Appeals) without considering the price of a share of M/s. Shirpur Gold Refinery Ltd. quoted at the Stock Exchange, Mumbai erred in observing as under: " ..... It can also be seen from page 0.2 of the paper book that purchase price of per share of SGRL was Rs.100/- in 1999-2000 and Rs.105.61 in 2001-02 whereas the sale price of such shares in F.Y. 2007-08 has been shown at Rs. 54.75 which is apparently unbelievable….”
8. The Commissioner (Appeals) erred in observing as follows: " ..... Appellant has failed to explain as to why as compared to purchase price, selling price has been reduced substantially. No proper reason has been given at any stage of proceeding whereas facts on record reveals that such arrangement has been made only with a view to suppress the capital gains"
9. The Commissioner (Appeals) erred in observing as follows: " An important point is also worthwhile to mention that sale of shares has been made to one related company viz. Jayneer Capital Pvt. Ltd. hence it is very obvious that there is no genuine capital loss but is arranged one. Similarly, there is no proper justification or explanation of suppression of selling price in respect of other four companies. "
10. The Commissioner (Appeals) erred in observing as follows: " As per the assessee purchase price of all the shares were of Rs.7,69,63,697/- whereas selling price of such shares is Rs.3,12,70,970/-. Obviously, appellant has deliberately sold out shares at lower price only with a view to generate the loss...."
11. The Commissioner (Appeals) erred in coming to the conclusion that the assessee company has chosen to get benefit of rain as pretence for not producing the records of 2005 and earlier years.
12. The Commissioner (Appeals) erred in coming to the conclusion that loss shown on account of sale of shares is not genuine and it is not verifiable and the transactions were arranged and therefore, they are not reliable.
The order of the Commissioner (Appeals) dismissing the appeal of the assessee Company is bad in law and without jurisdiction.”
Brief facts of the case are that assessee filed return of income on 27th September 2008 declaring the total loss of Rs. 9,10,37,356/-. The assessment was completed on 07.12.2010 u/s 143(3) of the Act. The Assessing Officer(AO) while framing - M/s Maharaja Builders Pvt. Ltd.
the assessment disallowed the Long Term Capital Loss on account of sale of share of Rs. 9,08,99,637/-. On appeal before the AO, the disallowance was confirmed. Further, aggrieved by the order of ld. CIT(A), the present appeal is filed before us.
None appeared on behalf of assessee when the case called for hearing despite repeated calls. We left no option except to hear the ld DR for the revenue and decided on the basis of material available on record. The ld DR supported the order of authorities below. It was argued by ld. DR for the Revenue that onus to prove the claim was upon the assessee and it is the assessee who has to substantiate his claim before the lower authorities. The assessee failed to substantiate the loss on account of sales of shares before the lower authorities. The official of the assessee has casual approach in attending the proceedings public authorities including the Tribunal.
We have considered the rival contention of ld DR for the Revenue and have gone through the orders of authorities below. From the order of ld CIT(A) we have seen that during the assessment proceeding, the assessee contended that the records prior to year 2005 were destroyed in the flood on 26th July 2005. During the appellate proceeding, the assessee furnished certain evidences consisting of copies of Annual Report, Balance-sheet and the Annexure thereto, copy of FIR regarding the losses of paper, copy of loss submitted to DCIT, statement submitted before the SEBI, copy on public notes and statement of accounts of five companies. On furnishing such evidence the matter was referred to the AO for his remand report. The ld. CIT(A) referred the documentary evidence for the remand report of AO. The order of ld. CIT(A) further reveals that neither the report of AO was furnished nor anybody on behalf of assessee attended the proceedings. The ld. CIT(A) passed the ex-parte order confirming the action of AO. Considering the background of case, we are of the view that to given fair and reasonable opportunity, matter should be remanded to the file of AO to consider the evidences filed by assessee during the appellate proceeding. The AO shall grant reasonable opportunity of hearing before passing the order. The assessee is also directed to fully co-operate during the set-aside proceeding. The assessee is - M/s Maharaja Builders Pvt. Ltd.