SRI DEO KUMAR SARAF,KOLKATA vs. ACIT, CIRCLE-49, KOLKATA, KOLKATA

Grounds of appeal raised by the assessee read as follows :- “1) That the orders passed by the Ld. Lower authorities to the extent they are prejudicial to the interests of the appellant are arbitrary, erroneous, without proper reasons, invalid and bad in law. 2) That, on the facts and in the circumstances of the case, the Ld. C.LT.(A) grossly erred in having alleged submission of forged Demat Account during appellate proceeding on the ground that the LTCG claimed by the assessee on the basis of Demat A/c. maintained with UBI was not relating to the relevant financial year in spite of the fact that LTCG was claimed on the basis of Demat A/cs. maintained with Axis Bank & Morgan Stanley India, the details of which were provided during the appellate proceeding on 12/3/2016. 3) That, further, the Ld. C.I.T.(A) misguided himself in taking contradictory stand while alleging forged Demat Alc. furnished by the assessee, inasmuch as he himself has stated that the UBI Demat A/c. was not related to the year under consideration and conveniently ignoring the fact of filing Demat A/cs. maintained with Axis Bank and Morgan Stanley India, which substantiated the claim of the assessee.

The Assessee is an individual. In the return of income filed for A.Y.2010-11, the assessee claimed that he derived long term capital gain of Rs.5,96,27,092/- which is not chargeable to tax because the transaction of sale suffered Securities Transaction tax(STT). The AO called upon the Assesee to furnish the details of long term capital gain along with supporting documents. According to the AO the assessee failed to file the evidence to show that it had derived long term capital gain. Before the AO the Assessee had produced contract notes, details of the purchase and sale of shares which resulted in the long term capital gain. According to the AO the Assessee failed to furnish the Demat account in which the shares were held. The AO therefore held that the Assessee failed to prove his claim of having derived long term capital gain and the income of Rs.5,26,27,092/- was treated as speculation profit chargeable to tax.

Aggrieved by the action of the AO the assesee filed appeal before CIT(A). CIT(A) held as follows :- “During the course of the appellate proceedings, the submitted the copy of demat account in United Bank of India (Bo ID No. 1305130000076791) for F.Y. 2008-09 and F.Y. 2009-10 to prove the date of purchase and sale of shares and the 'quantity of shares purchased and sold to prove his claim of LTCG of Rs. 5,96,27,092/-. He also submitted the print out of moneycontrol.com site to prove the rate of purchase and sale of the shares. 2

Aggrieved by the order of CIT(A) the assessee has preferred the present appeal before the Tribunal.

It can be seen from the order of the CIT(A) that the CIT(A) has proceeded on the basis that the submitted the copy of demat account in United Bank of India (Bo ID No. 1305130000076791) for F.Y. 2008-09. It is the plea of the learned counsel for the Assessee before us that no such Demat Account was maintained by the Assessee for the previous year relevant to AY 2010-11 and that for the relevant period the Assessee maintained a Demand Account with Axis Bank and that the Demat statement of the Assessee with the said bank was filed before CIT(A). His submission was that the subsequent enquiry stated to have been made by the CIT(A) are all irrelevant because the Assessee had no Demat Account with United Bank of India for the previous year relevant to AY 2010-11.

It is the stand of the assessee in the application for admission of the additional ground that the CIT(A) used information obtained by him u/s 133(6) of the Income tax Act, 1961 (Act) without affording any opportunity of being heard to the assessee and confronting the assessee with information that was so obtained by the AO.

We have considered the plea of the assessee and are of the view that the additional grounds of appeal arises for consideration from the order of CIT(A) and is therefore admitted for adjudication.

The ld. Counsel for the assessee has also filed an application under Rule 29 of the Income Tax (AT) Rules 1963 (ITAT Rules) praying for admission of certain additional evidence which are placed at pages 127 to 130 of the Assessee’s paper book. On perusal of pages 127 to 130 of the Assessee’s paper book, we find that the additional evidence sought to be filed is nothing but an affidavit of the assessee in which he has alleged that his demat account was never maintained with United Bank of India and the claim of the CIT(A) in the impugned order that the Assessee maintained a Demat account with UBI is contrary to the material available on record. It has been mentioned in the affidavit that during the relevant A.Y.2010-11 no demat account of the assessee was maintained with UBI. We are of the view that the affidavit cannot be regarded as an additional evidence

We have heard the submissions of the ld. Counsel for the assessee and the ld. DR. The ld. Counsel for the assesee brought to our notice that the assessee maintained a demat account during the relevant previous year with Axis bank and the same had been filed by the assessee before CIT(A) along with a letter dated 12.03.2016. A copy of the letter dated 12.03.2016 filed by the assessee before CIT(A) has been filed before us. In the said letter the assessee had given as annexure the complete details of the shares purchased and sold which gave rise to long term capital gain. Copy of the demat account containing 13 pages has also been filed along with the letter. In fact after the receipt of the order of CIT(A) the assessee had by its letter dated 03.06.2016, filed in the office of CIT(A) on 09.06.2016, has clearly brought out these facts and asked for the rectification of the apparent errors in the impugned order of CIT(A). The ld. Counsel for the assessee therefore prayed that the impugned order should be set aside and the issue raised by the assessee before CIT(A) should be directed to be decided afresh after affording opportunity of being heard to the assessee and after considering all relevant material evidence. The ld.DR could not controvert the plea put forth by the ld. Counsel for the assessee before us.

After considering the rival submissions, we are of the view that the impugned order of CIT(A) has to be set aside and the issue raised by the assessee before CIT(A) should be directed to be decided by CIT(A) afresh after affording opportunity of being heard to the assessee. It is clear from a reading of the order of the CIT(A) that he has proceeded on an erroneous assumption that the assessee maintained a demat account with UBI during the relevant previous year whereas the claim of the assessee was that the demat account was with Axis Bank Ltd. Secondly the CIT(A) used information obtained by him in exercise of his powers u/s 133(6) of the Act without confronting the 5

In the result the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the Court on 08.02.2017.