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Income Tax Appellate Tribunal, CHANDIGARH
Before: SHRI A.D.JAIN & SHRI KRINWANT SAHAY
आदेश/ORDER
PER A.D.JAIN, VICE PRESIDENT
These are assessee's appeals against the separate order dated 31.05.2019 passed by the ld. CIT(A)-3, Gurgaon pertaining to assessment year 2007-08, 2008-09 and 2009- 10 respectively.
There is a delay of 55 days in filing these appeals. As
per the applications for condonation of delay filed alongwith affidavits, Shri Raj Kumar Rawat, who works in the office of
ITA-1307, 1308, 1309/CHD/2018 A.Y. 2007-08, 2008-09 & 2009-10 2 the assessee's counsel, had been entrusted the job of filing the appeals; but he had to leave immediately for his home town Hamirpur to attend to his aged mother who was having low platelet count, and that he was also travelling to Gurgaon and Mumbai for the treatment of his nephew, who was suffering from cancer. He returned on 01.10.2019 and immediately, the appeals were filed, on 03.10.2019 but by that time, there had occurred a delay of 55 days.
3. We find the above facts to be a reasonable cause with which the assessee was visited, preventing the filing of the appeals in time. Accordingly, the delay in filing the appeals is condoned.
The facts in all the three appeals are exactly similar.
Therefore, for convenience, the facts are being taken from ITA 1307/CHD/2019, for assessment year 2007-08.
In ITA 1307/CHD/2019 for assessment year 2007-08, the following grounds have been taken by the assessee:
“1. That the Ld. Commissioner of Income Tax(Appeals) has erred in law as well as on facts in upholding the disallowance of the claim of long term capital loss of Rs. 1,35,00,000/-which is arbitrary and unjustified.
2. That the Ld. Commissioner of Income Tax(Appeals) has erred in law as well as on facts in upholding the finding of the Assessing Officer that the sale of shares is not a genuine transaction which is arbitrary and unjustified.
That the Commissioner of Income Tax(Appeals) as well as the Ld. Assessing Officer has disbelieved the capital gains/loss as declared to be ITA-1307, 1308, 1309/CHD/2018 A.Y. 2007-08, 2008-09 & 2009-10 3 not genuine only because the shares sold were unquoted and were not listed on the stock exchange which is nothing more than observation made based on suspicion, surmises and conjectures which is not permissible.
4. That the Ld. Assessing Officer has erred in law as well as on facts in not allowing the carry forward of losses which is arbitrary and unjustified.” 6. The issue is disallowance of claim of Long Term Capital Loss on sale of unquoted shares and not allowing carry forward of losses.
The facts, as set out in the assessment order dated 26.12.2018, i.e., the assessment order leading to the present appeal, are that a search under Section 132(1) of the Income Tax Act, 1961 was conducted on M/s Surya, Nectar & Parabolic Group of cases on 17.09.2010 by the Investigation Wing (Income Tax) Chandigarh. M/s Emm Bee Fincap Private Limited was one of the persons covered under Section 132 of the Income Tax Act, 1961. The assessment in the case was completed under Section 153A(l)(b) r.w.s. 143(3) of the Act on 30.03.2013 at ‘NIL’ against ‘NIL’ returned income. In the computation of Income filed with the return of income, the assessee had declared Long term Capital Loss to the tune of Rs. 1,35,00,000/-, which was not allowed to carry forward as the assessee had not filed his return of income. The Ld. CIT (Appeal) vide consolidated order, dismissed the appeal of the assessee for assessment year under consideration on this ITA-1307, 1308, 1309/CHD/2018 A.Y. 2007-08, 2008-09 & 2009-10 4 issue in Appeal No. 202C to 208C/CIT(A)(C)GGN/2013-14 dated 27.2.2015.
7.1 The assessee filed appeal before the ITAT, Chandigarh in Appeal No. ITA No.714/Chd/2016. The ITAT decided the appeal of the assessee vide order dated 02.06.2017, whereby the issue was set-aside to the file of Assessing Officer with directions to decide the issue afresh in the light of Circular dated 02.05.2016. The relevant extract of the decision of the Tribunal is reproduced as under :-
"We have gone through the impugned order of the Assessing Officer. It is evident that the assessees have not produced the relevant evidences before the Assessing Officer to prove the genuineness of the transactions in question. We have also gone through the above reproduced Circular of the CBDT which is clarificatory in nature guiding the Assessing officer for formation of view for the purpose of consistency in taxability of income/losses arising from transfer unlisted shares. In our view the above, issue requires to be looked into afresh by the assessing officer in the light of the above reproduced Circular dated 2.5.2016. Both the Ld. Representatives of the parties have also submitted that the matter to be restored to the Assessing officer for consideration afresh. We accordingly restore this issue to the file of the Assessing Officer with a direction to examine the issue afresh. The Assessing Officer is directed to examine the genuineness of the transactions in shares as claimed by the assessees and then to decide the issue afresh in the light of the Circular of CBDT dated 2.5.2016. The assessees are also directed to produce the relevant evidences before the Assessing Officer to establish the genuineness of the transactions in question. All the appeals are accordingly restored to the file of the Assessing Officer with the above directions. "
ITA-1307, 1308, 1309/CHD/2018 A.Y. 2007-08, 2008-09 & 2009-10 5 7.2 In the second round, before the AO, in the reply furnished by the Counsel of the assessee company, it has been submitted that in respect of selling of unquoted shares, there was no transaction in the demat account of the assessee company. However, the assessee had not furnished any evidence regarding sale of unquoted shares. The assessee in his reply simply stated that the shares sold during the year under review were non quoted shares and therefore, there were no contract notes.
7.3 The AO observed that the assessee had not given any details of same nor any proof of same being investments or stock in trade, or details regarding their particulars like type of transaction being delivery based or non delivery based, equity share or futures and options, name of scrip, date of acquisition/sale or cost of acquisition/sale etc., so, it could not be decided that as per assessee's claim, the said stock/scrip/share was being transacted in what manner and what was the period of holding and in absence of any proof or details given by the assessee, the genuineness of the transactions was not proved. Since, the assessee failed to prove genuineness of the transactions, therefore the second limb of the directions of the ITAT to decide the issue in light
ITA-1307, 1308, 1309/CHD/2018 A.Y. 2007-08, 2008-09 & 2009-10 6 of Circular issued vide F.No. 225/12/2016/ITA.II dated 02.05.2016 was not applicable. The AO further observed that the assessee failed to furnish any documentary evidence regarding loss arising from sale of unquoted shares during the assessment proceedings as well as during the re- assessment proceedings in pursuance to the order of the Tribunal. The AO held that the assessee had filed his return of income u/s 139(1) on 01.04.2008, thus the assessee had defaulted in filing of return as per due date prescribed under Section 139(1). Further, the AO observed that the assessee had also defaulted in filing of Income Tax Return u/s 153A; that as per notice under Section 153A dated 15.11.2012, the assessee was required to file return within 7 days of service of notice, however, the return had been filed on 10.12.2012.
Accordingly, carry forward of capital loss will not be allowed in subsequent years. The Assessing Officer, thus, assessed the income of the assessee at ‘Nil’, without carry forward of losses.
Vide the impugned order, the ld. CIT(A) reiterated that the order passed by the AO was in consequence of ITAT's order dated 02.06.2017, whereby the issue with regard to disallowance of Long Term Capital Loss was set
ITA-1307, 1308, 1309/CHD/2018 A.Y. 2007-08, 2008-09 & 2009-10 7 aside to the file of the AO with directions to decide the issue afresh in the light of circular dated 02.05.2016. The CIT(A) further observed that the assessee was also directed to produce the relevant evidences before the AO to establish the genuineness of the transactions in question.
8.1 The ld. CIT(A) confirmed the disallowance, observing as under :
“……with regard to claim of appellant related to claim of Long Term Capital Loss of Rs. 1,35,00,000/- in respect of sale of unquoted shares sold, the AO observed that:-
(a) In respect of unquoted shares, there was no transaction in the Demat account of the appellant company.
(b) The appellant company during the assessment proceedings did not furnish any evidence regarding sale of unquoted shares.
(c) It was stated by the appellant with regard to the unquoted shares sold during the year that there are no contract notes to support their sales
(d) The appellant did not produce any detail or proof to prove that these shares were investments or stock in trade, nor details regarding transaction being delivery based or non delivery based, equity shares or futures and options & name of scrip, date of acquisition/sale or cost of acquisition/sale etc was furnished.
(e) In absence of any proof, it could not be ascertained as to how much loss was incurred by appellant on sale of shares, period of holding and genuineness of the transaction on which Long Term Capital Loss was claimed. (vi) As the appellant failed to prove genuineness of the transactions, therefore the second limb of the directions of the Hon'ble ITAT to decide the issue in light of CBDT circular dated 02.05.2016 was not applicable in the case of the appellant.
ITA-1307, 1308, 1309/CHD/2018 A.Y. 2007-08, 2008-09 & 2009-10 8
(vii) Further, no documentary evidence was produced by the appellant during assessment proceedings in pursuance of order of Hon'ble ITAT while setting aside the order.
(viii) In view of the above, the carry forward of Capital Loss claimed was not allowed. During the appellate proceedings, the AR of the appellant vide order sheet entry dated 22.05.2019 reiterated that the submission filed before the AO and no submission was filed during the appellate proceedings. In view of the above, it is held that the Long Term Capital Loss of Rs. 1,35,00,000/-claimed by the appellant on unquoted shares has been rightly disallowed by the AO. Considering the Hon'ble ITAT's order regarding restoration of issue to the file of the AO, the facts of the case and the inability of the appellant to file any evidence in support of the Long Term Capital Loss claimed and hence, the disallowance by the AO is confirmed.
Before us, the assessee has not been able to controvert the well reasoned concurrent findings of fact recorded by the authorities below. In effect, the assessee, despite clear directions by the ITAT, could not produce any evidence regarding the sale of unquoted shares, even in the second round, before the AO or before the ld. CIT(A). No transaction was there in the Dmat account of the assessee, concerning the unquoted shares and the assessee had itself stated about the absence of contract notes with regard to the alleged sales of unquoted shares in the year. Nothing was brought on record to prove that such shares were either investments, or they were stock-in-trade. No evidence, whatsoever was ITA-1307, 1308, 1309/CHD/2018 A.Y. 2007-08, 2008-09 & 2009-10 9 brought on record to show as to whether the transactions of sale of these shares were of what nature, i.e., they were either delivery based or non-delivery based. Nor was any evidence produced with regard to the nature of the unquoted shares, i.e., as to whether they were equity shares or future options. Even the name of the scrip was not produced on record, much less the date of their acquisition or sale. Even the cost of the acquisition or sale was not produced before either of the authorities below. This being so, it was rightly held by the AO and confirmed by the ld. CIT(A) that it was not possible to ascertain as to what was the quantum of loss incurred by the assessee on the alleged sale of shares. It was not possible to determine the period of holding of such shares by the assessee. Thereby, the genuineness of the transactions concerning which the Long Term Capital Loss had been claimed, could not have been arrived at in the absence of any evidence whatsoever on record, as discussed.
In view of the above, finding no error whatsoever therein, the action of the ld. CIT(A) in confirming the disallowance of the Long Term Capital Loss claimed by the assessee is upheld.
ITA-1307, 1308, 1309/CHD/2018 A.Y. 2007-08, 2008-09 & 2009-10 10 11. In the result, the appeal of the assessee stands dismissed.
As the facts, circumstances and issues in all the appeals are exactly similar, therefore, our decision in would apply, mutatis-mutandis, to the assessee's appeals in & 1309/CHD/2019 also.