NAMITA BAJAJ,DELHI vs. DCIT, CENTRAL CIRCLE-32, DELHI

At the very outset, the Learned CIT-DR agreed to the submission of Learned Counsel of assessee that except quantum of addition, other facts and circumstances of both the cases are similar and identical, therefore, we are taking up Smt. Namita Bajaj as a lead case for the sake of convenience and brevity.

Learned Counsel submitted that the assessee wants to press her ground no.14 on merits first, which reads as follows: “14. (i) On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the addition of Rs.35,00,000/- under Section 68 of the Act on account of income from undisclosed sources.

The Learned Counsel submitted that on the facts and circumstances of the case, the Learned CIT(A) has erred in confirming the addition of Rs.35,00,000/- u/s 68 of the Act on the baseless allegation of earning undisclosed income by the assessee by ignoring the detailed submissions of assessee wherein the assessee substantiated that no capital gain accrued to her as the shares acquired were sold during the relevant financial period at the same price on which the shares were acquired. Drawing our attention towards assessee’s paper book page no. 254, the Learned Counsel submitted that the Learned CIT(A) after admission of additional & 2598/Del/2022 Smt. Namita Bajaj and Smt. Lalita Bajaj 3 evidence of assessee under Rule 46A of the Income Tax Rules, 1962 called remand report from the AO, which was filed on 15.03.2020. Further drawing our attention towards relevant concluding para nos. 4 & 5 of remand report (assessee paper book page nos.252 to 254) the Learned Counsel submitted that after proper evaluation and consideration of additional evidence submitted by the assessee and keeping in view other documentary evidence available on record the AO in the said remand report noted that the assessee has submitted that investment held in the shares of RNB Infrastructure Pvt. Ltd. were sold by her @10 per share which were acquired by her directly from RNB Infrastructure Pvt. Ltd. @10 per share.

The Learned Counsel also submitted that the Learned CIT(A) has considered irrelevant and not applicable case laws having distinct and different facts and circumstances from the present case and thus the same is not applicable in the present case against the assessee. The Learned Counsel has placed reliance on various judgments listed at serial nos.35 to 41 of the assessee paper book and submitted that & 2598/Del/2022 Smt. Namita Bajaj and Smt. Lalita Bajaj 5 when the investment in share of RNB Infrastructure Pvt. Ltd. @10 per share was not disputed by the Department in the year of acquisition of share then the same investment cannot be disputed in the year of sale at par i.e. on the same rate @10 per share merely because no capital gain was approved to the assessee. The Learned Counsel submitted that before the Learned CIT(A) the assessee submitted that provision of Section 68 of the Act are not applicable to the assessee as the assessee was not acquired to maintain the books of accounts and said provision cannot be invoked against the assessee in absence of the books of accounts for the previous year.

In support of said contentions, Learned Counsel has placed reliance on various judgments and orders including reasoned order of ITAT, Amritsar Benches in the case of Satbir Singh Bhullar vs. ITO dated 02.03.2023 reported as 2023 (3) TMI 356 – ITAT, Amritsar. The Learned Counsel reiterating earlier submissions, submitted that the assessee has sold investment at par value and authorities below has not doubted the purchase of shares/investment by the assessee in the year of investment and hence the assessee has duly explained the transactions of purchase and sale of shares @10 per share without earning any capital gain and therefore, no addition can be made in the hands of the assessee under section 68 of the Act or any other provision of the Act. Drawing our attention towards paper book pages 184-185, the Learned Counsel submitted that the list of shareholder for the year 2014 of RNB Infrastructure Pvt. Ltd. filed with Ministry of Corporate Affairs/ROC, makes it clear that the assessee had enough opening balance of share of said company and holding the shares by the assessee was never doubted or disputed by the AO. Therefore,

Replying to the above, the Learned CIT-DR supporting the action of the AO as well as first appellate order, submitted that the alleged shell concerns and individuals has made payment to the Bank account to the appellant on the instructions of M/s. RNB Infrastructure Pvt. Ltd. Therefore, it was rightly observed the credit entry received from so called purchaser of share parties remained unexplained and thus the provision of section 68 of the Act was attracted and the AO rightly made addition in the hands of the assessee and Learned CIT(A) also quite and justified in upholding the same. Learned CIT-D.R. also drew our attention towards provision of Section 2(24)(x) r.w.s 36(1)(va) of the Act to submit that when the assessee has not successfully demonstrated investment and the genuineness of transaction of purchase of Shares from assessee then the AO is entitled to invoke the provision of Section 68 of the Act for & 2598/Del/2022 Smt. Namita Bajaj and Smt. Lalita Bajaj 7 making addition to the income of the assessee. Therefore, the Learned CIT-D.R. submitted that the ground of assessee on merits may kindly be dismissed.

On careful consideration of submission, first of all, we note that the Assessing Officer made addition in hands of assessee by noticing that the assessee has sold 3,50,000/- shares of RNB Infrastructure Pvt. Ltd. @10% which were acquired by the assessee at the very same price i.e. @10 per share. The AO made addition by observing that the explanation submitted by the assessee was baseless as the impugned amount remained unexplained credit and the explanation of the assessee was not found to be sustainable to the satisfaction of the AO, therefore, the AO made addition u/s 68 of the Act. Before Learned CIT(A), assessee filed an additional evidence under Rule 46A of the Income Tax Rules and remand report was called from the AO wherein the AO after verification and examination of additional evidence and by taking on record the replies of the assessee from the share purchaser parties in response to notice u/s 133(6) of the Act reported as follows:

When the observations of the AO, basis taken by the Learned CIT(A) for upholding the addition made by AO is evaluated on the touch stone of documentary evidences submitted by the assessee and the remand report of the AO vide dated 15.03.2022, then we safely gather that the assessee acquired shares of RNB Infrastructure Pvt. Ltd. by view of allotment during F.Y. 2007-08 and her name was listed in the list of share holders filed by the said company in Form 2 on 23.05.2007 which was submitted to Ministry of Corporate Affairs. It is also not in dispute that the acquisition price of shares and sale price of shares was same i.e Rs.10 per share. The AO in the remand & 2598/Del/2022 Smt. Namita Bajaj and Smt. Lalita Bajaj 9 report recorded the Learned CIT(A) that the share purchaser party have confirmed the fund given to the assessee on behalf of the RNB Leasing and Financial Services on account of purchase of share by them from RNB Leasing and Financial Services out of their disclosed sources of funds. In support of said explanation, share purchases parties had also submitted copies of their respective Bank Statement, Financial Statement, Income-tax Returns in response to notice u/s 133(6) of the Act issued by AO. The Assessing Officer has concluded his remand report by merely alleging that despite several opportunities, the assessee did not submit documentary evidences during the proceedings which were submitted belatedly before Learned First Appellate Authority without any reason. The AO have not made any adverse comments on the additional evidences filed by the assessee and submitted the report by finally stating that the documents now being filed as additional evidences and replies of share purchaser confirming the transaction of purchaser of shares are on record.

In view of above factual findings stated by the AO in the remand report, we are unable to see any valid reason to invoke the provision of Section 68 of the Act treating the amounts received by the assessee as considering of sale of shares as unexplained to credits particularly when the Department has not objected the investment of shares by the assessee during F.Y. 2007-08 relevant to A.Y. 2008-09. On respectful and careful perusal of the proposition relied by the Learned CIT(A), we clearly observe that in these case issue was of alleging the allotment of Shares by assessee company against share application money and share premium and the AO made addition under section & 2598/Del/2022 Smt. Namita Bajaj and Smt. Lalita Bajaj 10 68 of the Act by holding that the identity and creditworthiness of investor and genuineness of transactions could not be established by the share application and premium recipient assessee company. But in the present case, the assessee has not received any share application money or premium from the investor but the impugned transaction in the present case pertains to sale of investment/shares by the assessee to the other entities and such transaction cannot be alleged as unexplained or bogus particularly when the Department has not disputed the investment in shares of RNB Infrastructure Pvt. Ltd. by the assessee during the earlier period of time i.e. in the A.Y. 2008-09 in the year of investment by the assessee. Therefore, we respectfully note that the benefit of case laws relied by CIT(A) having distinct and dissimilar facts and circumstances are not available for the Revenue in the present case. Accordingly, Ground No.4 of assessee on merits is allowed and AO is directed to delete the addition.

Since the facts and circumstances of Ground No.14 in are similar and identical to the ground no. 14 in the case of Smt. Lalita Bajaj, for A.Y. 2015-16 therefore, our conclusion drawn in the earlier appeal would apply mutatis mutandis to ground no.14 in ITA No.2596/Del/2022. Resultantly, AO is also directed to delete the addition of Rs.45,00,000/- in the later appeal accordingly, Ground No.14 of assessee in ITA No.2596/Del/2022 is also allowed.

Since neither the Learned Counsel of the assessee nor Learned CIT-D.R. has placed any arguments on the other grounds of the & 2598/Del/2022 Smt. Namita Bajaj and Smt. Lalita Bajaj 11 assessee, therefore, in absence of any arguments or submissions, we do not deem it proper to adjudicate the same in absence of any submissions from the parties.

In the result, appeals are allowed on merits in the manner as indicated above.