ABHIK FINANCE PVT. LTD.,HARYANA vs. ACIT, CIRCLE-1(1), NEW DELHI

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ITA 303/DEL/2020Status: DisposedITAT Delhi17 April 2023AY 2016-176 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal affirmed the CIT(A)'s order, finding that the assessee failed to provide any material to rebut the findings of the lower authorities. The source of the share capital was determined to be bogus long-term capital gains from penny stocks, making the addition under Section 68 valid.

What were the facts?

The assessee company introduced share capital from its Directors amounting to INR 13,93,70,000/-. The Assessing Officer made an addition under Section 68 as the assessee could not satisfactorily explain the source of this capital. The CIT(A) sustained the addition, holding that the source of funds was bogus long-term capital gains from penny stocks.

What were the issues?

Whether the assessee satisfactorily explained the source of share capital introduced by directors, and if the capital gains claimed as exempt under Section 10(38) were genuine or bogus from penny stocks.

Which sections of the Income-tax Act were involved?

Section 68,Section 10(38)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “A” BENCH: NEW DELHI

Before: SHRI KUL BHARAT & SHRI M BALAGANESH

For Respondent: Shri P Praveen Sidharth, CIT DR
Hearing: 11.04.2023Pronounced: 17.04.2023

ORDER

PER KUL BHARAT, JM :

1.

The present appeal filed by the assessee for the assessment year 2016- 17 is directed against the order of Ld. CIT(A)-1, New Delhi dated 15.11.2019.

2.

The assessee has raised following grounds of appeal:-

1. “On the facts and circumstances of the case and in law, Ld. Commissioner of Income Tax (Appeals) erred in dismissing the appeal without appreciating the fact that the source of source of Share Capital was duly explained with tax returns, computation of Income and bank Statements.

2. On the facts and circumstances of the case and in law, Ld. Commissioner of Income Tax (Appeals) erred in dismissing the appeal without appreciating the fact that there is no definition of "Penny stocks" in the Income Tax Act. There is no provision u/s 10(38) of Income Tax act barring exemption on capital gain arising from penny stocks.

3. On the facts and circumstances of the case and in law, Ld. Commissioner of Income Tax (Appeals) erred in dismissing the appeal without appreciating the fact that the assessment of individual providing share capital was not under the jurisdiction of present Ld. Commissioner of Income Tax (Appeals).

4. On the facts and circumstances of the case and in law, Ld. Commissioner of Income Tax (Appeals) erred in dismissing the appeal without appreciating the fact that the assessee has already established. the identity, genuineness and creditworthiness of the parties to whom shares were allotted. 5. On the facts and circumstances of the case and in law, Ld. Commissioner of Income Tax (Appeals) erred in dismissing the appeal without appreciating the fact that the persons to whom shares were allotted are directors of the company only. 6. On the facts and circumstances of the case and in law, Ld. Commissioner of Income Tax (Appeals) erred in dismissing the appeal without appreciating the fact that the sufficient evidences was placed on record to satisfy parameters of section 68 of Income Tax Act in the case of present assessee only. 7. On the facts and circumstances of the case and in law, Ld. Commissioner of Income Tax (Appeals) erred in dismissing the appeal by going beyond the jurisdiction and assessment of income of shareholders of the assessee company. 8. The appellant craves to amend, alter, add or delete all or any of the above grounds of appeal

.”

3. At the time of hearing, no one attended the proceedings on behalf of the assessee. It is seen from the record that neither any one has been attending the proceedings since 28.06.2022 nor any request has been filed for adjournment of hearing of appeal on behalf of the assessee. Under these facts, the appeal is taken up for hearing in the absence of the assessee and is being disposed off on the basis of material available on record.

4.

Facts giving rise to the present appeal are that in this case, the assessee filed its return of income, declaring total loss of INR 17,23,48,440/- on 15.10.2016. The case was selected for scrutiny assessment and the assessment was framed u/s 143(3) of the Income Tax Act, 1961 (“the Act”) vide order dated 30.12.2018. The Assessing Officer (“AO”) noted that during the year, the assessee had introduced share capital from the Directors of INR 13,93,70,000/-. The assessee could not satisfactorily explain the source of such capital and he made addition u/s 68 of the Act.

5.

Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, sustained the addition and dismissed the appeal of the assessee.

6.

Aggrieved against the order of Ld.CIT(A), the assessee has preferred the appeal before the Tribunal.

7.

Apropos to Grounds of appeal, Ld. CIT DR opposed the grounds of appeal and supported the orders of the authorities below.

8.

We have heard Ld. CIT DR and perused the material available on record and gone through the orders of the authorities below. The Ld.CIT(A) has given a finding on fact by observing as under:-

7.2. “During the course of appellate proceedings, the appellant has furnished the computation of total income of MrAnujNagpal, Mrs AnuNagpal and AnujNagpal (HUF) for 2014-15, AY 2015-16 & AY

2016-17. The information contained therein has been compiled as under: Ms.AnuNagpal Long Term Capital Long Term Claimed as exempt Sl.No. A.Y. Capital Gain Name of the Shares Shown in ITR u/s 10(38) 1 2014-15 1,69,17,563/- 1,69,17,563/- (i) Blazon Marble (ii) Eco friendly Food Processing Park Ltd. 2 2015-16 12,11,14,844/- 12,11,14,844/- (i) Eco friendly Food Processing Park Ltd. (ii) Mahadushi International Trade 3 2016-17 3,75,64,073/- 3,75,64,073/- Eco friendly Food Processing Park Ltd.

Mr.AnujNagpal

Sl. A.Y. Long Term Long Term Capital Name of the Shares No. Capital Gain Claimed as Shown in ITR exempt u/s 10(38) 1 2014-15 (i) Blazon Marble 2,49,09,200/- 2,49,09,200/- (ii) Eco friendly Food Processing Park Ltd. 2 2015-16 (i) Eco friendly Food 18,59,60,538/- 18,59,60,538/- Processing Park Ltd. (ii) Mahadushi International Trade Ltd. (iii)Shubham Granites iv)Shubham Granites (v) Surya Marketing Ltd 3 2016-17 (i) Eco friendly Food 3,41,93,427/- 3,41,93,427/- Processing Park Ltd.

Directorate of Income Tax (Investigation) has carried out investigation on bogus Long Term Capital Gains through listed penny stocks. It has been reported that (i) Blazon Marble Ltd, (ii) Eco friendly Food Processing Park Ltd and other companies are penny stocks. Considering the details submitted by the appellant company, it is evident that Mr AnujNagpal, Mrs AnuNagpal& AnujNagpal(HUF) have introduced unaccounted money in the form of bogus Long Term Capital Gains through listed penny stocks. Thus the source of the source of share capital in the present case is the bogus Long Term Capital Gains introduced through listed penny stocks. Considering the facts of the case, the first proviso to section 68 clearly applicable to the facts of the present case. Accordingly, the addition of Rs. 13,93,70,000/- u/s 68 is upheld in the present case. Ground No.2, 3, 4, 5 & 6 are decided against the appellant.” 7.3 Ground No.1 & 7 are general in nature and do not require any adjudication.” 8.1. The assessee has not brought any material to rebut the findings of lower authority and to substantiate its claim regarding the impugned addition. In the absence of such material, we do not see any reason to interfere in the findings of Ld.CIT(A), the same is hereby, affirmed. Grounds raised by the assessee are hence, dismissed.

9.

In the result, the appeal of the assessee is dismissed.

Order pronounced in the open Court on 17th April, 2023.

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