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11-02-2019, NAZIA ZAFAR, Section 68, 131, 69C, Tribunal Delhi

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6 months 6 days ago #8632 by amit
Section - 68, 131, 69C, 292B, 69, 69A, 10
Order Date - 11-02-2019
Favouring - Assessee Partly
Court - Tribunal Delhi
Appellant - NAZIA ZAFAR
Respondent - ITO
Justice - H.S. SIDHU JM
Citation - 219Taxpundit128
Appeal No. - ITA No. 8093/Del/2018
Asstt. Year - 2014-15

Order

PER : H.S. SIDHU

These aforesaid appeals have been filed by the respective assessee’s challenging similar orders passed by Ld CIT(A)Appeals 16 New Delhi confirming Ld AO’s action disallowing long term capital gains exemption u/s 10(38) of the Income Tax Act, 1961 (in short the “Act”) invoking deeming provisions of section 68 of the Act, hence, the same were heard together and are being disposed of by this common order for the sake of convenience, by dealing with the facts of ITA No. 8093/Del/2018 (AY 2014-15) (Nazia Zafar) which would apply mutatis mutandis to rest other appeals.

2. The facts in brief are that the assessee is an individual and has filed return of income u/s 139 of the Act on 24.11.2014 declaring income of Rs. 4,41,010/-. The return of the assessee was selected for scrutiny under CASS for the reason Suspicious Long term capital gains (inputs from investigation wing). The notice u/s 143(2) of the Income Tax Act, 1961 was issued on 18.09.2015. The main issue taken up in assessment was exemption of long term capital gains arising from sale of shares of M/s Kailash Auto Finance Limited of Rs 36,81,687/-. During assessment proceedings assessee has filed documents supporting exemption u/s 10(38) of the Act namely bank statements, broker notes, etc. Purchase and sale took place through doubtless banking channel. Notably no books of accounts were there before AO and Ld CIT(A) during assessment and first appellate proceedings. Show cause notice was issued by Ld AO to assessee as to why section 68 should not be invoked against the stated LTCG exemption claimed by assessee u/s 10(38) of the Act. Assessee replied to same and pleaded for acceptance of LTCG claimed in return of income. In assessment proceedings Ld AO heavily relied on statements of i) Sh Subrata Halder ii) Sunil Dokania iii) Harsvardhan Kayan iv) Narendra Balasia to draw adverse inference against the assessee , and these statement were recorded u/s 133A and section 131 by investigation wing Kolkata. Finally AO treated share sale proceeds as unexplained cash credit u/s 68 of the Act amounting to Rs. 36,95,000 and Rs 110,850 as commission paid by assessee was made u/s 69C of the Act totalling to Rs 38,05,850/- . This was challenged by assessee before Ld CIT(A) who vide order dated 30.11.2018 confirmed the action of AO in making of addition u/s 68 and section 69C respectively by dismissing assessee’s appeal. Thus feeling aggrieved with order of Ld CIT(A) this appeal is filed by assessee before this Tribunal.

3. During the course of hearing before this Tribunal, Ld Counsel for the Assessee, Shri Kapil Goel, Advocate has argued mainly on two aspects of the case firstly on applicability of section 68 of the Act to share sale proceeds on mere basis of trade data available in office of AO and without books being available before AO and Ld CIT(A) qua share sale transaction and secondly on impact of cross examination being denied to assessee despite repeated requests before AO and Ld CIT(A). In this context, Ld. AR has drawn my attention to following specific legal grounds raised in grounds of appeal :

2.1 That order passed by Ld AO dated 29/12/2016 and further order passed by ld CIT A dated 30/11/2018 are bad in law in as much as addition of Rs 38,05,850/- is made violating principles of natural justice withou confronting any investigation wing report relevant extract, statements recorded byinvestigation wing , etc and without offering cross examination of witness whose statements is extensively relied in impugned orders, which is sufficient to quash the assessment order and order passed by Ld CIT(A), despite repeated specific request in this regard .

5. That on the facts and in the circumstances of the case and in law, ld AO and Ld CIT(A) erred in making and sustaining subject additions without appreciating that law gives discretion to the assessing officer in applying deeming fictions u/s 68 etc as firstly no “books” are there in existence before ld AO in which any sum is found credited therein so as to invoke section 68 of the Act vis a vis subject LTCG is concerned , and secondly opinion and satisfaction u/s 68 has not been objectively arrived in facts of present case on due application of mind thirdly assessee has no economic capacity and source to generate given amount of unaccounted income. Fourthly law requires that additions under said deeming fiction cannot be made sans incriminating material brought on record which is completely

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