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11-02-2019, AMITABH BANSAL, Section 68, 10(38), 69C, Tribunal Delhi

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6 months 6 days ago #8633 by amit
Section - 68, 10(38), 69C, 292B, 10, 2, 44BB
Order Date - 11-02-2019
Favouring - Assessee Partly
Court - Tribunal Delhi
Respondent - ITO
Justice - H.S. SIDHU JM
Citation - 219Taxpundit129
Appeal No. - ITA No. 7802/Del/2018
Asstt. Year - 2015-16



These aforesaid appeals have been filed by the respective assessee’s challenging similar orders passed by Ld CIT(A)ppeals 16 New Delhi confirming 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. 7802/Del/2018 (AY 2015-16) in case of Smt. Anjul Bansal, which will apply mutatis mutandis to other appeals.

2. The brief facts of the case are that the assessee is an individual and has filed return of income u/s 139 of the Income Tax Act, 1961 (in short “Act) on 20.09.2016 declaring income of Rs 13,87,300/-. The return was selected for scrutiny under CASS for the reason Suspicious Long term capital gains (inputs from investigation wing). The notice u/s 143(2) was issued on 20.09.2016. 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 19,88,500/-. During assessment proceedings assessee has iled documents supporting exemption u/s 10(38) 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 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 AO heavily relied on statements of i) Anil Khemka and ii) Harshvardhan Kayan to draw adverse inference against the assessee , and these statement were recorded by investigation wing Kolkata. Finally AO treated LTCG claimed as exempt as unexplained cash credit u/s 68 of the Act and addition of Rs 19,88,500 and Rs 94,425 as alleged commission paid by assessee u/s 69C of the Act thus totaling to Rs 20,82,925/- . This was challenged by assessee before Ld CIT(A) who vide his impugned order dated 12.7.2018 has 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, Sh. 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 equests before AO and Ld CIT(A) and 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 AO dated 30/12/2017 and further order passed by ld CIT A dated 11/07/2018 are bad in law in as much as addition of Rs 20,82,925/- is made violating principles of natural justice without confronting any investigation wing report relevant extract, statements recorded by invest gation wing , etc which is sufficient to quash the assessment order and order passéd by Ld CIT(A) .

5. That on the facts and in the circumstances of the case and in law, 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 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 lacking in present case. Lastly section 68 does not apply to sale of shares where no credit within meaning of section 68 can be said to have arisen therein

7. That on the facts and in the circumstances of the case and in law, ld CIT(A) erred in sustaining the action of AO in making addition of Rs 20,82,925/- without appreciating that no opportunity is given to the assessee to be confronted with back material relied extensively in impugned orders like investigation wing report etc and no opportunity to cross examine the revenue’s witness was given despite specific written request in this regard made to AO/CIT(A).

4. During hearing Ld AR has placed on record the written submissions as well as gist of case laws to support his arguments which was duly given to Ld DR also. He requested that keeping in view of the grounds raised by assessee as well as his written submissions alongwith case laws, addition in dispute may be deleted by accepting the appeal filed by the assessee.

5. On the contrary, Ld DR has argued that no where assessee has been able to establish his/her case successfully and merely taking shield of technicalities cant wish away the onus to prove the genuineness of exemption . Further proceedings with his argument Ld DR has stated with passion that AO and Ld CIT(A) have discussed at great length the serious flaw and deficiency in defense set up by assessee which is not adequately controverted by Ld AR. Ld DR has supported the invocation of section 68 of the Act on the broader principle of burden to give satisfactory explanation on part of assessee and thus argued for confirming the orders of AO and Ld CIT(A). Ld DR has taken support of section 292B of the Act pleading for error if any being curable and has requested for confirming addition in section 69/69A of the Act requesting for use of wider discretion available to the tribunal. Ld DR has further highlighted that mere lack of cross examination is not fatal to revenue’s case and same is at best a irregularity only. Ld DR has further exhorted before me that such kind of cases does not deserve any sympathy of the tribunal as entire transaction are proved to be sham and bogus. Continuing with his arguments Ld DR preyed that grounds raised by Ld AR are devoid of merits and

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