×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
The captioned two appeals filed by the assessee, pertaining to assessment years 2013-14 and 2014-15, are directed against the separate orders passed by the learned Commissioner of Income Tax (Appeals)-21, Kolkata, (in short the ld. ‘CIT(A)’], which in turn arise out of separate assessment orders passed by the Assessing Officer u/s 153A / 143(3) of the Income Tax Act, 1961 ( in short the ‘Act’).
2. Since these two appeals pertain to the same assessee, identical and common issues are involved therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. Assessee’s appeal in I.T.(SS).A. No. 125/Kol/2018, for assessment year 2013-14, is taken as lead case.
3. In this appeal, although assessee has raised a multiple grounds of appeal, but at the time of hearing we have carefully perused all the grounds raised by the Assessee. Most of the grounds raised by the Assessee, are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of the Assessee. With this background, we summarize and concise the grounds raised by theAssessee as follows:
“All the grounds of appeal emanate from the action of the ld A.O. in treating the claim of Long Term Capital Gain of Rs. 3,39,46,071/- as bogus and ld CIT(A) confirmed the same. The ld AO had made a further addition of Rs.1,69,730/-, as unexplained expenditure under section 69C of the Act for commission paid to procure the impugned Long Term Capital Gain and ld CIT(A) confirmed the same. The assessee has also challenged that in absence of incriminating material no addition can be made in the order u/s 153A of the Act in case of unabated assessment.”
4. Brief facts qua the issue re that asearch and seizure operation u/s 132 of the Act, was carried out in he residential and business premises of ‘Gagan Group’ situated at various locations on 03.03.2015. The assessee, Shri Deepak Kumar Agarwal belongs to this group. The Assessing Officer, accordingly, issued notice u/s 153A of the Act on 22.01.2016, calling for return for the assessment year 2013-14. In response to notice u/s 153A, the assessee filed his return of income on 29.01.2016, declaring total income at Rs.18,29,180/-. It was observed by AO during the course of assessment proceedings that assessee has claimed Long Term Capital Gain to the tune of Rs.3,39,46,071/- by sale of shares of “Sulabh Engineers” on various dates. The Shares of “Sulabh Engineers” were purchased atthe price of Rs. 14,00,000/- and the same were sold at Rs. 3,53,46,071/-. Thus, AO noticed that the assessee has received a gain of around 2400% in about 2 years of share holding and this seems to be inflated and unrealistic.
The assessing officer also mentioned in his assessment order, the basic details of the large scale of scam of pre- arranged bogus LTCG and its modus operandi for a better understanding, which is mentioned in brief as follows:
“The Directorate Investigation, Kolkata on the basis of several information and actions unearthed the large scale racket, operating through close nexus of brokers, entry operators, promoters thus facilitating various individuals to brought their unaccounted money to regular books in the form of LTCG in quoted shares [exempted u/s 10(38) of the Income Tax Act, 1961] without any tax implications.”
The modus operandi of this pre-arranged bogus long term capital gain is also mention by AO in his order which is not being reproduced here for the sake of brevity.
5. Assessing officer noticed that during the search and seizure, in its Disclosure Petition u/s 132(4) dated 08.06.2015, Mr. D epak kumar Agarwal (on behalf of Group & Self) in point no. 12 & 13 duly accepted that pre-arranged bogus long term capital gain were availed by him and family members and thus the same are being offered for taxation. The AO noted that the scrip of ‘Sulabh Engineers’ was widely used for pre- arranged bogus long term capital gain purpose. Assessee also has availed the same facility and taken an amount of Rs.3,39,46,071/- in A.Y. 2013-14 as pre- arranged bogus Long Term Capital gain in his books. During the assessment proceedings, the assessee submitted the reply to justify the genuineness of LTCG, however, the Assessing Officer rejected the contention of the assessee and made an addition of Rs.3,39,46,071/-. The Assessing Officerhas also made addition u/s 69C @ 0.5% of commission of final entry provider of Rs. 1,69,730/-.
6.Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the addition made by the Assessing Officer. Aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us.
7. Ld Counsel for the assessee submitted before us that the entire purchase of 70,000 equity shares and sale of 4,16,680 equity shares (31480 share at face value