9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 1625 - AT - Income TaxBogus LTCG - unexplained profit on sale of shares of shares - unexplained credit u/s. 68 - claim of exemption u/s. 10(38) rejected by holding the sale of shares as penny stocks - HELD THAT - As noticed that in the case of penny stock, we are consistently taking a view, where the SEBI report and the report of the Investigation Wing of Kolkata Delhi or any other report was not confronted to the assessee, the matter is being restored back to the file of the AO for confronting the material gathered and used against the assessee. Similar view in the cases of SMT. VANDANA JAIN, MR. RAJ KUMAR JAIN, RAJ KUMAR JAIN HUF, and SMT. MITHU KUMARI RANKA 2022 (4) TMI 893 - ITAT CHENNAI , As in the present case before us, the material gathered during the course of investigation was never confronted to the assessee. Hence, taking a consistent view, as taken we remit the issue back to the file of the AO exactly on similar directions. Appeal filed by the assessee is allowed for statistical purposes.
Issues:
1. Addition of unexplained profit on sale of shares under section 68 of the Income Tax Act. 2. Rejection of claim of exemption under section 10(38) of the Income Tax Act. 3. Validity of the assessment order and procedural compliance requirements under section 142(3) of the Act. Issue 1: Addition of unexplained profit on sale of shares under section 68: The appeal pertained to the confirmation by the CIT(A) of the AO's action in treating the profit from the sale of shares as unexplained credit under section 68 of the Act. The appellant claimed the profit as exempt under section 10(38) of the Act. The AO based the decision on reports from the Investigation Wing of Kolkata and Delhi, as well as SEBI reports, indicating that the transaction was sham. Both the AO and CIT(A) concluded that the transaction was a colorable device to account for unaccounted money. The appellant failed to substantiate the genuineness of the transaction, leading to the confirmation of the addition by the CIT(A). Issue 2: Rejection of claim of exemption under section 10(38): The appellant's claim for exemption under section 10(38) in relation to the profit earned from the sale of shares was disallowed by the AO and confirmed by the CIT(A). The authorities found that the transaction was sham in nature and a colorable device to portray unaccounted money as Long Term Capital Gain. The appellant's reliance on documents and papers to support the transaction was deemed insufficient to prove the genuineness of the transaction. The CIT(A) upheld the AO's decision, citing relevant case law and emphasizing the need to consider the true nature of the transaction rather than the entries in the books of accounts. Issue 3: Validity of the assessment order and procedural compliance requirements under section 142(3): The Tribunal noted a consistent view in cases involving penny stocks where reports from SEBI and Investigation Wings were not confronted to the assessee. Following previous decisions, the matter was remanded back to the AO for confronting the material used against the assessee. The Tribunal emphasized the mandatory nature of compliance with section 142(3) of the Act, stating that failure to comply could vitiate the assessment. Referring to relevant case law, the Tribunal directed the AO to provide a fair hearing and furnish necessary details to the assessee. The Tribunal set aside the orders of the CIT(A) and AO, restoring the matter for fresh adjudication while ensuring the assessee's right to be heard and cooperate in the assessment proceedings. In conclusion, the judgment addressed the issues of addition of unexplained profit on sale of shares, rejection of claim of exemption under section 10(38), and the validity of the assessment order regarding procedural compliance requirements under section 142(3) of the Income Tax Act. The Tribunal upheld the decisions of the authorities regarding the transaction being sham and a colorable device, while emphasizing the need for procedural compliance and fair hearing in assessment proceedings.
|
