2020 (11) TMI 608 - AT - Income Tax

Exemption u/s 10(38) denied - addition was made u/s 68 - Denial of an opportunity of fair hearing by providing copy of the statement and related details - HELD THAT - As decided in case of SHRI. KIRTI K. BHANSALI 2019 (5) TMI 1754 - ITAT BANGALORE as held that since the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details, the matter is required to be reconsidered by the AO by providing fair and reasonable opportunity of hearing to the assessee after furnishing details / copy of the statement based on which the impugned assessment order has been passed. From the above it is seen that matter was restored back to the file of the AO for fresh decision - Assessee s appeal is allowed for statistical purposes.

Summary

Issues:
- Whether the CIT(A) erred in confirming the Assessing Officer's order treating consideration received for sale of shares as a bogus transaction and making an addition under section 68 of the Income Tax Act, rejecting the claim of deduction under section 10(38) of the Income Tax Act.

Analysis:
1. Factual Background: The appeals were against three orders of the CIT(A) dated 15.05.2019 for the assessment year 2015-2016. The common issue raised was the treatment of consideration received for the sale of shares as a bogus transaction and the denial of deduction under section 10(38) of the Income Tax Act.

2. Assessing Officer's Findings: The Assessing Officer noted the assessee's declaration of Long Term Capital Gains (LTCG) from the sale of shares of a company named KAFL. The investigation revealed that KAFL was under scrutiny for providing accommodation entries for LTCG and STCL. The AO concluded that the assessee engaged in engineered transactions to create artificial LTCG, treating the entire sale consideration as unexplained credit under section 68 of the Income Tax Act.

3. CIT(A) Decision: The CIT(A) upheld the AO's decision, denying the benefit of exemption under section 10(38) and making an addition under section 68 of the Income Tax Act. The appellant challenged this decision before the Tribunal, citing errors in the lower authorities' orders and seeking relief.

4. Tribunal's Decision: The Tribunal, after considering similar cases, remitted the issue back to the Assessing Officer for fresh consideration. Citing precedents, the Tribunal emphasized the need for a fair hearing and providing relevant details to the appellant. The Tribunal did not delve into the merits of the addition, focusing on procedural fairness.

5. Conclusion: The Tribunal partially allowed the appeal for statistical purposes, directing a fresh assessment by the Assessing Officer with specific guidelines. The decision in one appellant's case was deemed applicable to other assessees with identical facts. The Tribunal's order aimed to ensure procedural fairness and adherence to legal principles in the assessment process.

This detailed analysis of the judgment highlights the key legal issues, factual background, findings of the authorities, and the Tribunal's decision, emphasizing procedural fairness and adherence to legal principles in tax assessments.