2022 (6) TMI 478 - AT - Income Tax

Reopening of assessment u/s 147 - Short Term Capital Gain earned from the transactions in shares - HELD THAT - As a matter of fact, the only addition made by the Assessing Officer on account of Short Term Capital Gain was very much based on ground on which reopening of the assessment was based and this being so, we do not find any merit in the additional ground raised by the assessee. The case of Mohmed Juned Dadani 2013 (2) TMI 292 - GUJARAT HIGH COURT relied upon by the learned Counsel for the assessee in support of assessee s case on this issue is distinguishable on facts inasmuch as no addition in that case was made by the Assessing Officer in the order of reassessment on the ground on which reopening of the assessment was based and the reliance of the learned Counsel for the assessee on the same is clearly misplaced. The additional ground raised by the assessee is accordingly dismissed. STCG - The case of the assessee is that none of the notices issued by the Assessing Officer was received by the assessee and therefore the relevant details and documents to support and substantiate his case on the issue could not be furnished by the assessee. The learned Counsel for the assessee has submitted that these details and documents, however, were furnished by the assessee during the course of appellate proceedings before the learned CIT(A) with an application to admit the same as additional evidence under Rule 46A of the Income-tax Rules, 1962. He has contended that the learned CIT(A), however, did not entertain the same for the reason not so relevant and urged that one more opportunity may be given to the assessee to produce the same for verification before the Assessing Officer. Although the learned DR has raised objection in this regard, we consider it fair and proper and in the interest of justice to give one more opportunity to the assessee keeping in view all the facts of the case including especially the fact that the additional evidence sought to be filed by the assessee before the learned CIT(A) is relevant to decide the issue relating to the exact quantum of profit earned by the assessee from the share transactions entered into during the year under consideration. Appeal of the assessee is treated as partly allowed.

Summary

Issues:
1. Addition of Short Term Capital Gain by Assessing Officer.
2. Rejection of additional evidence by CIT(A).
3. Challenge to addition of Short Term Capital Gain before Tribunal.

Issue 1: The assessee appealed against the addition of Rs.8,65,200/- as Short Term Capital Gain by the Assessing Officer based on share transactions. The Assessing Officer made the addition as the assessee did not file a return of income and failed to comply with notices issued under Section 148 and 142(1) of the Income Tax Act. The assessee contended that he faced difficulties due to non-receipt of notices by his neighbor and provided explanations regarding intra-day trading, ledger account details, and bank statements to support his case that his total income was below the taxable limit. However, the CIT(A) upheld the addition, stating that the appellant had not shown reasonable cause for non-appearance before the AO and that the share transactions indicated potential profit. The Tribunal, on appeal, found no merit in the additional ground challenging the addition, as the reopening of assessment was based on the share transactions, and the addition of Short Term Capital Gain was justified.

Issue 2: The CIT(A) rejected the additional evidence submitted by the assessee during the appellate proceedings, which included ledger account details and bank statements, stating that the appellant did not show reasonable cause for non-appearance before the AO. The Tribunal, however, considered it fair to give the assessee another opportunity to produce the relevant details and documents before the Assessing Officer to substantiate his case regarding the exact quantum of profit earned from share transactions. The matter was restored to the Assessing Officer for fresh consideration.

Issue 3: The assessee challenged the addition of Short Term Capital Gain before the Tribunal, arguing that the reopening of assessment was based on investments in share transactions and no addition was made on that issue in the original assessment order. The Tribunal dismissed this contention, stating that the only addition made by the Assessing Officer was on account of Short Term Capital Gain, which was in line with the grounds for reopening the assessment. The Tribunal partially allowed the appeal, setting aside the CIT(A)'s decision and directing the Assessing Officer to reevaluate the issue with the additional evidence provided by the assessee.