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2023 (7) TMI 645 - AT - Income TaxEx-parte order of CIT(A) u/s 250 - Opportunity of being heard - HELD THAT - CIT(A) has issued given several opportunities to the assessee but, however, the assessee has not availed those opportunities. CIT(A) has passed a detailed order on merits of the case and adjudicated the assessee s grounds with a due consideration. Hence the order passed by CIT(A) is a detailed order on merits and not a summary-order. Being so, we do not find any merit in the claim of assessee that the CIT(A) has passed order without giving opportunities of hearing. Therefore, we are inclined to dismiss Ground No. 1 of assessee which is devoid of any merit. Bogus capital gain - assessee has earned capital gain from the transactions of shares of Turbotech Engineering Ltd., which falls within the category of a Penny stock as per the information available with the Income-tax Department - HELD THAT - As already decided in Shri Abhishek Gupta 2022 (8) TMI 1333 - ITAT INDORE wherein the identical issue of exempted capital gain from shares of Turbotech Engineering Ltd. the Bench has rejected the assessee s claim of long-term capital gain and upheld the additions made by revenue. No material change which could suggest non-applicability of the decision in present appeal. Hence, we find no valid reason to deviate. Accordingly, we uphold the additions made by revenue-authorities - Decided against assessee.
Issues Involved:
1. Opportunity of being heard before passing the order. 2. Addition of Rs. 69,78,526/- as bogus capital gain. 3. Addition of Rs. 1,39,568/- on account of estimated brokerage cost. Detailed Analysis: Ground No. 1: Opportunity of Being Heard The assessee claimed that the Commissioner of Income-Tax (Appeals) [CIT(A)] erred by passing the order without giving the assessee an opportunity of being heard. The CIT(A) had scheduled multiple hearings, but the assessee either requested adjournments or failed to attend. Despite several opportunities, the assessee did not file any written submissions. Consequently, the CIT(A) decided the case on its merits. The tribunal found that the CIT(A) passed a detailed order after due consideration and dismissed Ground No. 1, stating that the claim was devoid of merit. Ground No. 2 to 4: Additions of Rs. 69,78,526/- and Rs. 1,39,568/- The assessee challenged the additions made by the Assessing Officer (AO) on two counts: 1. Addition of Rs. 69,78,526/- as bogus capital gain. 2. Addition of Rs. 1,39,568/- on account of estimated brokerage cost. Details of Transactions: The assessee purchased 15,000 shares of Turbotech Engineering Ltd. for Rs. 45,000/- and sold them for Rs. 70,23,526/-, claiming a capital gain of Rs. 69,78,526/-. The AO found the capital gain suspicious and treated it as a bogus receipt under Section 68 of the Income-tax Act, 1961. The AO also added Rs. 1,39,568/- as estimated brokerage cost from undisclosed sources. Observations by AO: 1. The shares of Turbotech Engineering Ltd. were categorized as "Penny stock" by the Income-tax Department. 2. The department's investigations revealed syndicates manipulating market prices of penny stocks to provide exempted capital gain entries. 3. Turbotech Engineering Ltd. had weak financials, no business activity for the last five years, and suffered continuous losses. 4. The share price of Turbotech Engineering Ltd. was artificially rigged by about 15507% without any related growth in the company. 5. The AO issued summons to the assessee and notices to the buyers of the shares, but none responded, leading to the conclusion that the capital gain was not genuine. CIT(A) Findings: The CIT(A) upheld the AO's findings, stating that the assessee indulged in bogus long-term capital gain transactions through accommodation entries. The CIT(A) relied on various judicial precedents and observed that the transactions did not stand the test of human probability. Tribunal's Decision: The tribunal agreed with the findings of the AO and CIT(A). It noted that the issue of exempted capital gain from Turbotech Engineering Ltd. had been previously examined and concluded by the ITAT, Indore Bench in a similar case (Shri Abhishek Gupta Vs. ITO). The tribunal found no reason to deviate from the previous decision and upheld the additions made by the revenue authorities. Consequently, Grounds No. 2 to 4 were dismissed. Conclusion: The appeal was dismissed in its entirety, with the tribunal affirming the additions made by the AO and CIT(A). The order was pronounced on 01.12.2022.
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