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2021 (3) TMI 688 - HC - Income TaxValidity of the order of ITAT - Matter remitted back to the file of the Assessing Officer for reconsideration by Tribunal - Bogus LTCG - Penny stock purchases - Claim made u/s 10(38) denied - whether Tribunal was right in remitting the issue back to the file of the Assessing Officer by quoting the decision in the case of Kanhaiyal and Sons (HUF) 2019 (2) TMI 1640 - ITAT CHENNAI wherein the onus has been shifted to the revenue with a direction that the Assessing Officer is to bring on record the role of the Assessee in promoting the Company and the relation of the Assessee if any with that of the promoters and role of inflating of prices etc which exercise had already been done by the AO and the SEBI? - HELD THAT - As decided in MRS. MANISH D. JAIN (HUF) 2020 (12) TMI 740 - MADRAS HIGH COURT Not only the Assessing Officer, but also the CIT(A) examined the modus operandi of the assessee and held that the shares were purchased through off market and not through Stock Exchange and that the selling rates were artificially hiked later on. The above findings have not been set aside by the Tribunal and there is no reason for the Tribunal to remand the matter to the Assessing Officer for a fresh consideration. There was no material, which necessitated the remand of the case to the Assessing Officer and it is a clear case where the Tribunal had failed to exercise its jurisdiction in the manner known to law.Tribunal, being a last fact finding Authority, is under the legal obligation to record a correct finding of fact. Where all the evidence had been produced and the CIT(A), after full investigation of the evidence and examination of the accounts, had given a definite finding on the question in issue, the Tribunal's order of remand was held to be invalid. Substantial questions of law framed are answered in favour of the Revenue
Issues Involved:
1. Whether the Tribunal was correct in remanding the matter back to the Assessing Officer for re-examination. 2. Whether the Tribunal's decision to remit the issue back was justified given the Assessing Officer had already considered all materials. 3. Whether the Tribunal's finding was perverse and contrary to the principle that the initial burden of proof lies on the person asserting a fact. Issue-wise Detailed Analysis: 1. Tribunal's Remand Decision: The Tribunal remanded the matter back to the Assessing Officer (AO) for reconsideration, relying on its earlier decision in the case of Kanhaiyalal & Sons (HUF) vs. ITO. The High Court examined whether this remand was justified. It was noted that the Tribunal did not interfere with the factual findings of the AO and the Commissioner of Income Tax (Appeals) [CIT(A)] regarding the assessee's transactions. The High Court emphasized that the Tribunal should have recorded reasons for remanding the case and why it could not decide the factual issue based on the available material. The Tribunal's remand was found to be unjustified and devoid of reasons, making it unsustainable in law. 2. Justification for Remand: The High Court referred to the Supreme Court's decisions in Hukumchand Mills Ltd. Vs. CIT and Martin Burn Ltd. Vs. CIT, which affirmed the Tribunal's power to remand. However, it stressed that remand should be used sparingly and only when warranted by the facts. The High Court found that the Tribunal failed to identify any new material necessitating a remand. The AO and CIT(A) had already conducted a detailed inquiry, and the Tribunal did not find any error in their approach. Thus, the remand was deemed unnecessary. 3. Burden of Proof: The High Court reiterated the principle that the initial burden of proof lies on the person asserting a fact. The AO and CIT(A) had found that the assessee engaged in sham transactions to generate artificial long-term capital gains. The assessee failed to prove the genuineness of these transactions. The High Court cited several precedents, including Sumati Dayal Vs. CIT and PCIT, Central Vs. NRA Iron & Steel Private Limited, emphasizing that the assessee must provide cogent evidence to prove the genuineness of transactions. The Tribunal's decision to shift the burden back to the Revenue without sufficient cause was found to be contrary to established principles. Detailed Findings: The High Court detailed the modus operandi of the assessee, who purchased shares off-market, sold them at artificially inflated prices, and failed to provide credible evidence for these transactions. The AO and CIT(A) found that the transactions were engineered to convert black money into white. The High Court upheld these findings, noting that the assessee did not dispute the factual position brought out by the AO and CIT(A). The Tribunal's failure to address these findings and its decision to remand the case were deemed incorrect. Conclusion: The High Court allowed the appeals, set aside the Tribunal's orders, and restored the CIT(A)'s order. It answered the substantial questions of law in favor of the Revenue, highlighting that the Tribunal's remand was unjustified and that the assessee failed to discharge the burden of proving the genuineness of the transactions.
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