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TMI Blog2023 (11) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... see filed a petition for condonation of delay and also for admission of additional evidence. The assessee in both the petitions had stated that the notices being sent to the non-functional email id as the reason for delay in filing the appeal and for delay / non-submission of details before the AO - CIT(A) while condoning the delay has accepted the said submissions but did not consider same reason as sufficient cause for admission of additional evidence and has in the order has given a detailed finding in this regard - CIT(A) also relied on the remand report of the Assessing Officer where it is mentioned that the assessee despite having the evidences at their disposal wontedly did not submit the same. We are unable to appreciate this contention since there is no reason for the assessee to withhold submitting the required the details more so when the impugned addition is significant resulting in huge demand. In this regard we are also bound to take cognizance of the fact that the Hon'ble Bombay High Court has given a direction to decide the application under rule 46A which the CIT(A) has not considered in his order. In view of these discussions we are of the view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was processed under section 143(1) of the Income Tax Act (the Act) and a tax demand was raised by CPC of Rs. 175,52,26,440/-. Subsequently, the case was selected for scrutiny for examination of expenses incurred for earning exempt income by issue of notice under section 143(2) dated 09.08.2018. The assessment was completed under section 143(3) where the income was assessed at Rs. 461,72,35,403/- after making an addition of Rs. 373,39,28,268/- as unexplained credit under section 68 of the Act. On appeal, the CIT(A) dismissed the appeal of the assessee. Aggrieved, the assessee is in appeal before the Tribunal. 4. During the year under consideration, the assessee has credited to the P L Account an amount of Rs. 393,39,28,268/- towards profit on sale of investments, i.e. sale of listed shares of Wockhardt. The investment in shares of Wockhardt were treated as a capital asset and the assessee computed a long term capital gain on sale of such investments at Rs. 39,65,96,306/-. Since these capital gains were arising from sale of long term capital asset being shares of a listed company and the sale was subject to Securities Transaction Tax (STT), the long term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the notices and the final order of assessment had been sent to the non-functional email id due to which the assessee was not aware that the assessment has been completed. It is only when the assessee received a call from the department regarding the outstanding demand the assessee came to know that the assessment order has been passed. It was also submitted that as soon as the assessee came to know of the assessment order immediate efforts were made to file the appeal before the CIT(A). The assessee accordingly prayed for condonation delay and admission of appeal before the CIT(A). The CIT(A) after considering the submissions condoned the delay and admitted the appeal. 7. The assessee also filed a petition for admission of additional evidence on 04.09.2020 under Rule 46A of the Income Tax Rules. The assessee submitted a detailed note about the impugned transaction along with the additional evidences before the CIT(A) the relevant extract of which is given below The Appellant submits that 6,58,97,757 equally shares in Wockhardt Limited were acquired by it on 7 July 2014 by way of gift from three promoter group companies viz. Palanpur Holdings and Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit Loss account since there was no cost of acquisition recorded by the Appellant in respect of those shares as the shares were received by way of gift. The equity shares of Wockhardt Ltd. were shown under the head Investments and, apart from the investment in preference shares of Wockhardt Hospitals Ltd., this is the only investment held by the Appellant. The Appellant filed its return of income for the assessment year 2017-18 on 28 July 2017. In the return of income, the Appellant claimed exemption under section 10(38) of the Act with respect to the transaction of sale of shares of Wockhardt Ltd., given the transaction related to the sale of shares held as long-term capital asset and has been effected on the Stock Exchange and that the Appellant had paid STT. 8. The assessee further submitted that since the assessee was receiving the communication from the Assessing Officer in the non-functional email id, the details which are now submitted as part of additional evidence could not be submitted before the assessing officer. The assessee also submitted that it has inadvertently stated in its submissions before the Assessing Officer that the profit on sale of shares is exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable and the undersigned do not see sufficient reasons to interfere with that at this stage. Accordingly, the appeal of the appellant is dismissed. 11. The Ld.AR submitted that the assessee s case was taken up for limited scrutiny and in this regard drew our attention to page 131 of paper book where the notice under section 143(2) dated 09/08/2018 is placed which states that limited scrutiny for verification of expenses incurred for earning exempt income. The Ld.AR further drew our attention to the notice under section 142(1) dated 04/04/2019 wherein a query was raised (query 5(b) page 137 of paper book) to submit details of exempt income earned during the year under consideration. The Ld.AR submitted that the assessee, in response to the said notice filed a reply on 12/06/2019 (page 218 of paper book) wherein the assessee had inadvertently mentioned that the profit on sale of listed shares has been claimed as exempt in accordance with the provisions of section 10(34) of the Act. The Ld.AR further submitted that the observations of the Assessing Officer that the assessee s reply is evasive and incomplete, is not correct since the assessee has provided the necessary details a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, vehemently argued that there was a substantial delay in filing the details by the assessee before the AO that the notices sent to non-functional email id cannot be quoted as the reason as the assessee could have verified from the ITBA portal. The Ld.DR further submitted that all the details called for by the assessee pertained to the exempt income and, therefore, there is no conversion of limited scrutiny to full scrutiny. The Ld.DR also submitted that the assessee claimed to have made more than one inadvertent mistake with regard to the impugned transaction i.e. The gain arising out of the sale of shares is not declared under capital gains, the section under which the exemption claim is wrongly quoted, etc. The Ld.DR, therefore submitted that there are more than one anomaly pertaining to the transaction and therefore the lower authorities were correct in treating the entire transaction as suspicious and accordingly assessing the same under section 68 of the Act. 13. We heard the parties and perused the material on record. Though both the parties presented various arguments both on the legal grounds and on merits, for the purpose of adjudication we will limit our findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition under rule 46A to produce additional evidences such as copies of delivery instructions slip for transfer of shares by the transferor to the assessee, declaration before SEBI that the assessee has acquired the said shares, Demat account statements evidencing holding of shares, broker note evidencing sale of shares and payment of STT, Demat account statement evidencing sale of shares. It is noticed that the Assessing Officer in the remand report stated that the assessee was given sufficient opportunity to produce details and therefore no new evidences are to be accepted by the CIT(A). The ld AR during the course of hearing submitted that the acquisition and holding are substantiated from the financial statements where the investment is reflected and the sale is substantiated by the bank statements where the consideration received is reflected. It is further argued by the ld AR that the Assessing Officer did not call for any further details specifically with regard to the sale of shares except evidence for earning exempt income which the assessee substantiated by producing the bank statement reflecting the consideration received. We see merit in these contentions of the ld AR si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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