9911796707
TMI Blog2024 (9) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... d after duly examining the facts of the case to the extent of the issues discussed in the revisionary order after giving the assessee an reasonable opportunity of being heard. 2. The grounds of appeal raised by the assessee in Memo of Appeal filed with the Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad, reads as under:- "1. The ld. PCIT, Ahmedabad-1 erred in law and on fact in passing the order under section 263 of the Act." 3. The brief facts of the case are that the assessee filed return of income for impugned assessment year on 30th September, 2014, declaring income of Rs. 13,31,280/-. The Re-assessment order u/s. 147 r.w.s. 144B was passed by the Assessing Officer on 30th March, 2022, wherein the returned income was accepted by the Assessing Officer. The ld. PCIT on perusal of the record observed that the assessee traded in the scrip of KDJ Holidayscape & Resort Ltd.(in short KDJHRL)(formerly known as Gomti Finlease (India) Limited). The said scrip is a penny stock with scrip ID 530701, engaged in providing long term capital gain/ loss to various entities. Based on above information, the case of the assessee was reopened u/s. 147 r.w.s. 148 of the Act, as a trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of KDJ Holidayscape & Resort Ltd. was also covered u/s. 133(A) of the I.T. Act, 1961. (M/s KDJ Holidayscape & Resort Ltd. is a recognized penny Stock company with scrip id 530701 engaged in providing bogus long term capital gain loss to various entities. The assessee is one of the beneficiary who traded in the scrip of KDJ Holidayscape & Resort Ltd. of Rs. 79,43,000. 3. On verification of record it was observed that the assessee was one of the beneficiaries who traded in the scrip of KDJ Holidayscape & Resort Ltd. of Rs. 79,43,000/-, M/s KDJ Holidayscape & Resort Ltd. is a recognized penny stock company with scrip id 530701 engaged in providing bogus long term capital gain/loss to various entities. The assessee has uploaded invoices/contract notes issued by Prabhudas Liladhar Private Limited in respect of online purchase of 19400 shares of Gomati Finlease (India) Ltd during the financial year 2011-12 for an aggregate sum of Rs. 12,61,190/- after suffering security transaction tax. The assessee in his submission dated 16.03.2022 has claimed that out of 19,400 shares so purchased, 1000 shares were transferred in that year in his demat account. The assessee sold 18,400 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has legitimately invested in the shares of the aforesaid company, and held it for more than 18 months before selling, thus making it a long term capital gains. The investment was made through recognized stock exchange, through registered broker. The payments were made through banking channel, which also included STT. The assessee submitted before ld. PCIT that investments were recorded in the books of accounts regularly maintained by the assessee. The shares were held in Demat Account held by the assessee with the depository. The shares were purchased on delivery basis. The documents which were filed before the Assessing Officer justifies that transactions are not bogus. Thus, the assessee contended that the reassessment order is neither erroneous nor prejudicial to the interest of revenue, and request was made before ld. PCIT that the revisionary proceedings u/s. 263 of the Act may be dropped. The ld. PCIT after considering the submission of the assessee observed that the assessee has not submitted demat account during the course of assessment proceedings to prove the transactions. It was observed by ld. PCIT that KDJHRL is a recognized penny stock(scrip ID 530701) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eassessment order passed by the AO, dated 30.03.2022 with the directions to the Assessing Officer to pass fresh order in accordance with law after duly examining the facts of the case as discussed by ld. PCIT in its revisionary order, and after giving reasonable opportunity of being heard to the assessee. 4. Aggrieved, the assessee filed first appeal with Tribunal. The ld. counsel for the assessee opened argument before the Bench and submitted that shares have been sold through recognized stock exchange with Bombay Stock Exchange after keeping for 18 months, and the transactions have been routed through bank. The assessee has earned long term capital gain on the sale/purchase of shares, and the same was exempt u/s. 10(38). It was submitted that ld PCIT has observed during revisionary proceedings that the AO did not call for and verify the demat account. It was submitted that the demat account was duly submitted before the ld. PCIT during the course of revisionary proceedings u/s. 263 of the Act. It was submitted that the case of the assessee was reopened u/s 147 on the basis of investigation wing report that the said company KDJHRL is a penny stock company. It was submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is placed. Our attention was drawn to the reply filed by the assessee before ld. PCIT. It was submitted that demat account was furnished before the ld. PCIT during the course of revisionary proceedings u/s. 263 of the Act. Our attention was also drawn to the Circular No. 768, dated 24.06.1998 issued by CBDT. Our attention was drawn to revisionary proceedings u/s. 263 conducted by ld. PCIT, and it was submitted by ld. Counsel for the assessee that the reassessment order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of revenue, as all other details were furnished before the AO and merely because demat account was not furnished, the assessment cannot be revised by ld. PCIT and in any case the demat account was filed before the PCIT during revisionary proceedings. The assessee relied upon decision of ITAT in ITA no. 2586/Mum/2022, dated 02.03.2023 in the case of Karishma Ajay Agarwal v. ITO and also decision of ITAT in the case of ITO v. Shri Jimeet Vipul Modi in ITA No. 4297/Mum/2018, dated 29.07.2019. The assessee also relied upon the decision of Hon'ble Supreme Court in the case of Malabar Industrial Company Limited v. CIT, reported in(2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JHRL is a recognized penny stock with scrip code 530701 engaged in providing bogus long term capital gain/loss to various entities. The assessee is one of the beneficiary who traded in the scrip of KDJHRL of Rs. 79,43,000/-. The assessee bought 19400 shares of KDJHRL. Based on the above information, the AO invoked reassessment proceedings against the assessee u/s 147 of the 1961 Act after obtaining necessary approvals. Notice u/s 148 was issued. The assessee filed return of income pursuant to notice u/s 148. The AO issued notice u/s 143(2). The assessee filed objections to reopening of the concluded assessment by invoking provisions of section 147. The same were rejected by the AO. The notices u/s 142(1) were issued by the AO to the assessee during assessment proceedings. The assessee filed its reply along with supporting documents before the AO during the reassessment proceedings. The AO observed that the assessee has uploaded invoices/contract notes issued by Prabhudas Liladhar Private Limited in respect of online purchase of 19,400 shares of Gomati Finlease (India) Limited(later name changed to KDJHRL) during the financial year 2011-12 for an aggregate sum of Rs. 12,61,190/- inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operations conducted by Revenue u/s 132 in the case of Jatia Group and other related group on 17.04.2018. The premises of KDJHRL was covered u/s 133A of the 1961 Act. It reveals in the investigation that the KDJHRL is a recognized penny stock which is engaged in providing bogus long term capital gain/loss to various entities. The assessee is one of the beneficiary who traded in the scrip of KDJHRL of Rs. 79,43,000/- and earned long term capital gain during the impugned assessment year to the tune of Rs. 67,46,810/- which was claimed as an exempt income u/s 10(38). The statements under oath was recorded by Revenue of the Director Vinod Deora of KDJHRL on 17.04.2018 till 19.04.2018 in two rounds, which statements were provided by the AO to the assessee. The said statement reveals that there is manipulation in the stock of KDJHRL by 14 Kolkatta based companies which were bogus companies having no credentials (see question no. 34 in the statement dated 19.04.2018 (page 39/PB) who were trading and manipulated the shares of KDJHRL. The said company KDJHRL has miniscule gross block of fixed assets at Rs. 26,30,536/- out of which Computers valued at Rs. 14,85,826/-(question no. 35 of stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO more so the said company is merely an alleged shell company with miniscule fixed assets and operations(losses). Even the business of time share claimed by KDJHRL to be carried on by the said company, was shut down in 2015(paged 16/PB paged 32). The AO merely conducted superficial inquiry and did not see whether apparent is real or not, during the course of reassessment proceedings. The AO simply obtained contract notes, bank statements, ledger accounts etc, and accepted the contentions of the assessee, wherein the AO accepted the returned income. The ld. PCIT set aside the reassessment order passed by the AO, dated 30.03.2022 with the directions to the Assessing Officer to pass fresh order in accordance with law after duly examining the facts of the case as discussed by ld. PCIT in its revisionary order, and after giving reasonable opportunity of being heard to the assessee. Under the facts and circumstances, it was incumbent on the AO to have made proper inquiries to unearth the truth behind the smoke screen and the uncover the truth whether, the apparent is real or not, which he failed to do so. The AO failed to consider and examine that the statements under oath were reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s. 147 on the ground that the assessee has dealt with penny stock and the inquiries have revealed that the said shares of said company were manipulated to generate bogus long term capital gains/loss, It was all the more incumbent on the Assessing Officer to have made detailed inquiry into the matter to unravel the truth and see what is behind the smoke screen, but the Assessing Officer has merely accepted the contentions of the assessee based upon contract notes and the bank statement submitted by the assessee. Thus, the Assessing Officer has made a superficial inquiry and has not made proper inquiry as required in the facts and circumstances of the case. The ld. PCIT rightly set aside the reassessment order passed by the AO, dated 30.03.2022 with the directions to the Assessing Officer to pass fresh order in accordance with law after duly examining the facts of the case as discussed by ld. PCIT in its revisionary order, and after giving reasonable opportunity of being heard to the assessee. The appeal of the assessee stand dismissed. We order accordingly.
6. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 30-08-2024 X X X X Extracts X X X X X X X X Extracts X X X X
|
