Calcutta High Court
Principal Commissioner Of Income Tax 5 … vs Shri Sawankumar T Jajoo on 17 January, 2025
Author: T.S. Sivagnanam
Bench: T.S. Sivagnanam, Hiranmay Bhattacharyya
OD-1
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
CORAM:
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA
ITAT/271/2024
IA NO: GA/1/2024, GA/2/2024
PRINCIPAL COMMISSIONER OF INCOME TAX 5 KOLKATA
VS
SHRI SAWANKUMAR T JAJOO
Appearance:
Mr. Soumen Bhattacharjee, Adv.
Ms. Shradhya Ghosh, Adv.
...for the appellant.
Ms. Aratrika Roy, Adv.
Mr. Prakash Mishra, Adv.
Mr. Subhajit Das, Adv.
...for the respondent.
HEARD ON : 17.01.2025 DELIVERED ON: 17.01.2025 (T.S. SIVAGNANAM, C.J.) :
1. This appeal has been filed by the revenue under Section 260A of the Income Tax
Act, 1961 (the Act) challenging the order dated 13.03.2023 passed by the Income
Tax Appellate Tribunal, “E” Bench, Mumbai (the Tribunal) in
ITA/6489/MUM/2018 for the assessment year 2013-14.
2. The revenue has raised the following substantial questions of law for
consideration :
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i) Whether on the facts and in the circumstances of the case, the Hon’ble
ITAT has erred in law by not appreciating the fact that Long Term Capital
Gain of Rs.4,33,71,468/- claimed as exempted u/s. 10(38) of the IT Act,
1961 by the assessee from sale of scrips of Wagend Infra Venture Pvt.
Limited was correctly disallowed and added u/s.68 by the Assessing Officer
on the ground that the said scrips has all characteristics of a penny stock
used for generating bogus Long Term Capital Gains?
ii) Whether on the facts and in the circumstances of the case, the Hon’ble
ITAT was erred in law in failing to give credence to investigations made by
the Assessing Officer, Investigation Wing of the Income Tax Department on
the astronomical rise in price of shares of Wagend Infra Venture Pvt.
Limited which had no net worth and no financial foundation and thereby
failed to apply the test of human probability to ascertain the true nature of
transactions and overlooked the fact that the entire transactions were stage
managed in consonance with brokers and entry operators with the
objective to facilitate the beneficiaries to plough back their unaccounted
income in the form of bogus Long Term Capital Gains thereby giving rise to
the vice of perversity in the decision making process?
iii) Whether the Hon’ble ITAT had erred in law and on facts by deleting the
addition made by the Assessing Officer u/s. 68 of the IT Act, 1961 in the
order u/s. 143(3) read with section 153A even though the decision of the
Hon’ble Jurisdictional High Court in the lead case of Pr. CIT-vs.-Smt. Swati
Bajaj squarely covers the issue of bogus Long Term Capital Gain from sale
of penny stocks and also covered by exceptions laid in respect of Para
3.1(h) of CBDT’S Circular No. 5 of 2024 dated March 15, 2024?
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3. We have heard Mr. Soumen Bhattacharjee, learned Standing Counsel for the
appellant and Ms. Aratrika Roy, learned senior Advocate appearing for
respondent/assessee. There is a delay of 432 days in filing the appeal. Though the
explanation which is submitted by the revenue is not fully satisfactory, yet this is
an appeal under Section 260A of the Act, wherein the Court is required to
consider whether any substantial question of law arises for consideration we are
persuaded to exercise discretion and condone the delay in filing of the appeal.
4. The assessee preferred an appeal challenging the orders under Section 143(3)
read with Section 153A of the Act dated 30.12.2017. The Appellate Authority
namely the Commissioner of Income Tax (Appeals) 49, Mumbai allowed the
appeal.
5. Aggrieved by the same, revenue preferred an appeal before the learned Tribunal
which has been dismissed. This order has been put to challenge by the revenue in
this appeal.
6. Before the CIT(A) the assessee challenged the addition made by the assessing
officer as being perverse and contrary to the facts and circumstances of the case
and without following proper procedure and that the addition under Section 68 of
the Act was made on surmises, presumption and conjecture without any
incriminating evidence being found during the course of search without bringing
on record any material evidence in support of the addition. Further it was
contended that assessing officer erred in law in relying upon third party statement
against the assessee without providing any opportunity of being heard in this
regard despite the fact that the name of the assessee does not appear in the
statement given by the third party.
4
7. On the first aspect as to the procedural irregularities pleaded by the assessee, the
CIT(A) found that adequate opportunity was granted to the assessee to make a
submission and the assessment was completed after considering the submission
of the assessee and, therefore, there was no violation of any procedural law while
completing the assessment. Thus, this ground was triggered against the assessee.
The CIT(A) thereafter took up for consideration the merits of the matter and by a
very detailed order after analyzing all the contention the appeal was allowed. The
learned Tribunal has elaborately considered factual position and found that the
assessee had submitted in detail in respect of allotment of shares with supporting
share application form with bank statement and demat statement and broker
ledger account and discharged the onus cast upon the assessee and all those
materials were placed in the form of a paper book before the Tribunal.
8. After going through the document the Tribunal held that the assessing officer
made the addition solely on the ground that the scrips are in the stock whereas
the assessee was able to demonstrate that the shares of the company in which the
assessee has invested does not appear in the AIR report of the revenue which
related to trading in penny stock. Further the name of the alleged company did
not appear in the list of 331 suspended companies and no adverse inference was
drawn by the SEBI.
9. Thus, the Tribunal found that the assessing officer committed a mistake which is
apparent on the face of the assessment order. The Tribunal also noted that the
assessee had submitted details to substantiate the claim and the transaction of
the assessee was found to be not in the nature of speculation and the assessee
has purchased scrips for long term holding. The Tribunal faulted the assessing
officer in not considering the voluminous information placed by the assessee
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during the course of assessment proceedings. The learned Tribunal also referred
to the notice issued by the Bombay Stock Exchange dated 17.07.2016 wherein
the trading in the company in question namely Wagend Infra Venture Limited
resumed with effect from 15.7.2016 and this information made known in the
notice issued by the Bombay Stock Exchange was not disputed by the revenue.
Further, the learned Tribunal on facts found that in case of the assessee’s father
the long term capital gains on the sale of some scrips/shares was accepted by the
department, and this was specifically noted by the CIT(A).
10. Thus, we find that the CIT(A) has elaborately considered the factual position and
the voluminous documents and information furnished by the assessee and the
same were re-appreciated by the Tribunal and the order passed by the CIT(A) was
affirmed.
11. Thus, we find no question of law much less substantial question of law arising for
consideration in this appeal.
12. Accordingly, the appeal fails and dismissed.
(T.S. SIVAGNANAM, C.J.)
I agree.
(HIRANMAY BHATTACHARYYA, J.)
pkd/GH.
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