Case Law Details
Bridge India Fund Vs ACIT (ITAT Mumbai)
Conclusion: In present facts of the case, it was observed by the Tribunal that only Assessee could sign Form number 35A prescribed under Income Tax (Dispute Resolution Panel) Rules, 2009.
Facts: In present facts of the case, the two appeals have been filed for AY 2014 – 15 and 2015 – 16 against the assessment orders passed by the learned AO, involving common grounds of appeal. Brief facts of the case are that assessee is a resident of Mauritius and foreign portfolio investor (FPI) registered with SEBI. It carries on portfolio investment activity and derives income from investment activities in the secondary market and sale securities in accordance with the regulation made by the securities and exchange board of India. For AY 2014 – 15, assessee filed its return of income on 29/9/2014 declaring total income of ₹ 68 Lacs. This income was interest income offered under the head income from other sources being received from PTI infrastructure Ltd taxed at a special rate under section 196D of the act.
Subsequently information was received from inside Portal under CRU/VRU risk cases that assessee is one of the beneficiaries of bogus long-term capital gain/short-term capital loss pertaining to FY 2013-14 in script which falls under penny stock category in equity/ cash market segment wherein the assessee has allegedly bought 12,00,844 shares at ₹ 157,060,202 and sold the same quantity of shares at ₹ 126,182,597 resulting into a loss of ₹ 30,877,605. Thereafter, after obtaining the necessary approvals under section 151 (1)of the Act, case of the assessee was reopened on 31/3/2021 by recording the reasons and issuing the notice on the same date. In response to the above notice the assessee did not file any return of income and submitted that due to technical glitches he is unable to do so.
As the assessee did not file any return of income, another notice under section 148 was issued on 30 June 2021. Then a fresh notice under section 142 (1) was issued. The learned assessing officer recorded the fact of the huge short-term capital loss which was found to be suspicious on detailed investigation of the issue. The learned AO issued a show cause notice to the assessee to hold that why the value of the purchase amount should not be held as unexplained investment under section 69 of the Income Tax Act and further why not to tax commission on fictitious trade incurred by the assessee to be taxed under section 69C of the act as unexplained expenditure. This notice was replied by the assessee on 24/3/2022 denying all the allegations. The learned AO rejected all the arguments of the assessee and held that assessee has failed to discharged its onus, there is an ignorance of the assessee about the shares and penny stock companies, financial analysis of the penny stock companies do not support the trading by the assessee, there is an adverse order of the securities and Exchange board of India, there is a cash trial available in the accounts of the entry providers and therefore these are arranged transactions and are bogus. Accordingly the draft assessment order was passed.
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