Case Law Details
S.N. Sodhani HUF Vs PCIT (Supreme Court of India)
Supreme Court allowed the appeal of the revenue in manipulation of share price of SRK Industries recording fictitious Long Term Capital Gain and claiming exemption under section 10(38) by following case of Swati Bajaj.
Facts- This appeal has been filed by the revenue u/s. 260A of the Income Tax Act, 1961 raising substantial question of law that whether on the facts and circumstances of the case that Income Tax Appellate Tribunal erred in ignoring the direct and circumstantial evidence brought on record by AO in the form of modus operandi contrived by the accommodation entry providers who manipulated the share price of SRK Industries Ltd. and provided facility for round tripping of assessee’s unaccounted money to record fictitious Long Term Capital Gains of Rs.19,48,385/- in favour of the instant assessee which is also claimed as exempted income tax u/s 10(38) of the Income Tax Act, giving rise thereby to the vice of perversity in the process of decision making.
Conclusion- Held that no independent reasoning has been given by the learned Tribunal but the Tribunal chose to follow the decision of the Coordinate Bench in I.T.A. No. 354/Kol/2018 dated 24th August, 2018. In fact, in the said decision the earlier decision was affirmed. Those decisions were appealed against in the case of Principal Commissioner of Income Tax Vs. Swati Bajaj, SCC online Cal 1572 the appeal filed by the revenue were allowed and the substantial questions of law were answered in favour of the revenue. The said decision will squarely apply to the case on hand. Thus applying the case of Swati Bajaj, the appeal filed by the revenue is allowed and the substantial questions of law of law are answered in favour of the revenue.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Sh. Rajesh Ranjan, counsel for the petitioner invites our attention to an order dated 8.5.2023 passed with respect to a similarly situate party in relation to whom a writ petition stands dismissed, whereby orders have been passed by the very same Adjudicatory Authority.
Let supplementary affidavit be filed by the respondent explaining whether steps stand taken preferring any appeal(s) wherein the writ petition(s) stands dismissed. Also what action is taken against the erring officials who sat over the files and allowed the appeals to be preferred only after a prolonged period of delay.
We may point out that in the counter affidavit, the respondent themselves have pointed out that the tax evasion involved has an estimated revenue impact exceeding Rs.38,000/- crores.
Needful be done within a period of two weeks. Rejoinder, if any, may be filed by the petitioner within one week thereafte.
GA/1/2022
The Court:- Heard Mr. Tilak Mitra, learned Advocate for the appellant / revenue. Though notice was sent to the respondent/assessee the same was returned unclaimed. There is a delay of 964 days in filing the appeal.
Since the legal issue involved in this appeal is covered by a earlier decision of this Court in favour of the revenue we exercise discretion and condone the delay in filing the appeal.
ITAT/150/2022
This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961, is directed against the order dated 14th November, 2018 passed by the Income Tax Appellate Tribunal “SMC” Bench, Kolakata in I.T.A. No. 1566/Mkol/2018 for the assessment year 2014-2015. The revenue has raised the following substantial question of law for consideration:-
(ii) Whether on the facts and circumstances of the case the Learned Income Tax Appellate Tribunal erred in ignoring the direct and circumstantial evidence brought on record by the Assessing Officer in the form of modus operandi contrived by the accommodation entry providers who manipulated the share price of SRK Industries Ltd. and provided facility for round tripping of assessee’s unaccounted money to record fictitious Long Term Capital Gains of Rs.19,48,385/- in favour of the instant assessee which is also claimed as exempted income tax u/s 10(38) of the Income Tax Act, giving rise thereby to the vice of perversity in the process of decision making?
(ii) Whether on the facts and the circumstances of the case the Learned Income Tax Appellate Tribunal erred in cancelling the disallowance of Long Term Capital Gain of Rs.19,48,385/- overlooking the fact that the share transactions were stage managed with the object to facilitate the assessee to plough back its unaccounted income in the form of fictitious Long Term Capital Gains of Rs.19,48385/- and claim bogus exemption thereupon, thereby giving rise to the vice of law in the decision making processes?
We have heard Mr. Tilak Mitra, learned standing Counsel for the appellant. Though notice was sent to the respondent the notice was returned unclaimed and the respondent has not taken any steps for entering appearance. Therefore, we have heard learned standing Counsel for the appellant and proceeded to decide the appeal.
We find from the order passed by the learned Tribunal that no independent reasoning has been given by the learned Tribunal but the Tribunal chose to follow the decision of the Coordinate Bench in I.T.A. No. 354/Kol/2018 dated 24th August, 2018. In fact, in the said decision the earlier decision was affirmed. Those decisions were appealed against in the case of Principal Commissioner of Income Tax Vs. Swati Bajaj, SCC online Cal 1572 the appeal filed by the revenue were allowed and the substantial questions of law were answered in favour of the revenue. The said decision will squarely apply to the case on hand. Thus applying the case of Swati Bajaj, the appeal filed by the revenue is allowed and the substantial questions of law of law are answered in favour of the revenue.
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