Case Law Details
Vandana Deepak Savla Vs ITO (ITAT Mumbai)
The Hon’ble ITAT Mumbai recently addressed the case of Vandana Deepak Savla vs ITO concerning alleged penny stock transactions for Assessment Year (AY) 2014-15. The appellant had declared income of ₹9,09,390 in her income tax return but was issued notices under Sections 142 and 148 of the Income Tax Act, 1961. These notices aimed to reopen the assessment, citing suspicions about proceeds from the sale of shares in SRK Industries Ltd., which were categorized as a penny stock. The Assessing Officer (AO) added ₹1,55,47,275 under Section 68 and ₹4,66,418 under Section 69C for commission allegedly paid to brokers, bringing the total taxable income to ₹1,69,23,083. The assessee contested the additions, claiming compliance with securities laws and fulfilling conditions for tax exemptions under Section 10(38).
The CIT(A) upheld the AO’s order due to the appellant’s non-compliance during appellate proceedings. The assessee escalated the matter to ITAT Mumbai, arguing that she was denied the opportunity to substantiate her claims. The ITAT found merit in granting the appellant another chance to present her case in adherence to the principles of natural justice. Despite opposition from the Departmental Representative citing repeated non-compliance, the ITAT remanded the matter to the CIT(A) for fresh adjudication. The appellant was directed to actively participate in the proceedings without unnecessary delays.
This case highlights procedural safeguards under the Income Tax Act to ensure fair adjudication, even in cases involving significant non-compliance. By allowing the appellant a fresh opportunity, the ITAT emphasized the importance of natural justice and transparency in resolving disputes.
The matter was argued by Ld. Counsel Bharat Raichandani
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been filed by the assessee, challenging the ex parte order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act’), pertaining to the Assessment Year (‘A.Y.’ for short) 2014-15.
2. The grounds of appeal raised by the assessee reads as under:
| 1 | The Learned Commissioner has erred in not taking into consideration that the appellant had purchased 20,000 shares and the payment of the said purchase of shares was made through banking channel, also erred in not taking into consideration the shares has been sold on recognized stock exchange by paying necessary Securities Transaction Tax The Ld. Commissioner has erred in not taking into consideration that the appellant has fulfilled all the conditions required for claiming the benefit of exemption u/s 10(38) of the act. The Ld. Commissioner has erred in not taking into consideration the appellant was a prudent investor and wanted to retain its investment. The Ld. Commissioner has erred in not taking into consideration that the SEBI report has nowhere mentioned the appellant to be involved The Ld. Commissioner has erred in not taking into consideration that the Ld. Assessing officer has not established any nexus in connection of the alleged money trail found by the investigation wing | 1,55,47,275 |
| 2 | The Ld. Commissioner has erred in making addition on account of 3% commission on long term capital gain | 4,66,418 |
3 The brief facts are that the assessee is an individual and had filed her return of income for the year under consideration on 12.12.2014, declaring total income of Rs.9,09,390/- and the same was processed u/s. 143(1) of the Act. The ld. Assessing Officer (‘A.O.’ for short) reopened the assessee’s case vide notice u/s.148 of the Act dated 13.02.2017 on the ground that the assessee has received Rs.1,54,17,081/- as consideration on sale of shares of the scrip M/s. SRK Industries Ltd. which are alleged to be a penny stock out and had claimed the same as exempt u/s.10(38) of the Act. The ld. A.O. then passed the assessment order dated 28.12.2017 u/s. 143(3) r.w.s. 147 of the Act, thereby determining the total income at Rs.1,69,23,083/- by making an addition u/s. 68 of the Act on the sale proceeds of the shares amounting to Rs.1,55,47,275/- and Rs.4,66,418/- u/s. 69C of the Act being the commission @ 3% on the said amount alleged to have been paid to the brokers.
4. Aggrieved, the assessee was in appeal before the first appellate authority, challenging the assessment order.
5. The ld. CIT(A) vide order dated 24.01.2024, upheld the order of the ld. A.O. for the reason that inspite of several opportunity the assessee has failed to substantiate her claim and has been non compliant throughout the appellate proceedings.
6. The assessee is in appeal before us, challenging the impugned order of the CIT(A).
7. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has challenged the additions made by the A.O. before the first appellate authority but has been non compliant throughout the appellate proceeding.
8. The learned Authorised Representative (‘ld. AR’ for short) for the assessee contended that the assessee if given another opportunity would be able to substantiate her claim before the CIT(A) and prayed that the issues be remanded back to the ld. CIT(A).
9. The learned Departmental Representative (‘ld.DR’ for short) vehemently opposed to setting aside the issue to the file of the ld. CIT(A) for the reason that the assessee was given several opportunity by the ld. CIT(A) which was not availed by the assessee, which is evident from the ld. CIT(A)’s order at pg. no.2 where he has recorded that inspite of various notices the assessee has neither filed any written submission nor has responded to the notices.
10. On the above factual matrix of the case, we are of the considered view that the assessee may be given one more opportunity to present her case before the first appellate authority by adhering to the principles of natural justice. We, therefore, remand all these issues back to the file of the ld. CIT(A) for de novo adjudication on the merits of the case. The assessee is directed to comply with the proceedings without any undue delay on her side.
11. In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on 01.08.2024
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