Rahul Gupta (HUF) Vs ACIT (ITAT Raipur)
ITAT Raipur held that unexplained money u/s 69A of the Income Tax Act was received back through banking channel in the form of sale consideration of the shares. Accordingly, the same has to be brought to tax u/s 115BBE of the Income Tax Act.
Facts- The assessee-HUF had e-filed its return of income for A.Y.2015-16. Subsequently, the case of the assessee was selected for “complete scrutiny” under CASS for examination of “suspicious sale transaction in shares (Penny Stock tab in ITS), and notice under Section 143(2) of the Income Tax Act was issued.
During the course of assessment proceedings, it was observed by the A.O that the assessee had claimed to have earned a profit of Rs. 2,81,049/- on account of Short-Term Capital Gain (STCG) by transacting in shares of CCL International Ltd. A.O in order to verify the authenticity of the aforesaid transactions of purchase/sale of shares carried out extensive verifications. It was observed by the A.O that the assessee in the garb of the transaction in question, of purchase/sale of shares, had in fact introduced its undisclosed funds in the form of capital gain.
A.O rejected the assessee’s claim of having earned genuine STCG of Rs.2,81,049/- from the transaction of purchase/sale of 3000 shares of CCL International Ltd. and re-characterized the entire amount of impugned sale proceeds of shares of Rs.5.40 lac as the undisclosed funds of the assessee. Accordingly, the A.O vide her order passed u/s.143(3) of the Act dated 27.12.2017 after making an addition of Rs. 5.40 lac to the assessee’s returned income assessed the same at Rs.20,55,690/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success.
Conclusion- As regards the contention of the Ld. AR that the amount of Rs.5.40 lac (supra) could not have been brought to tax u/s.115BBE of the Act, I am unable to concur with the same. As the A.O had in clear and unequivocal terms observed that the sale consideration of 3000 shares of CCL international Ltd. of Rs.5.40 lac, was infact the routing back of the undisclosed fund of the assessee through the medium of transaction of sale of shares, therefore, it can safely; or in fact inescapably be concluded that the same was the assessee’s unexplained money u/s.69A of the Act, which it had received back through banking channel in the form of sale consideration of the said shares.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeals filed by the captioned assessee’s are directed against the respective orders passed by the Commissioner of Income-Tax (Appeals)-1, Raipur dated 06.07.2018, which in turn arises from the orders passed by the A.O in their cases under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 27.12.2017 and 26.12.2017 for the assessment year 2015-16. As common issues are involved in the aforementioned appeals, therefore, the same are being taken up and disposed off by way of a consolidated order.
2. I shall first take up the appeal marked as ITA No.190/RPR/2018 for assessment year 2015-16, and the order therein passed shall apply mutatis-mutandis for the purpose of disposing off the remaining appeals. The assessee has assailed the impugned order on the following grounds of appeal :
“1. Ld. C1T (Appeals) erred in confirming the addition of Rs.5,40,000/- made by the AO as undisclosed income, holding the transaction of sale of shares to be bogus. The addition of Rs.5,40,000/- made by AO and confirmed by CIT (A) is not justified. The AO erred in rejecting the claim of appellant that the amount disclosed in return represented capital gain on sale of shares.
2. CIT(A) erred in confirming the addition of Rs. 5,40,000/-made by the AO disregarding the evidences filed and without bringing any material on record to controvert the claim of appellant.
3. Without prejudice to above grounds the AO, erred in taxing the amount of Rs. 5,40,000/-added by him u/s 115BBE.
2. The appellant reserves the right to add, amend or alter any ground or ground/s of appeal.”
3. Succinctly stated, the assessee-HUF had e-filed its return of income for A.Y.2015-16 on 18.08.2015, declaring an income of Rs.17,96,730/-. Subsequently, the case of the assessee was selected for “complete scrutiny” under CASS for examination of “suspicious sale transaction in shares (Penny Stock tab in ITS), and notice u/s.143(2) of the Act was issued.
4. During the course of assessment proceedings, it was observed by the A.O that the assessee had claimed to have earned a profit of Rs. 2,81,049/- on account of Short-Term Capital Gain (STCG) by transacting in shares of CCL International Ltd., as under:
