TMI Blog2023 (5) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... rading in this scrip. It is found that Assessee is a trader in shares - as shares traded are his stock-in-trade. And once assessee is found to be a trader, the loss incurred during business need to be allowed as business loss. Thus we are inclined to delete the addition made by the AO u/s. 68 of the Act and direct the AO to allow the short term capital loss claimed by the assessee incurred during the year. Decided in favour of assessee. - ITA NO.325/MUM/2023 - - - Dated:- 5-4-2023 - Shri S. Rifaur Rahman, Hon'ble Accountant Member For the Assessee : Shri Jayant Bhatt For the Department : Shri S.N. Kabra ORDER PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short Ld.CIT(A) ] dated 01.01.2022 for the A.Y.2011-12. 2. At the outset, we observe that the present appeal is filed by the assessee with a delay of 338 days and assessee also filed an affidavit in this regard and prayed for condonation of delay. In the affidavit assessee has submitted as under: - I Shri Naveen Kishor Mohnot, aged about 51 years resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t omission on the part of Shri Unnikrishnan Nair N, CA in taking appropriate action to file the appeal. He had a mistaken belief that the appeal for this year was filed by the assessee as there was separate Counsel to take steps to file this appeal before the ITAT. Therefore, we have to consider whether the Counsel s failure is sufficient cause for condoning the delay. The Madras High Court considered an identical issue in the case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression sufficient cause should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay. 6.1 On merit the issue is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee filed an affidavit saying that the appeal was not filed because of the Counsel s inability to file the appeal. The Revenue has not filed any counter affidavit to deny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 2819 days has to be condoned. 6.3 The next question may arise whether 2819 days was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. The Apex Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (AIR 1978 SC 537) held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counter-affidavit opposing the application of the assessee, therefore, as held by the Apex Court, there is sufficient cause for condonation of delay. The Supreme Court observed that when the delay was of short duration, a liberal view should be taken. It does not mean that when the delay was for longer period, the delay should not be condoned even though there was sufficient cause. The Apex Court did not say that longer period of delay should not be condoned. Condonation of delay is the discretion of the Court/Tribunal. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period. In this case, the non-filing of an affid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 12 of the Assessment Order. Based on the informations from Directorate of Investigation in relating to the scrip the Assessing Officer treated the whole sale proceeds of ₹.2,14,390/- as unexplained cash credit u/s. 68 of the Act. Accordingly, he rejected the loss claimed by the assessee and also he made the addition of ₹.2,14,390/-. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and made a detailed submission, for the sake of clarity it is reproduced below: - . The assessee had purchased 2078 number of shares of VAS INFRA STRUCTURE LIMITED resulting total purchase cost of Rs.261354 from M/s Emkay Global Financial Services Ltd. and M/s HDFC Securities Ltd. The said shares were sold by assessee in the same year (A.Y. 2010-11) for sale consideration of Rs.2,14,390/- after payment of Securities Transaction Tax (STT). As all the shares were held the assessee for less than one year there has been short term capital loss of Rs.46,964/-.In the assessment order passed u/s 143(3), the ld. A.O. has treated the short term capital loss of Rs.46,964/- as well as the sale proceeds of Rs. 2, 14,390/- as accommodation entries. The A.O. has disallowed the losses (ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tifiable as it is one sided approach as the equity shares sold were purchased in the same year, only sale proceeds were added to the income what about purchases. Ideally currently only differences needs to be considered. When ITO had not rejected the purchase, he must not reject the sales. ITO was not able to prove receipt/payment in cash. No addition needs to be made on more imaginations. The whole transaction including purchase sale of shares are routed through banking channels and have not been opened in the name of the dummy person. 8. After considering the submissions of the assessee, Ld.CIT(A) dismissed the appeal filed by the assessee with the following observations: - 2.3 I have gone through the submission of the assessee and perused the assessment order. As per the above facts, VAS Infrastructure Private Limited is a penny stock. A group of operators, intermediatories were active in this stock in the stock exchange to assist interested persons to convert their cash into short term capital gain/loss as per their requirement. There were an investigation by DIT(Inv.) Kolkata and Ahmedabad on the modus operandi of earning bogus gains/loss through penny stocks. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer of Short Term Capital Loss of Rs. 46,964/- on sale of shares of VAS Infrastructure Ltd. 10. At the time of hearing, Ld. AR of the assessee submitted that assessee has purchased all the shares from the recognized stock exchange and also sold the same in the recognized stock exchange and through authorised broker. During the year, assessee has purchased and also sold the same within the same year and suffered a loss of ₹.46,964/-. He submitted that merely because the scrip is under scanner as penny stock and by merely relying on the report from investigation wing, the Assessing Officer has rejected the loss claimed by the assessee and also made the addition of sale proceeds as undisclosed income u/s. 68 of the Act without appreciating the fact in the case of the assessee. In this regard, he relied on the decision of the Coordinate Bench in the case of Rajiv Rameshchander v. Income Tax Officer in ITA.No. 1528/Mum/2020 dated 31.01.2023. 11. On the other hand, Ld. DR relied on the orders of the lower authorities. 12. Considered the rival submissions and material placed on record, we observe that during the current Assessment Year assessee has purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
