TMI Blog2023 (10) TMI 1351X X X X Extracts X X X X X X X X Extracts X X X X ..... it should be listed and sold on recognized stock exchange and, thirdly, on the said sale necessary Security Transaction Tax (STT) has to be chargeable. If all these requirements are satisfied, then the benefit of exemption u/s 10 (38) of the Income Tax Act, 1961 is admissible. A survey u/s 133A was conducted on 20.08.2015 and, without detecting any incriminating documents or evidence against the respondent-assessee, recorded the statement that tax will be paid on the claim made under Section 10 (38) in filing the IT return for the AY 2013-14 and to be disclosed as income from other source. But the said statement, being without any incriminating evidence against the respondent-assessee, cannot be ipso facto decided against the respondent-assessee. The present income tax appeal filed at the instance of the revenue involved no substantial question of law, as both the appellate authorities have decided on the basis of evidence and documents produced by the respondent-assessee and the revenue and, as such, on the basis of the facts, both the authorities have come to a conclusion that the respondent-assessee is entitled to the benefit u/s 10 (38) and held that the appellant-revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uttack Bench, Cuttack in ITA No.212/CTK/2019 for the Assessment Year 2013-14 with a prayer to decide the substantial questions no.(A) and (B), as formulated in para-9 of the memo of appeal. Similarly, in ITA No.85 of 2022 challenge has been made to the order dated 06.07.2022 passed by the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack in ITA No.213/CTK/2019 for the Assessment Year 2013-14 with a prayer to answer the substantial questions no.(A) and (B), as formulated in para-9 of the memo of appeal. 2. Since both the appeals involve identical issue, they are taken up together for hearing and disposed of by this common judgment. 3. For the sake of convenience and better appreciation, the factual matrix, as delineated in ITA No.84 of 2022, has been succinctly referred to. 3.1. Respondent, being an assessee, filed her return of income by e-mode for the assessment year 2013-14 on 24.03.2015 showing total income of Rs.6,14,950/- in the status of individual. She disclosed to have derived income from partnership firm, house property and income from other sources. She claimed exemption under Section 10 (38) on Long Term Capital Gain (LTCG), arising out of sale shares of CCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rments and materials available on record, the Assessing Officer included Rs.1,61,09,716/- in the computation of the taxable income of the respondent-assessee, as income from other source, and accordingly a penalty proceeding under Section 27 (1) (c) of the Income Tax Act, 1961 was initiated. Consequentially, final order was passed and assessment was made under Section 143 (3) of the Income Tax Act, 1961 on a total income of Rs.1,67,24,670/- and penal notice was issued to the respondent-assessee. The respondent-assessee preferred first appeal before the First Appellate Authority by filing I.T. Appeal No.0018/2016-17 and finally the First Appellate Authority, on 28.03.2019, came to a definite finding that the Assessing Officer was not justified in rejecting the claim of exemption under Section 10 (38) in respect of LTCG arising on the sale of shares of M/s CCL International Ltd. The consideration received by the respondent-assessee was out of the sale of shares effected on a recognized Stock Exchange. The shares had been held for a period of more than twelve months and Securities Transaction Tax (STT) had been paid at the time of transfer. Hence, the amount received by the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate evidence, cannot be found fault with. As such, similar issues have been raised by the revenue in its appeal, i.e., ITA No.213/CTK/2019 in the case of Radheshyam Singhania, except difference in figures. By holding as above, the tribunal dismissed both the appeals filed by revenue, vide order dated 06.07.2022, upholding the order of the CIT (A). 3.5. Against the aforesaid order, the present appeal has been filed under Section 260A of the Income Tax Act, 1961 read with Rules framed thereunder taking a specific plea that the respondent-assessee in her return of income tax for the assessment year 2013-14 derived income as a partner from partnership firm of M/s Nilachal Textwaste Industries, income from business, salary and other sources, capital gains and dividend. As such, a survey under Section 113A of the Income Tax Act, 1961 was conducted on 20.08.2015 by the Investigation Wing of the IT Department on the partnership firm of the respondent-assessee M/s Nilachal Textwaste Industries and Group. At the time of survey, it was found that the assessee had booked a bogus capital gain of Rs.1,56,09,716/- out of the sale of shares of M/s CCL International Ltd. and the transaction was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he admission by their group before the income tax authority. It is further contended that in view of the CBDT Circular No.23 of 2019 dated 06.09.2019, as the matter related to bogus Long Term Capital Gain of penny stock, the finding arrived at by the CIT (A) and Income Tax Appellate Tribunal, cannot be sustained in the eye of law 5. Mr. Bijay Panda, learned counsel appearing for the respondent-assessee vehemently contended that the main dispute is with regard disallowance of Long Term Capital Gain (LTCG) claimed under Section 10 (38) of the Income Tax Act, 1961 in passing the order of assessment under Section 143 (3) of the Income Tax Act, 1961 by the Assessing Officer on 23.03.2016 and treating the same as income from other source under Section 56 of the Income Tax Act, 1961 on the basis of a statement recorded during survey made under Section 133A of the Income Tax Act, 1961 without any adverse materials/evidence against the respondent-assessee. But, the learned CIT (A), after verification of the documents and confrontation of the matter, allowed the claim under Section 10 (38) of the Income Tax Act, 1961. It is further contended that the revenue authority went on Second Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recognized stock exchange and STT had been paid at the time of transfer, therefore it cannot be held as bogus? 7. Before delving into the issues in question, the provisions contained under Section 10 (38) of the Income Tax Act, 1961 are extracted hereunder:- Any income arising from the transfer of a long term capital asset, being an equity share in a company or a unit of an equity oriented fund [or a unit of a business trust] where- (a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No.2) Act, 2004 comes into force; and (b) such transaction is chargeable to securities transaction tax under that Chapter; [Provided that the income by way of long term capital gain of a company shall be taken into account in computing the book profit and income tax payable under section 115 JB;] [Provided also that nothing contained in sub-clause(b) shall apply to a transaction undertaken on a recognized stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in foreign currency;] [Provided also that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have come to a conclusion that the respondent-assessee is entitled to the benefit under Section 10 (38) of the Income Tax Act, 1961 and held that the appellant-revenue had failed to bring any evidence in rebuttal nor was it proved that the documents produced were false, fabricated or fictitious, hence, the findings, as recorded by the appellate authorities, that the transaction of purchase and sale of shares could not be treated as non-genuine, were essentially in the realm of appreciation of evidence and, as such, no substantial question of law is involved. 10. In Vijaya Kumar Talwar (supra), it has been held that in absence of demonstrated perversity in the finding of the Tribunal, interference cannot be warranted, when on thorough consideration of the material on record it was found that the transaction of purchase and sale of shares could not be treated as non-genuine. 11. In Khader Khan Son (supra), the apex Court held that statement recorded during survey under Section 133A of the Income Tax Act, 1961 has no evidentiary value, as it does not empower any Income Tax Officer to examine on oath, as the assessment has to be made on the basis of materials and documentary evi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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