Mr. T.k. Satapathy, Senior Standing Counsel v. Kishore Kumar Mohapatra

IN THE HIGH COURT OF ORISSA AT CUTTACK ITA No. 20 of 2022 …. Appellant The Principal Commissioner of Income Tax-1, Bhubaneswar Mr. T.K. Satapathy, Senior Standing Counsel -versus- ….Respondent Kishore Kumar Mohapatra CORAM: THE CHIEF JUSTICE JUSTICE M.S. RAMAN ORDER Order No. 09.02.2023 1. This appeal by the Revenue arises from an order dated 21[st] 01. December, 2021 passed by the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack (ITAT) dismissing the Revenue’s appeal i.e. ITA No.48/CTK/2020 against the corresponding order of the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment years (AY) 2014-15. 2. The question sought to be urged by the Revenue Department in the present appeal is as follows: “Whether after making certain statements in the survey the Assessee not claiming exemption under Section 10(38) of the Income Tax Act, 1961 at the stage of the assessment proceedings, could be the Assessee turned around and make such claim of wanting to cross-examine persons make adverse statements against the Assessee at the stage of the appeal before the ITAT”? 3. The impugned order of the ITAT has sufficiently dealt with the factual details concerning the Respondent-Assessee. The question was regarding the claim of long-term capital gains on shares in terms of Section 10(38) of the Act. During the course of scrutiny assessment, a revised return was filed by the Assessee claiming the above exemption. After the AO rejected the plea, the Assessee went before the CIT(A). The CIT(A) was satisfied that the purchase of liquid shares have been made through Account Payee Cheques and the shares themselves were held in Demat Account for more than 12 months and then sold through the recognized stock exchange after payment of security transaction tax. A reference was made to the CBDT circular which debarred the Revenue from obtaining admissions/ statements during the course of a survey. The ITAT also noted the settled position in law that if an Assessee has wrongly offered an item of income or omitted to make a claim of deduction in the return, he was entitled to correct such a mistake by making a request to the AO to that effect. 4. Another ground on which the ITAT found fault with the additions made by the AO was that reliance was placed on statement of ‘so called entry operator’ to justify the additions under Sections 68 and 69 of the IT Act. These statements were recorded on various dates in some other proceedings not connected with the Assessee. Further, the statements were recorded much before the date of the survey conducted on the Assessee. It was unable to be disputed by the Department that the Assessee did not have an opportunity to challenge such statements and further, no opportunity to cross- examine the so-called entry providers was given to the Assessee. S.K. Guin 5. Having heard learned Senior Standing Counsel for the Department (Appellant) and having perused the impugned orders of the AO, CIT(A) and the ITAT, the Court finds that both the grounds viz., the claim for benefit of Section 10(38) of the Act and denial of an opportunity to cross examine the entry providers, turned on facts. The ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO. 6. In the considered view of the Court, the ITAT committed no error in concurring with the view of the CIT(A) and in dismissing the Revenue’s appeal. No substantial question of law arises from the impugned order of the ITAT that calls for interference by this Court. The appeal is accordingly dismissed. (Dr. S. Muralidhar) Chief Justice (M.S.Raman) Judge