Principal Commissioner Of Income Tax 5, Kolkata v. Aditya Saraf Huf

OD–7 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/30/2022IA NO: GA/2/2022, GA/3/2022 PRINCIPAL COMMISSIONER OF INCOME TAX 5, KOLKATAVS.ADITYA SARAF HUF BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 2[nd] January, 2023 Appearance :Mr. Soumen Bhattacharjee, Adv.…for appellant.Mr. Asim Chowdhury, Adv.Ms. Akshar Shukla, Adv...for respondent The Court : - This appeal filed by the revenue under Section 260A of the IncomeTax Act, 1961 (the Act) is directed against the order dated 30[th] April, 2021 passed bythe Income Tax Appellate Tribunal, SMC Bench in ITA/2260/Kol/2018 dated15.8.2019 for the assessment year 2014-15. The revenue has raised the followingsubstantial questions of law for consideration:- i)Whether in the facts and circumstances of the case and in law, the ITAThad erred and failed to appreciate that the assessee could not substantiatethe genuineness of the transaction to prove that it had not indulged indubious share transactions meant to account for undisclosed income inthe garb of Long Term Capital Gain (LTCG) to claim exemption u/s. 10(38)of the Income Tax Act, 1961 ?had erred and failed to appreciate that the assessee could not substantiatethe genuineness of the transaction to prove that it had not indulged indubious share transactions meant to account for undisclosed income inthe garb of Long Term Capital Gain (LTCG) to claim exemption u/s. 10(38)of the Income Tax Act, 1961 ? ii) Whether in the facts and circumstances of the case and in law the ITAThad erred while allowing the assessee’s appeal of claim of exemption u/s10(38) of the Income Tax Act, 1961 without holding that transaction ofhad erred while allowing the assessee’s appeal of claim of exemption u/s10(38) of the Income Tax Act, 1961 without holding that transaction of sale and purchase of shares of penny stock companies was an adventurein nature of trade, thus, same was to be taxed as business income? iii) Whether in the facts and circumstances of the case, the order of the ITATis perverse in overlooking that it is the duty of the Tribunal to scratchsurface and probe documentary evidence in depth in light of-conduct ofassessee and other surrounding circumstances in order to see whether theassessee is liable to provisions of section 68 or not ? iv) Whether in the facts and circumstances of the case, the ITAT had grosslyerred in facts and in law by not appreciating the findings made by theAssessing Officer that the assessee had failed to explain satisfactorily howthe investments, in absence of any evidence as to the financials, growthand operations of the company, could earn profit of 3714.30% within a gapjust exceeding 12 months ? We have heard Mr. Soumen Bhattacharjee, learned standing counsel for theappellant and Mr. Asim Chowdhury, learned Advocate for the respondent assessee. The learned Tribunal by the impugned order had allowed the assessee’s appealand set aside the order passed by the Commissioner of Income Tax (Appeals) 15,Kolkata dated 28.08.2018 and consequently set aside the assessment order dated20.12.2016. The respondent/assessee has filed an application in GA/3/2022 with aprayer to allow the respondent/assessee to pay only 50% of the disputed tax amounti.e. Rs.2,63,919/- (the disputed amount of tax as per demand notice by the revenuebeing Rs.5,27,838/-) on the income assessed by the revenue vide assessment orderdated 20.12.2016 without including any interest or penalty along with interest receivedby the petitioner under Section 244A of the Income Tax Act of Rs.89,170/-. Theassessment which is the subject matter of consideration in this appeal is of the year2014-2015. Similar issue arose for the assessment year 2012-2013 and the assessmentwas completed by rejecting the case of the assessee. Aggrieved by the same, theassessee preferred the appeal before the Commissioner of Income Tax (Appeals), Kolkata which was allowed. The revenue did not challenge the said order before the learnedTribunal. However, the assessee thought it fit to avail the benefit of Vivad Se VishwasScheme 2020 and an application was filed by the assessee. The said application wasaccepted and form 5 was issued and the assessee had also remitted the required taxamount in terms of the conditions stipulated under the scheme. As a consequencethereof an order under Section 250 of the Act dated 18.2.2021 was passed by theCommissioner of Income Tax (Appeals), National Faceless Appeal Centre. In the presentappeal the respondent/assessee requests for similar prayer to enable them to file anapplication under the Scheme so that the matter can attain its finality. The revenue hadopposed such a prayer by contending that the Scheme is no longer in vogue and,therefore, the respondent/assessee cannot be permitted to avail the benefit of theScheme or file an application under the Scheme. To be noted that the present appealwas filed with a delay of 958 days and the delay was condoned assigning certainreasons as a consequence of the order passed by this court condoning the delay it isdeemed that the appeal was filed well within the period of limitation. If that is so, thenthe assessee could have very well availed the benefit of the Scheme. In other words, hadthe appeal been preferred within the period of limitation the assessee could have filedan application well before the time stipulated under the Scheme. Considering the peculiar facts and circumstances of the case, we are of the viewthat the assessee should not be non-suited for the default committed by the revenue innor preferring the appeal within the period of limitation. Identical issue arose forconsideration before the High Court of Delhi in the case of I.A. Housing Solution PrivateLimited vs. Principal Commissioner of Income Tax 4 & Others in WPC No.3560 of 2022etc. dated November 2, 2022 and the Hon’ble Division Bench by the said order allowedthe writ petition and directed the revenue to accept declaration/application forms inForm 1 and 2 filed by the assessee as valid declaration/application within a time frameand accept the balance disputed amount as stipulated by them under the provisions ofthe Scheme. Thus, in the light of the above, the appeal stands disposed of with a direction tothe respondent to file the requisite application under the Scheme within a period of tendays from the date of receipt of the server copy of this application and such applicationshall be deemed to have been presented well before the last date on which the benefit ofthe Scheme had come to an end and the application shall be processed and therequisite forms be issued so as to enable the respondent/assessee to pay the disputedtax in terms of the conditions contained under the Scheme. Such order shall be passedby the revenue within a period of six weeks from the date on which Forms 1 and 2 arefiled by the assessee. Consequently, the substantial questions of law are left open. (T.S. SIVAGNANAM, J.) Pkd/GH. (HIRANMAY BHATTACHARYYA, J.)