Anil Kumar Agarwal (HUF), Bangalore Vs Income Tax Officer, Ward- 3(2)(1), Bangalore

IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCHES “SMC-C”, BANGALORE

Before Shri George George K, Judicial Member

ITA No.1584/Bang/2019 : Asst.Year 2015-2016

Snehlatha Agarwal H-803, ETA Garden Apartments Opp : Binny Mills, Magadi Road Bangalore – 560 023.
PAN : AAJPA5577B.
(Appellant)  

vs.

The Income Tax Officer Ward 3(2)(1) Bengaluru.
(Respondent)

ITA No.1585/Bang/2019 : Asst.Year 2015-2016

Santosh Devi Agarwal H-803, ETA Garden Apartments Opp : Binny Mills, Magadi Road Bangalore – 560 023.
PAN : ABIPA0545P.
(Appellant) 

vs.

The Income Tax Officer Ward 3(2)(1) Bengaluru.
(Respondent)

ITA No.1586/Bang/2019 : Asst.Year 2015-2016 Anil Kumar Agarwal (HUF) H-803, ETA Garden Apartments Opp : Binny Mills, Magadi Road Bangalore – 560 023.PAN : AAFHA6615J.
(Appellant) 

vs.

The Income Tax Officer Ward 3(2)(1) Bengaluru.
(Respondent)

Appellant by : --- None ---
Respondent by : Sri.Ganesh R.Ghale,
Standing Counsel for Department
Date of Hearing : 17.11.2020
Date of : Pronouncement : 18.11.2020

O R D E R

These appeals at the instance of various assessee’s are directed against three orders of the CIT(A), all dated15.05.2019. The relevant assessment year is 2015-2016. Common issue is raised in these appeals, hence they were heard together and are being disposed of by this consolidated order.

2. The solitary issue that is raised in these appeals is whether the CIT(A) has erred in confirming the Assessing Officer’s order, wherein the consideration received for sale of shares was treated as bogus transaction and addition was made u/s 68 of the I.T.Act, by rejecting the claim of deduction u/s 10(38) of the I.T.Act.

3. Facts are identical in these cases, except for variance in figures, hence, the facts pertaining to ITA No.1584/Bang/2019 are narrated and the decision rendered therein would apply mutatis mutandis to the other appeals also.

4. The brief facts of the case are as follow:The assessee, an individual, had filed return of income on 29.09.2015 declaring total income of Rs.7,16,950. In the return of Income, the assessee had declared Long Term Capital Gains (LTCG) of Rs.19,99,260 and claimed the same as exempt u/s 10(38) of the I.T.Act. During the course of assessment proceedings, the A.O. noted, the assessee’s declaration of LTCG from sale of shares of a company named Kailash Auto Finance Limited (KAFL) and claim of exemption u/s 10(38) of the I.T.Act. The assessee had purchased 50,000 shares of Panchshul Marketing Limited (PML) in physical form at an average price of Rs.2 per share. This company later on got merged with KAFL and the assessee got 50,000 shares of KAFL. The assessee sold 50,000 shares of KAFL in May 2014 at an average price of Rs.41.98 per share. The Assessing Officercarried out investigation by examining BSE data, financials of KAFL, Investigation Wing report and the findings of the SEBI.The A.O. held that KAFL was one of the companies which were investigated by the Directorate of Investigation, Kolkata inrelation to bogus LTCG and Short Term Capital Losses (STCL) entries being provided to various persons by accommodation entry operators. The A.O. discussed in detail the modusoperandi of providing accommodation entry by the entry operators as well as the findings of the Investigation Wing in relation to KAFL scrip price rigging. The Assessing Officer concluded that the assessee had entered into engineered transaction to generate artificial long term capital gains. Accordingly, the A.O. held that the sale consideration of Rs.20,99,260 (the entire sale consideration) was to be treated as unexplained credit u/s 68 of the I.T.Act. Therefore, the assessee’s claim of exemption u/s 10(38) of the I.T.Act was rejected. Further, the A.O. held that the unexplained cash credit of the assessee amounting to Rs.20,99,260 is to be brought to tax at the rate of 30% as per section 68 r.w.s. 115BBE of the I.T.Act.

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