MANISHA AJAY SHAH, MUMBAI vs PR. CIT 30, MUMBAI

This case involves an appeal by Mrs. Manisha Ajay Shah against an order by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act. The PCIT questioned the assessee's declaration of long-term capital gains (LTCG) under the Income Declaration Scheme 2016, arguing the gross sale price should have been declared. Mrs. Shah contended that only the profit element is taxable, not the gross sale price, and provided documentation to support the genuine nature of the share transaction.

IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH “D”, MUMBAI

BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER &
SHRI RAJESH KUMAR, ACCOUNTANT MEMBER

ITA NO. 3001/MUM/2019 (A.Y.2015-16)

Mrs. Manisha Ajay Shah,
601/602 Adarsh Harmony,
Adarsh Vihar Complex, Off Marve Road,
Mumbai 400 064
PAN: ANGPS 4878K ...... Appellant

Vs.

Principal CIT-30,
Room No.401, 4th Floor, Bldg. No.C-13,
Pratyaksha Kar Bhavan, Bandr Kurla Complex,
Bandra(E) Mumbai- 400 051 .....Respondent

Appellant by : None

Respondent by : Shri Purushottam Tripuri

Date of hearing : 01/10/2020
Date of pronouncement : 14 /10/2020

ORDER

PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the order of Principal Commissioner of Income Tax -30, Mumbai ( in short ‘the PCIT”) dated 07/03/2019 passed under section 263 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’). 

2. The brief facts of the case as emanating from records are: The assessee filed return of income for assessment year 2015-16 on 20/07/2015 declaring her total income of Rs.16,46,420/-. The case of assessee was selected for scrutiny under CASS. During the pendency of scrutiny assessment, the assessee made declaration of Rs.32,86,815/- under Income Declaration Scheme 2016 (in short ‘IDS’) in respect of Long Term Capital Gains (LTCG) from sale of shares claimed as exempt in return of income. Thereafter, the Assessing Officer vide order dated 21/12/2017 completed the assessment accepting the income declared by the assessee without making any addition/disallowances.

2.1. At the time of filing return of income, the assessee claimed long term capital gain of Rs.32,86,815/- on sale of shares of GCM Securities Ltd. as exempt under section 10(38) of the Act. The Assessing Officer issued notice U/s 142(1) of the Act along with a questionnaire raising a specific query on LTCG/STCG arising from sale of equity shares. The assessee in reply dated 28/6/2017 to the said specific question on LTCG/STCG on sale of shares informed that Declaration has been made under 2016 Scheme offering LTCG to tax.

2.2. Thereafter, the PCIT invoked the provisions of section 263 of the Act on the ground that the assessee has made declaration of Capital Gain only in IDS 2016. The assessee ought to have declared gross sale price of the shares i.e. Rs.34,30,000/-. Before the PCIT, the assessee contended that it is only profit element on sale of shares that is taxable and not the gross sale price. The purchase price i.e. Rs.1,43,185/- has to be deducted from the sale price. The assessee in order to substantiate that assessee in fact paid for purchase of shares, furnished copy of share application form and copy of Dena Bank statement (at page 22 and 28 of the Paper Book, respectively). The contention of the assessee before the PCIT was that the purchase and sale of GCM Securities shares is genuine and through authorized broker. To substantiate her contentions the assessee filed contract notes and ledger account. The only reason for making declaration under IDS 2016 was to buy peace of mind. The assessee has filed Paper Book wherein the notice issued under section 142(1) dated 19/06/2017 and the questionnaire issued alongwith that notice is at pages 15 and 16 of the Paper Book. The reply to the said notice dated 28/06/2017 is at pages 17 to 27 of the Paper Book. 

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