Case Number: ITA 4916/DEL/2019
Appellant: Sanjay Gupta, Delhi
Respondent: ACIT, Circle-59(1), New Delhi
Assessment Year: 2014-15
Case Filed On: 2019-05-30
Order Type: Final Tribunal Order
Date of Order: 2023-04-19
Pronounced On: 2023-04-19
The case of Sanjay Gupta vs ACIT, Circle-59(1), New Delhi (ITA 4916/DEL/2019) involves an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], New Delhi dated 15.04.2019. The case primarily focuses on the limited scrutiny conducted by the Assessing Officer (AO) and the subsequent additions made, which were contested by Sanjay Gupta.
Sanjay Gupta, an individual engaged in the business of share trading under the name and style of M/s Nirmal Commodities, filed his return of income on 30.07.2014 declaring income at Rs.2,78,23,780/-. The case was selected for limited scrutiny, but the AO went beyond the scope of limited scrutiny, leading to several additions and disallowances which were contested by the appellant.
The appellant raised multiple grounds of appeal, challenging the validity and correctness of the CIT(A)’s order. The key grounds of appeal included:
The arguments presented by both parties were heard by the Tribunal. The counsel for Sanjay Gupta highlighted procedural lapses, particularly regarding the AO exceeding the scope of limited scrutiny without proper authorization and communication.
At the outset, the appellant’s representative argued that the AO went beyond the scope of limited scrutiny without obtaining the necessary approval from the Principal Commissioner of Income Tax (PCIT), as mandated by the Central Board of Direct Taxes (CBDT) instructions. This procedural lapse was a critical point in the appellant’s favor.
The Tribunal referred to CBDT’s Instruction No. 20/2015, which outlines the protocol for handling limited scrutiny cases and the conditions under which they can be converted to complete scrutiny. The AO failed to adhere to these instructions, as no evidence was presented to show that the required approval was obtained.
The Tribunal acknowledged the appellant’s grievance regarding the non-admission of additional grounds by the CIT(A). Given the procedural shortcomings highlighted, this point was noted as part of the broader issues in the case.
The appellant argued that adequate opportunity to present their case was not provided, which the Tribunal took into consideration while assessing the procedural fairness of the assessment process.
The key dispute revolved around the addition of Rs.19,02,413/- related to transactions in the scrip of Jolly Plastic. The appellant contended that no such transactions occurred during the relevant period and provided evidence to substantiate this claim. The Tribunal reviewed the evidence and the AO’s reasoning, noting inconsistencies and the lack of direct evidence against the appellant.
The appellant provided extensive documentation to prove the genuineness of the share transactions, including bank statements and records of transactions conducted through proper banking channels and as per stock exchange regulations. The Tribunal found the AO’s reliance on assumptions and the investigation wing’s report, without independent verification, to be procedurally flawed.
The Tribunal concluded that the AO failed to follow proper procedures, particularly in exceeding the scope of limited scrutiny without the requisite approval. The additions made were based on assumptions and external reports without giving the appellant an opportunity to counter the claims. As a result, the appeal filed by Sanjay Gupta was allowed, and the additions were deleted.
Order Pronounced: April 19, 2023
By:
Smt Diva Singh, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
Copy forwarded to:
Assistant Registrar
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