Case Number: ITA 1666/DEL/2019
Appellant: Shruti Garg, New Delhi
Respondent: ITO Ward-42(4), New Delhi
Assessment Year: 2010-11
Case Filed On: 2019-02-28
Order Type: Final Tribunal Order
Date of Order: 2019-10-14
Pronounced On: 2019-10-14
The case of Shruti Garg vs ITO Ward-42(4), New Delhi (ITA 1666/DEL/2019) centers on allegations of tax evasion through the misuse of the National Multi Commodity Exchange (NMCE) platform. Filed on 28th February 2019, this case concerns the assessment year 2010-11 and was heard by the Income Tax Appellate Tribunal (ITAT) in New Delhi. The final tribunal order was issued on 14th October 2019.
Shruti Garg, an individual deriving income from rent and interest, filed her return of income for the assessment year 2010-11 on 3rd February 2011, declaring a total income of INR 185,593. The case arose from information received from the Deputy Director of Income Tax (Investigation), Kolkata, regarding systematic tax evasion by clients/members of the NMCE by creating artificial trading volumes and evading taxes.
The investigation identified 85 entities involved in booking contrived losses/profits exceeding INR 10 crores. Shruti Garg was among the 50 clients selected for verification to determine if the losses booked on the NMCE platform were used to offset any income or profit recorded in the books. The investigation report revealed that Shruti Garg allegedly booked a profit/loss of INR 200,000 through sub-broker Shivputra Vinimay Private Limited during the financial year 2009-10. However, this transaction was not reflected in her income tax return for the assessment year in question.
As a result, a notice under Section 147 of the Income Tax Act was issued, stating that income of INR 200,000 had escaped assessment. The assessing officer issued notices under Section 133(6) to the NMCE to obtain information about the transactions. The NMCE responded with details of total sales and purchases, indicating a profit of INR 200,000 for Shruti Garg.
Shruti Garg contested the allegations, asserting that she did not earn any profit on the NMCE platform through the mentioned broker. She provided her bank statements and taxable income statements to support her claim. She also requested details of the bank, branch, and account number where the alleged profit was credited, which the assessing officer could not provide. Consequently, the addition of INR 200,000 to her total income was challenged.
The tribunal carefully considered the rival contentions and reviewed the orders of the lower authorities. It found no substantial evidence linking Shruti Garg to the alleged transactions. The reasons recorded for reopening the assessment were found unsustainable, as there was no credible material to support the claim that Shruti Garg earned INR 200,000 by misusing the NMCE platform. The assessing officer could not identify any bank account where the income was credited, nor did the income appear in the computation of total income submitted with the return of income.
The tribunal allowed the appeal of Shruti Garg, concluding that the reopening of the assessment was invalid and the addition of INR 200,000 to her total income was unwarranted. The final judgment stated:
Order pronounced in the open court on 14/10/2019.
-Sd/- (K.N.CHARY) JUDICIAL MEMBER
-Sd/- (PRASHANT MAHARISHI) ACCOUNTANT MEMBER
Similar conclusions were reached in the cases of Preeti Bansal (ITA No. 1665/Del/2019) and Chand Kumar Goyal HUF (ITA No. 1667/Del/2019), where the tribunal allowed the appeals based on identical facts and findings.
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