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2023 Supreme(Del) 1912
IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Tara Vitasta Ganju, JJ.
Pr. Commissioner of Income Tax-10 – Appellant
Versus
Rajat Finvest – Respondent
ITA 13 of 2023, ITA 14 of 2023 and ITA 15 of 2023
Decided On : 12-01-2023
Zoheb Hossain, Vipul Agarwal & Parth Semwal, Advocates, for the Appellant.
None, for the Respondent.
The central legal point established in the judgment is the importance of factual findings, lack of evidence supporting allegations, and the interpretation of provisions related to unaccounted income and bogus transactions.
Headnote:
LTCG - Income Tax - ITA 13/2023, ITA 14/2023, ITA 15/2023 - The court discussed the Income Tax Act, 1961 and its Section 133A, Section 148, and Section 68. The court highlighted the legal provisions related to unaccounted income, bogus transactions, and the treatment of shares as stock-in-trade or investment. The court's decision was influenced by the interpretation of these provisions and the findings of fact regarding the nature of the transactions and the lack of evidence supporting the appellant's allegations.
Fact of the Case:
The appeals were filed against the common impugned order concerning Assessment Years 2008-2009, 2009-2010, and 2010-2011. The main allegation was the introduction of unaccounted income in the guise of 'bogus Long Term Capital Gains' by the respondent/assessee.
Finding of the Court:
The court found that the appellant's allegations were based on assumptions and conjectures, and the findings of fact by the CIT(A) and the Tribunal did not support the appellant's claims.
Issues: The issues revolved around the nature of the transactions, the treatment of shares as stock-in-trade or investment, and the lack of evidence supporting the appellant's allegations of unaccounted income and bogus transactions.
Ratio Decidendi: The court's decision was based on the lack of material to back the appellant's conclusions, the findings of fact by the CIT(A) and the Tribunal, and the absence of substantial questions of law indicating perversity in the findings.
Final Decision: The appeals were dismissed as no substantial question of law arose for consideration.
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J. (Oral):
CM APPL. 1300/2023 in ITA 13/2023
CM APPL. 1301/2023 in ITA 14/2023
CM APPL. 1302/2023 in ITA 15/2023
1. These are the applications filed on behalf of the appellant/revenue seeking condonation of delay in re-filing the appeals.
1.2. For the reasons given in the applications, the delay in re-filing the appeals is condoned.
1.3. The applications are accordingly disposed of.
ITA 13/2023, ITA 14/2023 & ITA 15/2023
2. These appeals, filed by the appellant/revenue, are directed against the common impugned order dated 12.09.2019 passed by the Income Tax Appellate Tribunal [in short "Tribunal"]. The impugned order concerns Assessment Year (AY) 2010-2011 [ITA 13/2023], AY 2009-2010 [ITA 14/2023] and AY 2008-2009 [ITA 15/2023].
3. The main allegation against the respondent/assessee is, that it has introduced unaccounted income in its books in the guise of "bogus Long Term Capital Gains" ["LTCG"].
3.1. The LTCG, as per the Assessment Order dated 31.03.2015, which were registered by the respondent/assessee in each of the AYs is the following:
| Assessment Year (AY) | Amount | |
| 1. | 2008-09 | Rs. 37,41,74,914/- |
| 2. | 2009-10 | Rs. 2,29,30,711/- |
| 3. | 2010-11 | Rs. 59,24,97,150/- |
4. In order to adjudicate upon the appeals, the following broad facts are required to be noticed:
4.1. On 07.08.2012, a survey was carried out by the appellant/revenue in exercise of powers under Section 133A of the Income Tax Act, 1961 [in short, "the Act"], and according to the appellant/revenue, during investigation, the aforementioned fact was revealed i.e., that the respondent/assessee had introduced unaccounted income in its books of accounts in the guise of LTCG to the extent indicated hereinabove, albeit, by first investing and then selling the shares of two entities i.e., REI Agro Ltd. [in short, "REI"] and REI Six Ten Ltd. [in short, "REI Six"].
5. The respondent/assessee, against the LTCG, had claimed exemption from tax.
6. It is not in dispute, that REI is a listed company, and its shares were transacted on the stock exchange.
7. The facts also show, that during the course of the survey on 07.08.2012, the statement of one Mr Brij Mohan Vyas was recorded.
7.1. Mr Brij Mohan Vyas, according to the appellant/revenue, is an employee of REI Agro Group.
8. It has also emerged, that the respondent/assessee is in the business of trading and investing in scrips. The shares of REI were bought and sold through brokers, on instructions of one Mr Sandeep Kumar Jhunjunwala.
9. We may also note, that Mr Brij Mohan Vyas, in his statement, had indicated that he was working in Octal Suppliers Pvt. Ltd, and used to buy and sell shares on instructions of Mr Sandeep Kumar Jhunjunwala.
10. The Assessing Officer has relied upon the details gathered by the Investigation Wing, to conclude that the respondent/assessee had introduced its unaccounted income to purchase and sell shares of REI. These details are set forth in the form of a flow chart in paragraph 5 of the Assessment Order in ITA 14/2023. For the sake of convenience, the said chart is set forth hereafter:
[IMG]
11. Thus, based on the information gathered by the Investigation Wing, the Assessing Officer concluded, that the entire set of transactions was a 'sham', and that the same had been configured to give the sale and purchase of shares by the respondent/assessee a legal framework.
12. It is important to note, that the Assessment Order was passed pursuant to reopening of assessment of the respondent/assessee under Section 148 of the Act.
13. Being aggrieved, the respondent/assessee carried the matter in appeal to the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"].
14. The CIT(A) via order dated 29.06.2016 partly allowed the respondent/assesee's appeals.
15. This time around, the appellant/revenue was aggrieved, and hence, an appeal was preferred to the Tribunal.
16. The Tribunal considered the matter in great detail, and examined, as it appea
