ITAT rules capital gains out of sale proceeds declared under IDS not sustainable

ITAT rules capital gains out of sale proceeds declared under IDS not sustainable

The revenue department had made the addition relying on the report of its Investigation Wing

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that since the assessee offered the capital gain out of the sale proceeds under the Income Declaration Scheme, 2016, the addition is not sustainable under the Income Tax Act, 1961.

The assessee, Jyoti Swaroop Kashuka was aggrieved by the order of the income tax department that made the addition under the IT Act relying on the report of the Investigation Wing of the department.

On an appeal, the Commissioner of Income Tax (Appeals) confirmed the order and wrote on black money, plugging loopholes in the system by the revenue department, which garnered in the form of bogus long-term capital gains by the assessees through features of penny stock companies

A two-member bench comprising Sanjay Garg (judicial member) and Girish Agrawal (accountant member) observed that in the case of another individual Jyoti Swaroop Kashuka, who disclosed the long-term capital gains being the sale proceeds under the IDS 2016, the same Assessing Officer (AO) accepted the returned income of the individual.

The bench held, "In the present case, the assessee brought on record all the details relating to the mistake committed by the broker in executing the sale transaction of 8000 shares of GCM Securities Ltd, both before the AO and the CIT(A), along with documentary evidence."

The tribunal further observed, "The submissions made by the assessee before both the authorities were reproduced in their respective orders. Once the mistake is brought to the fore and is in knowledge of the authority, it is incumbent upon the authority, who is possessed with all the powers, to take a deep dive into the matter. It must ascertain the correct facts and understand the mistake as well as see how the effect of the mistake can be mitigated."

Granting relief to the assessee, the bench held, "The factual matrix evidently demonstrates that a mistake was committed, which was mitigated by the assessee. The relevant income arising from the transaction of the sale of shares erroneously executed in her account was duly reported in the ITR. It was offered by the individual in the IDS 2016 and accepted in the scrutiny assessment under the Act. Thus, the addition made by the AO and sustained by the CIT(A) is without going into the facts of the case."