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Issues involved: Appeal against CIT(A) order confirming reopening of assessment and addition made under section 68 of the Income Tax Act, 1961.
Reopening of Assessment: The appeal was made against the Order of the CIT(A)-34, Mumbai dated 26.10.2012 for the assessment year 2003-2004. The assessee objected to the reopening of the assessment and the addition of Rs. 1,02,064 made under section 68 of the Income Tax Act, 1961. The search action under section 132 of the IT Act was conducted in the case of M/s. Mahasagar Securities Pvt. Ltd., now known as 'M/s. Alag Securities Pvt. Ltd.', revealing bogus dealing activities. The assessee had purchased shares worth Rs. 1,02,064 from M/s. Buniyad Chemicals, funded by loans from friends. The Assessing Officer added this amount under section 68 of the Act, leading to the appeal. Merits of the Addition: The assessee submitted that loans were obtained from friends to purchase shares, and the amounts were returned in the subsequent year. Details of the loans and ledger accounts were provided, but no further enquiry was made by the Assessing Officer. The CIT(A) upheld the reopening of the assessment, stating that there was material to support it. However, the Tribunal found that the addition of Rs. 1,02,064 was unjustified. The assessee had provided evidence of the loans and purchase of shares through a broker. The genuineness of the transactions was supported by documents, and the Tribunal held that the addition under section 68 was not justified. The CIT(A) was also criticized for confirming the addition. Conclusion: The Tribunal allowed the appeal, deleting the addition of Rs. 1,02,064 made by the Assessing Officer under section 68 of the Act. The Tribunal held that the genuineness of the transaction should not have been doubted and criticized the CIT(A) for confirming the addition. The Tribunal did not dispose of the legal ground due to the deletion of the addition on merit. Note: Separate judgment was not delivered by the judges.
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