2012 (5) TMI 668 - AT - Income Tax

Summary

Issues Involved:
1. Treatment of salary income as income from other sources and disallowance of standard deduction u/s 16(1).
2. Disallowance of exemption u/s 54F.
3. Addition due to undervaluation of closing stock of shares.
4. Addition u/s 68 on account of unexplained credits from Sunil Sharma.
5. Addition u/s 68 on account of unexplained credits from Sunila Kedia.
6. Addition u/s 68 on account of unexplained credits from Meera Aggarwal and Neeru Kanodia.

Summary:

1. Treatment of Salary Income:
The assessee's ground regarding the treatment of Rs. 60,000 as income from other sources and disallowance of standard deduction u/s 16(1) amounting to Rs. 20,000 was dismissed as not pressed.

2. Disallowance of Exemption u/s 54F:
The assessee claimed long-term capital gains of Rs. 8,08,034 from the sale of shares and sought exemption u/s 54F. The AO disallowed the claim due to non-production of purchase bills and concluded that the transactions were bogus. The CIT(A) ruled in favor of the assessee, stating that ownership and cost of acquisition of shares were substantiated through balance sheets and confirmations. However, the CIT(A) upheld the AO's denial of exemption u/s 54F due to the assessee owning another house on the date of investment. The Tribunal set aside the matter to the AO for further investigation to determine the genuineness of the share transactions and eligibility for deduction u/s 54F.

3. Addition Due to Undervaluation of Closing Stock:
The AO added Rs. 1,14,103 due to undervaluation of closing stock of shares of M/s. Pentasoft Media, as the assessee included bonus shares in the average cost. The CIT(A) upheld the AO's valuation at cost price or market price, whichever is lower, rejecting the assessee's method. The Tribunal found no infirmity in this decision.

4. Addition u/s 68 on Account of Sunil Sharma:
The AO added Rs. 2,00,000 shown as payable to Sunil Sharma, rejecting the claim that it was for stamp papers purchased on credit. The CIT(A) upheld the addition, noting the lack of evidence and non-compliance with summons. The Tribunal agreed with the CIT(A), emphasizing the absence of corroborative evidence.

5. Addition u/s 68 on Account of Sunila Kedia:
The AO added Rs. 17,000 received from Sunila Kedia, citing unproven creditworthiness. The CIT(A) upheld the addition, doubting the genuineness of the transaction. The Tribunal found no evidence to support the assessee's claim and upheld the CIT(A)'s decision.

6. Addition u/s 68 on Account of Meera Aggarwal and Neeru Kanodia:
The AO added Rs. 40,000 received from Meera Aggarwal and Neeru Kanodia, questioning the identity, creditworthiness, and genuineness of the transactions. The CIT(A) upheld the addition due to lack of evidence. The Tribunal agreed, finding no infirmity in the CIT(A)'s order.

Conclusion:
The assessee's appeal is partly allowed for statistical purposes, and the Revenue's appeal is allowed for statistical purposes. The Tribunal directed the AO to re-examine the genuineness of the share transactions and eligibility for exemption u/s 54F.