2010 (6) TMI 807 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 21,06,225/- as unexplained cash credit u/s 68 of the I.T. Act.
2. Genuineness of share transactions through Calcutta Stock Exchange.

Summary:

Issue 1: Addition of Rs. 21,06,225/- as unexplained cash credit u/s 68 of the I.T. Act

The assessee, a proprietor of M/s. Sheth Textiles, declared a profit of Rs. 17,03,542/- on the sale of shares, with Rs. 21,06,225/- credited as sale proceeds. The A.O. conducted inquiries and found discrepancies in the transactions, leading to the addition of Rs. 21,06,225/- as unexplained credit. The Ld. C.I.T.(A) confirmed this addition, noting that the transactions did not match with the information from the Calcutta Stock Exchange (CSE) and the demat account did not show the name of the assessee. The Tribunal, however, found that the assessee had discharged the onus of proving the transactions and that the A.O. did not provide sufficient evidence to counter the assessee's claims. The Tribunal cited several cases where similar transactions were deemed genuine and concluded that the addition was not justified.

Issue 2: Genuineness of share transactions through Calcutta Stock Exchange

The A.O. found that the transactions involving the sale of shares through the CSE were not genuine, as the details provided by the assessee did not match with the information from the CSE. The Ld. C.I.T.(A) upheld this view, noting inconsistencies in the dates and quantities of shares sold. However, the Tribunal, referencing previous judgments, held that the assessee had provided sufficient evidence, including broker confirmations and demat account details, to prove the genuineness of the transactions. The Tribunal emphasized that the A.O. did not bring any material evidence to disprove the assessee's claims and that mere suspicion could not replace legal proof. Consequently, the Tribunal directed to tax the capital gain as declared by the assessee and allowed the appeal.

Order Pronounced:

The appeal filed by the assessee is allowed, and the addition made by the A.O. and confirmed by the Ld. C.I.T.(A) is deleted.