2016 (10) TMI 1028 - AT - Income Tax

Unexplained receipt of sale of shares - Held that - it is established that even if there were some other instances of sale of shares at a higher price that cannot lead to a conclusion that the appellant had also sold its shares at higher price until otherwise the A.O is able to prove that the consideration received by the appellant is more than what is shown in the return of income. Since the A.O failed to establish that the appellant had received the sale consideration more than what is shown, the addition is to be deleted - Decided in favour of assessee

Summary

Issues:
Challenge to deletion of addition on account of unexplained receipt of sale of shares of ARSS Infrastructures Project Ltd.

Analysis:
1. The appeal was filed by the revenue challenging the deletion of the addition on account of unexplained receipt of sale of shares of ARSS Infrastructures Project Ltd amounting to ?1,20,00,000 for the assessment year 2008-09.
2. During a search conducted on 6.10.2010 in the case of ARSS Infrastructures Project Ltd, incriminating materials were found at the premises of the assessee's father, leading to the issuance of a notice to the assessee under section 153C of the Act.
3. The grounds of appeal were against the deletion of the addition, with the revenue arguing that the AO had relied on documentary evidence found during the search action.
4. The appellant's representative cited a similar case decided by the Co-ordinate Bench of Mumbai Tribunal, arguing that the issue raised in this appeal was covered by the previous decision.
5. The revenue contended that the deletion of the addition by the CIT(A) was incorrect despite incriminating documentary evidence found during the search.
6. The AO had made the addition based on the sale of shares of ARSS Infrastructures Project Ltd, concluding that the assessee had concealed income by selling shares at a higher price than disclosed, resulting in the addition of ?1,20,00,000 to the total income.
7. The CIT(A) decided in favor of the assessee, citing relevant case law and stating that the AO failed to prove that the appellant had received a higher sale consideration than reported.
8. The Tribunal found a similar issue decided in favor of the assessee in a previous case, concluding that the addition made by the AO was incorrect under section 68, as the nature and source of the money had been explained.
9. Consequently, the Tribunal dismissed the appeal of the revenue, upholding the decision of the CIT(A) in favor of the assessee.

This detailed analysis covers the issues involved in the legal judgment comprehensively, outlining the arguments presented by both parties and the reasoning behind the decision of the Tribunal.