2012 (9) TMI 1099 - HC - Income Tax

Addition u/s. 68 - treating the Short Term Capital Gain as unexplained cash credit - Held that - Since the shares were sold after 1-4-2005, the transactions were not under the broker s code. As regards service-tax and stamp charges the contract note of the broker clearly mentioned that the brokerage was inclusive of service tax etc. In the case of the selling broker the Service tax Securities Transaction tax and Education Cess were separately mentioned. As regards the point raised by the Assessing Officer that there was absence of broker-client agreement, the Tribunal accepted the submission of the assessee that the genuineness of the transactions was already proved by the contract notes for sale and purchase, the bank statement of the broker, the Demat Account showing transfer in and out of shares, as also abstract of transactions furnished by the CSE. The Tribunal, after appreciating the evidence on record, concurred with the findings recorded by the Commissioner (Appeals) that the assessee had furnished complete details which were not found false or bogus by the Assessing Officer and that it was only on suspicion that the Assessing Officer had treated the capital gain declared by the assessee as unexplained cash credit under section 68 of the Act. In the light of the aforesaid findings of fact recorded by it, the Tribunal dismissed the appeal of the revenue. In the light of the above findings of fact recorded by the Tribunal, it is not possible to state that the view adopted by the Tribunal is, in any manner, unreasonable or perverse.

Summary

Issues:
Challenge to deletion of addition of unexplained cash credit under section 68 by the Assessing Officer.

Analysis:
The appellant-revenue challenged the order of the Income Tax Appellate Tribunal (ITAT) regarding the deletion of the addition of Rs. 36,72,631 made under section 68 of the Income Tax Act, 1961. The respondent-assessee, an individual, had filed her income tax return for the assessment year 2006-07, showing total income including short and long term capital gains. The Assessing Officer treated a sum of Rs. 36,72,631 credited in the books of accounts as unexplained cash credit under section 68 and brought it to tax. However, the Commissioner (Appeals) allowed the claim of the assessee, directing the Assessing Officer to accept the capital gains. The Tribunal upheld this decision, leading to the revenue's appeal.

The Tribunal found that the assessee had explained the purchase transactions were made on the "Online Trading System" and were genuine. Transactions prior to April 1, 2005, were made using the broker's code, which was accepted as genuine by providing evidence such as contract notes, bank statements, and Demat Account details. The Tribunal concurred with the Commissioner (Appeals) that the assessee had provided complete and genuine details, not found false by the Assessing Officer. The Assessing Officer's suspicion led to treating the declared capital gain as unexplained cash credit under section 68. The Tribunal dismissed the revenue's appeal based on these factual findings.

The High Court held that the Tribunal's decision was not unreasonable or perverse, as it was based on factual evidence and proper appreciation of records. The appellant's counsel failed to show any irrelevant material relied upon by the Tribunal or any ignored relevant material. The Court found no grounds to interfere with the concurrent findings of fact by the Tribunal. Consequently, the appeal was dismissed, upholding the deletion of the addition of unexplained cash credit under section 68 by the Assessing Officer.