2012 (11) TMI 981 - HC - Income Tax

Disallowance of loss on sale of shares - assessee could not produce the confirmations from M/s.R.K. Consultancy and even the Assessing Officer has required the assessee to produce the said broker for examination - Once the confirmation is not produced and even broker is not produced for examination in respect of transaction carried on by him, the transaction cannot be treated as genuine matter remanded to AO Addition being amount advanced to Shri Sanjay Held that - Receipt of Rs.4 crores, which the assessee claimed he had received by way of an advance from one Shri Sanjay Amin - He, however, could not produce confirmation of said Shri Sanjay Amin as he had left the country - assessee could not produce the confirmation and other details regarding to said person and that therefore the claim was disallowed - further materials produced by the assessee - without proper verification such material ought not to have been accepted - issue was remanded to the Revenue authorities

Summary

Issues:
1. Disallowance of loss on sale of shares
2. Addition of amount advanced to an individual

Analysis:

Issue 1: Disallowance of loss on sale of shares
The first issue pertains to the disallowance of a claim of loss on the sale of shares amounting to Rs.1.33 crores made by the assessee, which was initially disallowed by the Assessing Officer. The CIT(Appeals) allowed the claim, prompting the Revenue to appeal to the Tribunal. The Tribunal remanded the issue back to the Assessing Officer for re-examination due to the assessee's failure to produce confirmations from M/s.R.K. Consultancy and the lack of essential details such as the identity of the party involved in the off-market transaction. The Tribunal emphasized the need for the assessee to provide the necessary details for re-verification by the Assessing Officer. The issue was remanded for further examination, and the Tribunal did not conclude on the matter.

Issue 2: Addition of amount advanced to an individual
The second issue involves the receipt of Rs.4 crores claimed as an advance from an individual, which the Assessing Officer doubted and subsequently added as unaccounted income under Section 68 of the Income Tax Act. The Commissioner deleted the additions made by the Assessing Officer, leading the Revenue to appeal to the Tribunal. The Tribunal found that the assessee failed to produce the individual, Shri Sanjay Amin, for examination before the Assessing Officer, as he was out of India, and could not provide necessary confirmations. While the CIT(Appeals) accepted further materials produced by the assessee, the Tribunal remanded the issue for proper verification, emphasizing the importance of considering the principles of identity, capacity, and genuineness of the transaction of cash credits as laid down by higher courts. The Tribunal directed the Assessing Officer to decide the issue in accordance with the provisions of the IT Act, and the matter was remanded for further examination.

In conclusion, the Tribunal remanded both issues back to the Assessing Officer for proper verification, and as no questions of law were found to arise, the Tax Appeal was dismissed.