2014 (2) TMI 239 - AT - Income Tax

Unexplained investment in shares Held that - The assessee submits that the amount was added as unexplained investment in shares and therefore the unexplained amount actually invested should be determined and while doing so, there is nothing wrong in telescoping the amounts available by way of sale of shares for future investment in such shares - The theory of assessing peak credit was well accepted by the Department and therefore this ground of the department may be dismissed - This ground may not even sustain once it is held that the investment in shares were made only in the assessment year 2008-09 and not in the A.Y.2009-10 as there would be no unexplained investment at all for consideration in the assessment year 2009-10 thus, in the interest of justice, the matter has to be remitted back to the Assessing Officer since all the arguments raised by the assessee in his written submissions were not considered by the Revenue Decided in favour of Assessee. Profit on sale of shares Held that - The CIT(A) held that The A.O is required to look into the aspect, and if found so, the AO may treat the above gains as short term capital gains only- the AO is also required to recomputed the peak investments by considering the above sales as the sales of the financial year 2008-09 - CIT(A) has only directed the AO to verify the relevant dates and recompute the income as per merits and facts of the case thus, there was no infirmity in the order of the CIT (A) AO is directed to look into the issue considering the provisions of the Sec.10 (38) of the Act Decided partly in favour of Assessee.

Summary

Issues:
1. Unexplained investment in shares.
2. Profit on sale of shares.

Issue 1: Unexplained investment in shares:

The appeals were filed by the Assessee and the Revenue against the order of the Ld. CIT(A)-IV, Chennai for the assessment year 2009-10. The Assessee contended that the addition of Rs.36,74,800 as unexplained investment in shares was erroneous, as the shares were purchased in the F.Y. 2007-08 and not in 2008-09 as presumed. The appellant provided documentary evidence to support the purchase of shares in 2007-08. The Ld. CIT(A) confirmed the addition of Rs. 36,74,800 as peak investment but deleted Rs.9,78,660. The appellant argued that the peak investment should be lower, considering the actual sale dates. The Department challenged the peak credit method, but the appellant argued that no unexplained investment existed for the assessment year 2009-10. The ITAT remitted the matter back to the Assessing Officer for reconsideration, noting that all arguments were not considered.

Issue 2: Profit on sale of shares:

The Ld. Assessing Officer determined Rs.2,05,468 as short term capital gains from the sale of shares. The Ld. CIT(A) directed the Assessing Officer to verify the sale dates and recompute the income based on the correct dates. The CIT(A) also instructed the AO to consider the provisions of Sec. 10(38) of the Act. The ITAT found no error in the CIT(A)'s order and partially allowed the assessee's ground. The Revenue's appeal was remitted back to the Assessing Officer for fresh consideration due to its interrelation with the assessee's appeal. Ultimately, the appeal of the assessee was partly allowed for statistical purposes, and the Revenue's appeal was allowed for statistical purposes.

In conclusion, the ITAT Chennai dealt with issues related to unexplained investment in shares and profit on the sale of shares for the assessment year 2009-10. The judgment involved detailed arguments from both the Assessee and the Revenue, with the ITAT remitting the matters back to the Assessing Officer for reconsideration based on the facts presented and legal provisions.