2015 (6) TMI 289 - AT - Income Tax

Sale consideration claimed as giving rise to long term capital gains treated as unexplained cash credit u/s.68 by CIT(A)- Held that - Shares of both the companies, i.e. Shalimar Agro Products Ltd. and G-Tech Info Trading were shown to be held by the assessee in the balance sheet filed with the Department in respect of A.Y 2003-04. There is no material on record to show that the return filed by the assessee showing purchases of these shares in A.Y 2003-04 has ever been disturbed by the Revenue. The Revenue has also not contradicted any of the aforementioned evidence submitted by the assessee to support the impugned transactions. Moreover, under similar facts and circumstances, one of the transactions which was added by the AO in respect of shares of M/s. Robinson Worldwide Ltd., was deleted by Ld. CIT(A) on the ground that it pertains to A.Y 2005-06 has been already deleted by the Tribunal in the case of assessee itself. The facts of that transaction and the impugned transactions are not materially different. Therefore, the impugned transactions in the facts and circumstances of the case are covered by the aforementioned decision of the Tribunal in assessee s own case in respect of assessment year 2005-06. Respectfully following the said decision of Tribunal given in respect of present assessee with regard to assessment year 2005-06, we are of the opinion that Ld. CIT(A) has committed an error in upholding the addition. - Decided in favour of assessee.

Summary

Issues Involved:
1. Confirmation of sale consideration as unexplained cash credit under Section 68.
2. Confirmation of addition as unexplained expenditure under Section 69C.

Issue-wise Detailed Analysis:

1. Confirmation of Sale Consideration as Unexplained Cash Credit under Section 68:
The primary issue revolves around the treatment of the sale consideration of Rs. 55,98,486/- claimed by the assessee as long-term capital gains, which the Ld. CIT(A) confirmed as unexplained cash credit under Section 68. The assessee, part of the Kariya Group, was subject to a search operation, which alleged that the group had manipulated share transactions to obtain artificial capital gains. The AO added Rs. 81,02,761/- to the assessee's income, treating the capital gains from the sale of shares of three companies as unexplained money. The AO's decision was based on statements from directors of DPS Shares and Securities Pvt. Ltd., who admitted to issuing accommodation bills without actual transactions. The Ld. CIT(A) upheld the AO's decision for shares of G-Tech Info Training Ltd. and Shalimar Agro Products Ltd. but reduced the addition for Robinson Worldwide Ltd. as it pertained to a different assessment year.

The Tribunal found that the assessee had provided substantial documentary evidence, including purchase vouchers, dematerialization records, and sale transaction details, proving the genuineness of the transactions. The Tribunal noted that the AO and Ld. CIT(A) had ignored these documents and relied on presumptions and statements without cross-examination. The Tribunal emphasized that the transactions were reflected in the assessee's balance sheets for the relevant years, which were accepted by the Revenue without any adverse findings. Consequently, the Tribunal concluded that the sale consideration could not be treated as unexplained cash credit and deleted the addition.

2. Confirmation of Addition as Unexplained Expenditure under Section 69C:
The second issue pertains to the addition of Rs. 2,79,924/- being 5% of the sale consideration as unexplained expenditure under Section 69C. The AO assumed that the assessee might have paid a commission or service charges for obtaining the bogus long-term capital gains and calculated this amount at 5% of the sale price of shares. The Ld. CIT(A) partially upheld this addition but reduced it proportionately due to the duplicate addition for Robinson Worldwide Ltd.

The Tribunal, in its analysis, reiterated the genuineness of the transactions based on the extensive documentary evidence provided by the assessee. It highlighted that the Revenue had accepted the assessee's balance sheets for the relevant years, which included the investment in shares. The Tribunal found no basis for the AO's assumption of unexplained expenditure without concrete evidence. It noted that the transactions were conducted through recognized brokers and reflected in the Demat accounts, further validating their authenticity. Therefore, the Tribunal deleted the addition under Section 69C as well.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, deleting the additions made under Sections 68 and 69C. The decision was based on the substantial documentary evidence provided by the assessee, which was not contradicted by the Revenue. The Tribunal emphasized the importance of concrete evidence over assumptions and presumptions in tax assessments. The order was pronounced in the open court on 13/05/2015.