2015 (6) TMI 848 - AT - Income Tax

Bogus capital gain returned - CIT(A) charged the same as unexplained cash credit on the grounds that the capital gains the appellant neither satisfactorily explained the purchases of shares nor the sales thereof - Held that - We first agree with the submissions of the DR that since the assessee changed his stand from LTCG to normal gain in itself would amount to incriminating. This is so, because, the assessee was forced to change his statement and claim in the return, after the search. This can only mean that what has been claimed in the ROI was not the complete truth. In such a circumstance, we reject the additional ground. Coming to the original GOA, though we appreciate the amount of spade work that the revenue authorities did to come to certain conclusion, but on the other hand, nowhere in either of revenue authorities orders, do we find the negation of the details and evidences filed by the assessee, so that the revenue authorities could clinch the initiative. We find that the certificates of brokers, i.e. Action Financial Services (India) Ltd. and District Securities Pvt. Ltd. along with complete details have not been considered in completeness. We find that the references were made, to those documents, which were at the disadvantage to the assessee.In such a circumstance, we are of the opinion that the case needs fresh adjudication. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
- Appeal against order of CIT(A) 37, Mumbai regarding treatment of capital gains as unexplained cash credit.
- Allegations of bogus capital gains and unexplained commission charges.
- Discrepancies in purchase and sale details of shares leading to addition u/s 68 of the Income Tax Act, 1961.
- CIT(A) decision to confirm the addition as unexplained cash credit.
- Appeal before ITAT challenging CIT(A) order.
- Arguments regarding actual delivery of shares and disregarded documents.
- Additional ground raised regarding absence of incriminating material during search.
- ITAT decision to set aside CIT(A) order and remand the case to AO for fresh adjudication.

Detailed Analysis:
1. The appeals were filed against the CIT(A) 37, Mumbai's orders regarding the treatment of capital gains as unexplained cash credit. The assessees, in both cases, were alleged to have engaged in penny stock dealings resulting in bogus capital gains and unexplained commission charges.
2. The search and seizure operations revealed discrepancies in the purchase and sale details of shares, leading to suspicions of artificial gains. The AO treated the sale proceeds as unexplained credit and added the same u/s 68 of the Income Tax Act, 1961, along with the 5% commission.
3. The CIT(A) confirmed the addition as unexplained cash credit, citing the failure to satisfactorily explain the source of income. The appeals before ITAT challenged this decision, emphasizing the actual delivery of shares and submission of relevant documents disregarded by the revenue authorities.
4. The ITAT rejected the additional ground raised regarding the absence of incriminating material during the search, considering the change in the assessee's stand as incriminatory. However, the ITAT set aside the CIT(A) order and remanded the case to the AO for fresh adjudication.
5. The ITAT decision to allow the appeals for statistical purposes indicated a need for a re-examination of the case by the AO, ensuring a fair and thorough assessment of the provided details and evidence. The restoration of the case to the AO for fresh proceedings aimed at achieving a just and lawful outcome, with adequate opportunity provided to the assessee during the process.