9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (5) TMI 1578 - AT - Income TaxLTCG on sale of shares - genuineness of the share transactions - addition on statement of the third party, viz. Sh. Mukesh Choksi - Held that - The lower authorities which have hushed through the facts to arrive at a conclusion on the basis of principle of preponderance of human probability, had however absolutely failed to appreciate that the said principle could have been validly applied only on the basis of a considerate view as regards the facts of the case in totality, and not merely on the basis of the stand alone statement of the aforesaid third party, viz. Sh. Mukesh Choksi. We are neither able to persuade ourselves to subscribe to the adverse inferences drawn by the lower authorities in respect of the share transactions of the assessee by referring to the stand alone statement of Sh. Mukesh Choksi, as the same as observed by us hereinabove, suffer from serious infirmities, and as such cannot be summarily accepted, nor are able to dislodge the genuineness of the purchase and sale of shares of the aforesaid 10,200 shares of M/s Talent Infoways Ltd., which we find had been duly substantiated by the assessee on the basis of material made available on record, which we find had not been dislodged by the lower authorities - Decided in favour of assessee
Issues Involved:
1. Addition of Long Term Capital Gains (LTCG) as unexplained cash credit under Section 68. 2. Addition of commission on accommodation entry as undisclosed income. 3. Validity and basis of reassessment proceedings under Section 147. Detailed Analysis: 1. Addition of Long Term Capital Gains (LTCG) as Unexplained Cash Credit under Section 68: The primary issue was whether the LTCG from the sale of shares of Talent Infoways Ltd. through Alliance Intermediaries & Network Pvt. Ltd. should be treated as unexplained cash credit under Section 68. The Assessing Officer (A.O.) based this on the statement of Shri Mukesh Chokshi, who admitted to providing accommodation entries through his group companies, including MSPL and Alliance Intermediaries & Network Pvt. Ltd. The A.O. concluded that the transactions were not genuine and treated the sale proceeds as income from undisclosed sources. The assessee, however, provided substantial documentary evidence to substantiate the genuineness of the transactions, including contract notes, bank statements, STT paid statements, and demat account details. The CIT(A) upheld the A.O.'s decision, relying heavily on Chokshi's statement. The Tribunal, however, noted that the statement of Chokshi alone, without corroborative evidence, could not dislodge the assessee's claim. The Tribunal emphasized that the assessee had provided substantial evidence supporting the genuineness of the transactions, and the A.O. had not provided any concrete evidence to disprove these documents. The Tribunal also highlighted the failure to provide cross-examination of Chokshi to the assessee, which undermined the validity of the adverse inferences drawn by the A.O. 2. Addition of Commission on Accommodation Entry as Undisclosed Income: The A.O. also added a commission, estimated at 5% of the sale consideration, as undisclosed income, assuming that the assessee must have paid this commission for availing the accommodation entry services. The CIT(A) upheld this addition. The Tribunal, however, found that this addition was based on assumptions and surmises without any concrete evidence. The Tribunal noted that the A.O. had not provided any specific evidence to substantiate the claim that the commission was paid. Consequently, the Tribunal deleted the addition of the commission as well. 3. Validity and Basis of Reassessment Proceedings under Section 147: The reassessment proceedings were initiated based on the information gathered during the search and seizure action on MSPL and its group companies. The A.O. used this information to form a belief that the assessee had obtained accommodation entries and initiated reassessment proceedings under Section 147. The Tribunal acknowledged that the information from the search and seizure action provided a valid basis for the A.O. to form a belief and initiate reassessment proceedings. However, the Tribunal stressed that while the initiation of reassessment proceedings was justified, the final assessment should be based on concrete evidence and not solely on the statement of Chokshi. Conclusion: The Tribunal concluded that the lower authorities had erred in relying solely on the statement of Chokshi without corroborative evidence to disallow the LTCG and add the commission. The Tribunal found that the assessee had provided substantial evidence to substantiate the genuineness of the transactions, which was not effectively rebutted by the A.O. Therefore, the Tribunal set aside the orders of the CIT(A) and deleted the additions made by the A.O., allowing the appeals of the assessees. Order Pronounced: The appeals of the assessees were allowed, and the order was pronounced in the open court on 22/05/2017.
|
