2017 (12) TMI 1650 - AT - Income Tax

Addition u/s 68 - sale proceeds of shares treated as income from undisclosed sources - rejecting the assessee s claim of long term Capital Gains (LTCG) on sale of those shares - claim of exemption u/s 10(38) denied - Held that - AO did not provide the copies of evidences received by him from Director of Investigations Kolkata based on which he made the addition to the assessee. The cross-examination of the persons whose statements were relied upon by the Investigation Wing and the Assessing Officer for making the addition were not provided to the assessee. AO mechanically and arbitrarily followed the investigation report without establishing any link of the Report with the assessee and without any independent investigation on independent application of mind.The addition to income was done on presumption and assumptions without any authentic legal evidence. Issue is covered by case of Mahendra Kumar Baid 2017 (10) TMI 522 - ITAT KOLKATA - Decided in favour of the assessee.

Summary

Issues Involved:
Appeal against deletion of addition under section 68 of the Income Tax Act, 1961 for the Assessment Year 2014-15.

Detailed Analysis:

1. Issue of Deletion of Addition under Section 68:
The appeal before the Appellate Tribunal ITAT Kolkata pertains to the deletion of an addition of INR 38,11,421 made by the Assessing Officer under section 68 of the Income Tax Act. The Learned Commissioner of Income Tax (Appeals) had deleted this addition. The Tribunal noted that the CIT(A) based the deletion on several observations. Firstly, it was highlighted that the Assessing Officer did not provide copies of evidences received from the Director of Investigations, Kolkata, which formed the basis of the addition. Secondly, the lack of cross-examination of individuals whose statements were relied upon for the addition was noted. Additionally, it was pointed out that the AO had merely followed the investigation report without establishing a direct link to the assessee or conducting an independent investigation. The Tribunal agreed with the CIT(A) that the addition was made on presumptions and assumptions without concrete legal evidence.

2. Controversion and Legal Precedent:
During the proceedings, the Learned DR failed to counter the factual findings of the CIT(A) and did not present any contrary decision to challenge the order. It was also highlighted that the issue at hand was similar to a case decided by a Division Bench of the Tribunal in the matter of Mahendra Kumar Baid. The absence of any conflicting decision being brought to the notice of the Tribunal further strengthened the position of the assessee.

3. Judgment and Dismissal of Appeal:
In light of the arguments presented and the lack of substantial counterarguments, the Tribunal upheld the order of the CIT(A) and dismissed the appeal of the revenue. The decision was pronounced in court on 20.12.2017, thereby concluding the matter in favor of the assessee.