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2018 (12) TMI 1761 - AT - Income TaxAddition u/s 68 - Bogus LTCG - HELD THAT - Assessee specifically requested for cross-examination of the deponents whose statements were the basis of addition by the AO and also the report of the Investigation Directorate, Kolkata for rebuttal; from the judicial decisions cited, we find that the issue for consideration is squarely covered by the orders of the Bengaluru ITAT in the cases of Arvind Kumar Moolchand 2017 (5) TMI 1643 - ITAT BANGALORE and Pukhraj Hasmukhlal 2018 (1) TMI 1406 - ITAT BANGALORE . Following the aforesaid orders (supra), we set aside the orders of the AO and restore the matter of treatment of profit declared on sale of shares, claimed as exempt u/s 10(38) to the file of the AO to re-adjudicate the issue afresh; after making available to the assessee for rebuttal all documents; including Statements, Investigation Reports, etc., relied upon by Revenue for making the additions/disallowances and providing adequate opportunity to the assessee for cross-examination of persons whose statements are being relied upon - Assessee s appeal allowed for statistical purposes.
Issues:
1. Assessment of unexplained cash credits under Section 68 of the Income-tax Act, 1961. 2. Violation of principles of natural justice in the assessment process. 3. Treatment of profit declared on the sale of shares claimed as exempt under Section 10(38) of the Act. 4. Liability to pay interest under Sections 234B and 234C of the Act. Assessment of Unexplained Cash Credits: The appellant, an individual, filed a return of income for the assessment year 2014-15, declaring income from various sources. The assessment concluded with the determination of income at a higher amount due to the sale consideration of shares being treated as unexplained cash credits under Section 68 of the Act. The CIT(A)-5 upheld this addition. The appellant contended that the addition was erroneous as the credit was duly explained. The ITAT, considering similar cases, set aside the orders of the AO and restored the matter for re-adjudication. The Tribunal directed the AO to provide the appellant with all documents and reports relied upon for the addition, allowing for rebuttal and cross-examination, in line with principles of natural justice. Violation of Principles of Natural Justice: The appellant raised concerns about the violation of principles of natural justice during the assessment process, specifically the absence of cross-examination of relevant persons. Citing precedents, the ITAT acknowledged the appellant's request for cross-examination and directed the AO to provide the necessary documents and statements for rebuttal, ensuring a fair opportunity for the appellant to contest the additions made. The Tribunal emphasized the importance of affording the assessee adequate opportunity to be heard and to present submissions. Treatment of Profit from Sale of Shares: The appellant contested the addition to income on the sale of shares claimed as exempt under Section 10(38) of the Act. Referring to a similar case, the ITAT noted that the AO's addition was made without proper substantiation and without affording the appellant the opportunity to rebut the allegations. Following established precedents, the ITAT set aside the orders of the lower authorities and remanded the matter to the AO for fresh adjudication, ensuring the appellant's right to rebut and cross-examine relevant parties. Liability for Interest under Sections 234B and 234C: The appellant denied liability to pay interest under Sections 234B and 234C of the Act. The ITAT did not provide a specific ruling on this issue as the other grounds raised were considered academic due to the decision on the primary issue. Consequently, the appeal for the assessment year 2014-15 was allowed for statistical purposes, with the ITAT providing directions for the re-adjudication of the primary issue related to the treatment of profit from the sale of shares.
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