2018 (3) TMI 1883 - AT - Income Tax

Genuineness of transaction with that of broker of MCX Stock Exchange - CIT-A found satisfied that the assessee filed all the required details and documents in support of the transactions entered into by it in respect of foreign exchange derivatives - statement recorded during the search seizure operation - Whether CIT-A is justified in deleting the addition made by the AO by accepting new evidence under Rule 46A of the IT Rules 1962? - HELD THAT - CIT-A found satisfied that the assessee filed all the required details and documents in support of the transactions entered into by it in respect of foreign exchange derivatives. AO made the addition only on the basis of statement recorded during the search seizure operation in the premises of the said Shri Sachet Saraf, director of M/s. Marigold Vanijya P.Ltd. The said statement of Mr. Saraf was retracted at a later point of time. CIT-A found satisfied that there was no corroborative evidence which supports the view of the AO that the said transaction was unexplained. No additional evidence, which was filed before the CIT-A, but not before the AO. CIT-A deleted the said addition only on the basis of material/evidence available on record, which were very much before the AO in the re-assessment proceedings. The case laws as relied on by the assessee before the CIT-A were relevant and applicable to the present facts of the case. CIT-A has discussed the each case law thoroughly. CIT-A was justified in deleting the addition made by the AO on this issue. The grounds raised by the revenue in the appeal are dismissed.

Summary

Issues Involved:
Condonation of delay in filing appeal; Justification of deletion of addition by CIT-A based on new evidence under Rule 46A of IT Rules 1962.

Condonation of Delay:
The Revenue's appeal was filed 6 days beyond the time limit, seeking condonation of delay. The Tribunal, after considering the request and hearing both parties, condoned the delay and admitted the appeal for disposal on merits.

Deletion of Addition by CIT-A:
The main issue was whether the CIT-A was justified in deleting the addition made by the AO based on new evidence under Rule 46A of the IT Rules 1962. The assessee, a real estate development company, had declared income for the assessment year 2011-12. A search operation revealed a loss of ?43,90,251 in foreign currency transactions. The AO added this amount as unexplained loss, which the assessee challenged before the CIT-A. The CIT-A found that the AO did not provide sufficient evidence to support the addition and deleted it. The AO had not verified the transactions with the broker or the stock exchange, relying solely on a retracted statement. The CIT-A concluded that the assessee had submitted all required details and documents, and the addition lacked substantiated evidence. The Tribunal upheld the CIT-A's decision, stating that no new evidence was presented before the CIT-A that was not already before the AO. The CIT-A's decision was based on existing material and relevant case laws, justifying the deletion of the addition.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT-A's decision to delete the addition. The Tribunal found that the CIT-A had appropriately considered the available evidence and case laws, concluding that the addition made by the AO lacked substantiated support. The Tribunal upheld the CIT-A's decision, emphasizing that no new evidence was introduced before the CIT-A that was not already before the AO.