2021 (4) TMI 1252 - AT - Income Tax

Assessment u/s 153A - bogus LTCG - Addition u/s 68 - Reliance on statement u/s 132(4) - HELD THAT - As no admission as alleged by lower authorities was made and secondly, the said statement stood retracted immediately on 14/04/2015. Therefore, since the statement stood rejected immediately after making thereof, the same would lose substantial evidentiary value. In such a case, the onus would be on revenue to establish that the earlier admission made was backed up by some cogent / corroborative material on record and the retraction was not valid one. However, we find that there is no such material with the revenue which would corroborate assessee s statement that the gains were bogus in nature. Any statement on oath, to be valid, has to be supported by corroborative evidences. Thus, the statement made by the assessee, in our considered opinion, could not be considered as incriminating material which would justify additions in the hands of the assessee Except for statement u/s 132(4), there was no incriminating material. The statement was retracted by the assessee. Therefore, the bench held that addition on the basis of retracted statement, without there being corroborative material would not be sustainable as held in various decisions. Similar are the facts before us. Therefore, applying the ratio of aforesaid decisions, since the additions are not with reference to any incriminating material, the same would not be sustainable in the eyes of law. The impugned additions are not sustainable in the eyes of law. The assessee had discharged the primary onus of establishing the genuineness of the transactions whereas the onus as casted upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The whole basis of making additions is third-party statement and no opportunity of cross-examination has been provided to the assessee to confront these parties. As against this, the assessee s position that that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. Hence, going by the factual matrix and respectfully following the binding judicial precedents as enumerated in the order, the additions made by Ld. AO and confirmed by Ld. CIT(A), are not sustainable in the eyes of law. Therefore, we are inclined to delete the same. - Decided in favour of assessee.

Issues Involved:
1. Validity of notice issued under Section 153A of the Income Tax Act.
2. Non-compliance with the provisions of Section 153D of the Income Tax Act.
3. Addition of ?44,39,566 under Section 68 of the Income Tax Act.
4. Addition of ?2,66,374 under Section 69C of the Income Tax Act.

Detailed Analysis:

1. Validity of Notice Issued Under Section 153A:
The assessee contested that the notice issued under Section 153A was void as the jurisdictional conditions were not complied with, and no incriminating documents were found during the search proceedings. The appellate tribunal noted that the assessment for the year under consideration was a non-abated assessment year as no proceedings were pending on the date of the search. The tribunal concluded that no incriminating material was found during the search that could justify the issuance of notice under Section 153A. Hence, the additions made based on such notice were not sustainable.

2. Non-Compliance with Provisions of Section 153D:
The assessee argued that the Assessing Officer (AO) failed to comply with the provisions of Section 153D, rendering the entire assessment proceedings null and void. The tribunal did not find merit in this argument, as no specific arguments were urged regarding this ground. Consequently, this ground was dismissed.

3. Addition of ?44,39,566 under Section 68:
The AO treated the sale proceeds of shares of Splash Media & Infra Limited (SMIL) as non-genuine and added ?44,39,566 to the assessee's income under Section 68. The tribunal observed that the assessee had provided all necessary documentary evidence, including purchase and sale contract notes, demat statements, and bank statements, to substantiate the transactions. The AO's reliance on third-party statements without providing the assessee an opportunity for cross-examination was deemed insufficient to disprove the genuineness of the transactions. The tribunal emphasized that the onus was on the revenue to disprove the assessee's claim with cogent evidence, which was not done. Thus, the addition under Section 68 was deleted.

4. Addition of ?2,66,374 under Section 69C:
The AO made an addition of ?2,66,374 under Section 69C, alleging unexplained commission expenditure for availing accommodation entries of bogus capital gains. The tribunal found that the AO's conclusion was based on suspicion and conjectures without any corroborative evidence. The tribunal reiterated that the revenue failed to establish any cash exchange between the assessee and the alleged exit providers. As a result, the addition under Section 69C was also deleted.

Conclusion:
The tribunal concluded that the additions made by the AO were not sustainable in the eyes of the law. The assessee had discharged the primary onus of establishing the genuineness of the transactions, while the revenue failed to corroborate the additions with substantial evidence. Consequently, the tribunal deleted the additions made under Sections 68 and 69C, and the appeal was partly allowed.

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