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2015 (9) TMI 1753 - AT - Income TaxCorrect head of income - gain on sale of shares - LTCG or Income from other sources - HELD THAT - Looking to the facts and circumstances of the case, we find that the ld. CIT(A) has accepted that the long term capital gain on sale of shares of Hindustan Continentals limited as genuine long term capital gains as done through SEBI registered broker and De-mat account - dismiss the Departmental appeal on this ground. Addition u/s 68 - assessee has made investment in the Lunkad group of companies providing entries of unsecured loan, share application money and investment in actual state of needy persons, who are beneficiaries and during the survey huge cash receipt and payments were found - HELD THAT - We find that the CIT(A) in his order has deleted the addition on the ground that the I.T.A.T., Indore Bench has passed the order in the case of Narmada Extrusions Limited 2011 (12) TMI 702 - ITAT INDORE and other family members of the Mittal Group and the assessee is also one of the beneficiaries of Mittal Group and in the appeal for assessment year 2003-04 and 2006-07, the Tribunal has decided the appeal and the Tribunal has analyzed all the documents. Thereafter, the matter was restored to the AO by the Tribunal and after that in set-aside proceedings, the ld. CIT(A) has accepted that these loans are genuine. Therefore, the ld. CIT(A) has deleted the addition on account of unsecured loans. In the result, the departmental appeal is dismissed.
Issues Involved:
1. Classification of income from the sale of shares. 2. Consideration of a landmark judgment in a similar case. 3. Variance in High Court orders. 4. Addition of unsecured loans under Section 68 of the Income Tax Act, 1961. 5. Timeliness of cross objections filed by the assessee. Issue-Wise Detailed Analysis: 1. Classification of Income from Sale of Shares: The Department challenged the CIT(A)'s decision to classify income from the sale of shares of M/s Hindustan Continental Ltd. as long-term capital gains instead of income from other sources. The AO suspected that the transactions were a colorable device to introduce unaccounted money as long-term capital gains. However, the CIT(A) found the transactions genuine, supported by purchase bills, bank account statements, D-mat account details, and sale bills. The CIT(A) relied on the ITAT Indore Bench decision in the case of Shri Darpan Anand, which was upheld by the High Court, confirming the genuineness of the long-term capital gains. The Tribunal dismissed the Department's appeal on this ground, affirming the CIT(A)'s decision. 2. Consideration of Landmark Judgment: The Department argued that the CIT(A) erred by not considering the ITAT Indore's landmark judgment in the case of M/s Agrawal Coal Corporation, which held M/s Hindustan Continental Ltd. as a paper company providing accommodation entries. However, the CIT(A) relied on the decision in Shri Darpan Anand's case, where the long-term capital gains from the same company were accepted as genuine. The Tribunal upheld the CIT(A)'s reliance on the Shri Darpan Anand case, dismissing the Department's appeal on this ground as well. 3. Variance in High Court Orders: The Department contended that the High Court's dismissal of its appeal in the case of Darpan Anand was at variance with its order in the case of Agrawal Coal Corporation. The CIT(A) noted that the High Court had dismissed the Department's appeal in Darpan Anand's case, affirming the genuineness of the long-term capital gains. The Tribunal agreed with the CIT(A) and dismissed the Department's appeal, maintaining consistency with the High Court's decision in Darpan Anand's case. 4. Addition of Unsecured Loans Under Section 68: The AO added Rs. 12,00,000 as unsecured loans from M/s Parkson Securities Ltd. and M/s Lunkad Media and Entertainment Ltd. under Section 68, suspecting them as accommodation entries. The CIT(A) deleted the addition, noting that the assessee provided confirmations, affidavits, bank statements, and proof of interest payments with TDS deductions. The Tribunal found that the CIT(A) correctly relied on the ITAT's decision in Narmada Extrusions Ltd. and other family members of the Mittal Group, where similar loans were accepted as genuine. The Tribunal dismissed the Department's appeal, affirming the CIT(A)'s deletion of the addition. 5. Timeliness of Cross Objections Filed by the Assessee: The cross objections filed by the assessees were time-barred. The assessee's counsel submitted an application for condonation, explaining that the Accountant mistakenly believed no appeals were required as the CIT(A) decided in favor of the assessees on merit. The Tribunal found the cause reasonable and condoned the delay in all cross objections. Since the Department's appeals were dismissed, the assessee's counsel did not press for the cross objections, which were subsequently dismissed. Conclusion: The Tribunal dismissed all the Department's appeals and the cross objections. The decision affirmed the CIT(A)'s classification of income from the sale of shares as long-term capital gains, the deletion of additions under Section 68, and the condonation of delay in filing cross objections. The order was pronounced in the open court on 29th September 2015.
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