2016 (4) TMI 565 - AT - Income Tax

Addition on LTCG - additions only on the basis of information received from DDIT (investigation) Bombay in respect of search action - Held that - In the present case by virtue of independent documents as referred in paper book the assessee has proved the genuineness of the share transaction and there was no justification to disallow the claim of the assessee in respect of long term capital gain merely on the basis of information received from DDIT which is based on admission of Shri Mukesh Chokshi. Therefore accordingly we direct the AO to assess the long term capital gain declared by assessee as such and accept the same - Decided in favour of assessee

Summary

Issues Involved:
1. Reopening of the case under section 148 of the Income Tax Act, 1961.
2. Treatment of Long Term Capital Gain as Income from Other Sources.
3. Denial of set-off of Long Term Capital Loss.

Issue-wise Detailed Analysis:

1. Reopening of the case under section 148 of the Income Tax Act, 1961:
The appellant challenged the reopening of the case under section 148 based on the statement of a third party without considering the merit of the case. However, during the appeal, the appellant's representative did not press this ground, leading to its dismissal as not pressed.

2. Treatment of Long Term Capital Gain as Income from Other Sources:
The primary contention was against the Assessing Officer's (AO) decision to treat the Long Term Capital Gain (LTCG) of Rs. 2,72,550/- as Income from Other Sources. The AO's decision was based on information from the DDIT (Investigation) about a search action conducted on M/s. Mahanagar Securities (now M/s. Alag Securities Pvt. Ltd.) and group companies, particularly relying on the statement of Shri Mukesh Chokshi, who was alleged to be involved in issuing bogus purchase and sale bills. The appellant argued that the transactions were genuine, supported by documentary evidence such as purchase bills, dematerialization records, and sale bills, asserting that the shares were legally purchased and sold on recognized stock exchanges.

The Tribunal reviewed the material and previous judgments, particularly referencing ITAT Mumbai decisions in ITA No. 1175/Mum/2012 and ITA No. 1176/Mum/2012. These cases involved similar facts where the Tribunal had ruled in favor of the assessee, validating the genuineness of the share transactions and dismissing the AO's reliance on Shri Mukesh Chokshi's statement without cross-examination or corroborative evidence. The Tribunal in the present case found the facts identical and followed the principle of judicial consistency, directing the AO to accept the LTCG as declared by the assessee.

3. Denial of set-off of Long Term Capital Loss:
The appellant also challenged the AO's refusal to grant a set-off of Long Term Capital Loss amounting to Rs. 2,84,814/-. However, similar to the first issue, this ground was not pressed by the appellant's representative during the appeal, leading to its dismissal as not pressed.

Conclusion:
The Tribunal allowed the appeal, directing the AO to accept the LTCG declared by the assessee and not to treat it as Income from Other Sources. The grounds related to reopening the case and set-off of Long Term Capital Loss were dismissed as not pressed. The decision was pronounced in the open court on 4th March 2016.