2017 (3) TMI 950 - AT - Income Tax

Addition on loan received - Held that - Addition was beyond jurisdiction in absence of any seized material. Further, it has been found by the Ld. CIT(A) that on merits also, addition was wrongly made since assessee had discharged onus u/s 68 and substantiated the loans received by Shri Suresh Gaggar and M/s. Garnet International Ltd. Nothing wrong has been pointed out in the well reasoned findings of Ld. CIT(A). Thus, viewed from any angle, no interference is called for in the order of Ld. CIT(A) n deleting addition - Decided against revenue Addition on account of unexplained receipt on sale of shares - Held that - There is no evidence on record suggesting that the assessee had received more sale consideration and had understated the sate consideration in respect of this transaction. It may be a sale of shares at undervalue, but not a case of understatement of sale consideration Even if the market price of share is higher than the actual sate price, there cannot be a presumption that there is, understatement of sale consideration to the extent of difference of market price and sale price. If the AO alleges any on-money transaction in respect of this sale of shares, then the onus lies on the AO to prove that the assessee had actually earned any undisclosed higher price on sale of these shares than the rate as disclosed by assessee. The AO s conclusion of manipulation of share price and thereby earning, undisclosed receipts on sate of shares is highly presumptuous - Decided against revenue

Issues Involved:
1. Admission of additional evidence by CIT(A) in violation of Rule 46A.
2. Deletion of addition on account of unexplained receipt on sale of shares.
3. Deletion of addition on account of loans received.

Issue-wise Detailed Analysis:

1. Admission of Additional Evidence by CIT(A) in Violation of Rule 46A:

The revenue contended that the CIT(A) erred in admitting additional evidence without providing an opportunity to the Assessing Officer (AO) to be heard, thereby violating Rule 46A. The CIT(A) admitted additional evidence despite the assessee failing to produce the same before the AO when given the opportunity. The Tribunal noted that similar issues had been decided in favor of the assessee in related cases, such as DCIT v. Shri Ramakant Gaggar and DCIT v. M/s. Jyoti Bright Bar Ltd., where the Tribunal upheld the CIT(A)'s decision to admit additional evidence under similar circumstances.

2. Deletion of Addition on Account of Unexplained Receipt on Sale of Shares:

The revenue argued that the CIT(A) erred in deleting the addition of ?2,44,54,730 on account of unexplained receipt from the sale of shares of ARSS Infrastructure Pvt. Ltd. The AO had determined the sale price at ?1251 per share, while the assessee showed it as ?13.33 per share. The Tribunal observed that the AO's determination was based on documentary evidence found during the search, suggesting that share transactions were carried out to earn profit outside the books.

However, the Tribunal referred to earlier decisions, such as DCIT v. Jyoti Bright Bar Pvt. Ltd., where it was held that unless the AO could prove that the assessee received more than what was shown, the actual sale consideration should be accepted. The Tribunal found that the AO failed to bring any cogent material to substitute the actual sale consideration received by the assessee. Therefore, the CIT(A)'s deletion of the addition was upheld.

3. Deletion of Addition on Account of Loans Received:

The revenue was aggrieved by the CIT(A)'s action in deleting the addition of ?16,25,000 on account of loans received from Shri Suresh Gaggar and Garnet International Ltd. The CIT(A) observed that the AO failed to verify the books of accounts and loan confirmations, which clearly reflected the status of the outstanding loans. The CIT(A) noted that the loans were received through banking channels and thus could not be treated as unexplained under Section 68.

During the hearing, it was submitted that the addition was made without any incriminating material found during the search. The Tribunal referred to several decisions, including All Cargo Global Logistics and CIT v. Kabul Chawla, which held that no addition could be made under Section 153A in the absence of incriminating material found during the search. The Tribunal found that the AO made the addition based on the balance sheet without any reference to incriminating material. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the addition, finding no merit in the revenue's contention.

Conclusion:

The Tribunal dismissed the appeal filed by the revenue, upholding the CIT(A)'s decisions on all grounds. The Tribunal's judgment was pronounced in the open court at the conclusion of the hearing.

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