2017 (12) TMI 309 - HC - Income Tax

Unaccounted income - price difference between December 2007 and May 2007 - Held that - There is no evidence brought on record by the Revenue to show that any consideration for purchase of the said shares was paid by the respondent-assessee over and above what was shown by the respondent-assessee. Therefore, on the basis of material on record, the finding of fact recorded by the Assessing Officer was set aside by the Commissioner (Appeals) while deciding appeal. His order has been confirmed by the Appellate Tribunal. The result of the finding is that the direction to treat the price difference between December 2007 and May 2007 as unaccounted income has been set aside. We see no reason to disturb the concurrent findings of fact recorded by the first and second appellate authorities Sale of shares through IPOs - Tribunal held as cannot be said that frequency of transactions in shares of the assessee was very high - no repetitive transactions were entered into by the assessee and entire investment in shares was made by the assessee out of her own funds - Held that - Though the Appellate Tribunal has referred to the fact that similar treatment given by the assessee in the books of accounts for the earlier years was accepted by the Assessing Officer, that is not the only ground on which the finding is rendered by the Appellate Tribunal. It is true that paragraph3.3 of the judgment of the first appellate authority may not contain elaborate reasons. However, the Appellate Tribunal has gone into the material on record and recorded the aforesaid findings. There is no reason to disturb the findings of facts recorded on the basis of material on record. There is no perversity in the findings. Hence, no substantial question of law is involved.

Summary

Issues:
1. Assessment of unaccounted income based on alleged share purchase transactions.
2. Alleged short-term capital gains addition.
3. Failure to produce brokers for verification.
4. Frequency of share transactions by the assessee.
5. Source of funds for share investments.

Analysis:
1. The respondent-assessee declared income from various sources, including short-term and long-term capital gains. The Assessing Officer found discrepancies in share purchase transactions, alleging that shares were bought in December 2007 but shown as purchased in May 2007 at a lower price. This led to the addition of unaccounted income and short-term capital gains. The Commissioner (Appeals) and the Appellate Tribunal disagreed, concluding that shares were indeed purchased in May 2007 at the prevailing rate, supported by documentary evidence and broker confirmation. The finding was upheld, dismissing the Revenue's appeal.

2. The appellant argued that the Assessing Officer's findings were overlooked, emphasizing the failure to produce brokers for verification. However, the Appellate Tribunal upheld the lower authorities' findings, stating no evidence showed additional consideration paid by the assessee. The direction to treat the price difference as unaccounted income was set aside, with no substantial question of law arising from this issue.

3. Regarding the frequency of share transactions, it was found that the assessee dealt with 24 scrips, with only 12 acquired through IPOs, indicating a reasonable frequency. The Appellate Tribunal accepted the explanations provided for share sales and the absence of repetitive transactions, along with confirming that the investments were made from the assessee's own funds. The Tribunal's decision was based on a thorough review of the material on record, leading to the dismissal of the appeal.

4. The Appellate Tribunal's decision was supported by the assessee's consistent treatment in previous years and a detailed examination of the evidence, indicating no perversity in the findings. While the first appellate authority's judgment lacked detailed reasoning, the Tribunal's analysis was deemed sufficient, with no substantial question of law identified in this regard.

5. In conclusion, the appeal was dismissed based on the comprehensive analysis and findings of the lower authorities and the Appellate Tribunal, which collectively established the correctness of the assessee's transactions and the source of funds for share investments.