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2018 (12) TMI 194 - AT - Income TaxAddition u/s 68 - unexplained cash credit - Held that - The assessee had produced copies of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd., and had been maintaining books of account as per Companies Act. The assessee had also demonstrated the purchase and sale of shares over a period of time as seen from the balance sheet. In our opinion, the Assessing Officer has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim. Consequently the addition made by the Assessing Officer cannot be sustained. - Decided in favour of assessee.
Issues Involved:
1. Disallowance of exemption claimed by the assessee for long-term capital gains on the sale of shares. 2. Validity of the assessment order based on suspicion and information from the investigation wing. 3. Reliance on judicial precedents and principles of uniformity and consistency. Issue-wise Detailed Analysis: 1. Disallowance of Exemption Claimed by the Assessee for Long-Term Capital Gains on Sale of Shares: The assessee filed a return declaring an income of ?13,53,740 and claimed an exemption of ?9,74,605 as long-term capital gain from the sale of shares. The Assessing Officer (AO) scrutinized the case and assessed the income at ?23,94,830. The AO disallowed the exemption, suspecting the transactions to be fictitious. The assessee appealed to the CIT(A), who upheld the AO's decision. The assessee then appealed to the Tribunal, arguing that the disallowance was based on suspicion without concrete evidence and relied on several judicial precedents where similar disallowances were overturned. 2. Validity of the Assessment Order Based on Suspicion and Information from the Investigation Wing: The Tribunal considered the arguments and evidence presented by both parties. The assessee's counsel argued that the AO's decision was based on suspicion and information from the investigation wing without any direct evidence against the assessee. The Tribunal noted that in several cases, courts have held that suspicion, however strong, cannot replace concrete evidence. The Tribunal cited multiple judgments where disallowances based on similar grounds were overturned, emphasizing that the AO must provide specific evidence linking the assessee to any alleged wrongdoing. 3. Reliance on Judicial Precedents and Principles of Uniformity and Consistency: The Tribunal extensively referred to various judicial precedents to support its decision. Key judgments included: - Prem Pal Gandhi (P&H High Court): The court held that the AO's suspicion without evidence was insufficient to disallow the exemption. - Rungta Properties (Calcutta High Court): The tribunal found that the AO did not provide material evidence to show that the transactions were false or fictitious. - Alpine Investments (Calcutta High Court): The court emphasized that transactions supported by proper documentation cannot be dismissed based on suspicion. - Pooja Aggarwal (Rajasthan High Court): The court ruled that transactions supported by documents and conducted through recognized channels must be accepted as genuine. - GTC Industries (ITAT Mumbai Special Bench): The tribunal highlighted that suspicion must be corroborated by material evidence to justify any addition. The Tribunal concluded that the AO and CIT(A) failed to provide specific evidence against the assessee and relied heavily on general observations and suspicion. The Tribunal emphasized the need for uniformity and consistency in applying legal principles, reiterating that genuine transactions supported by proper documentation and conducted through recognized channels should not be disallowed based on mere suspicion. Conclusion: The Tribunal allowed the assessee's appeal, deleting the addition made by the AO. The Tribunal's decision was based on the lack of concrete evidence against the assessee and the reliance on judicial precedents that emphasize the importance of evidence over suspicion. The Tribunal upheld the principles of uniformity and consistency in applying legal standards, ensuring that genuine transactions are not unfairly disallowed.
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