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2018 (12) TMI 521 - AT - Income TaxUnexplained cash credits u/s 68 - exemption u/s 10(38) denied - bogus share capital gain - Held that - Assessee specifically requested for cross-examination of the deponents whose statements were the basis of addition by the AO and also the report of the Investigation Directorate, Kolkata for rebuttal; the judicial decisions cited, we find that the issue for consideration is squarely covered by the orders of the Bengaluru ITAT in the cases of Arvind Kumar Moolchand 2017 (5) TMI 1643 - ITAT BANGALORE and Pukhraj Hasmuchlal 2018 (1) TMI 1406 - ITAT BANGALORE Following the aforesaid orders (supra), we set aside the orders of the AO and restore the matter of treatment of profit declared on sale of shares, claimed as exempt u/s 10(38) of the Act, to the file of the AO to re-adjudicate the issue afresh; after making available to the assessee for rebuttal all documents; including Statements, Investigation Reports, etc., relied upon by Revenue for making the additions/disallowances and providing adequate opportunity to the assessee for cross examination of persons whose statements are being relied upon. - Decided in favour of assessee for statistical purposes.
Issues:
Challenging the order of the CIT(A)-5, Bangalore dated 31.01.2018 for Assessment Year 2014-15. Detailed Analysis: Issue 1: Order validity The appellant contended that the Assessing Officer's order and the CIT(A)'s confirmation were erroneous, void ab initio, and required to be quashed due to violations of natural justice and fair play, specifically the absence of cross-examinations. The appellant sought the cancellation of the order based on these grounds. Issue 2: Addition to income The Assessing Officer added ?2,37,65,800 to the appellant's income under section 68 of the Income-tax Act, treating the sale consideration of shares as unexplained cash credits. The CIT(A) upheld this addition, leading to the appellant disputing the validity of the addition both in law and on facts, asserting that it should be deleted entirely. Issue 3: Application of section 68 The Assessing Officer and the CIT(A) applied section 68 of the Act, considering unexplained credit, which the appellant argued was erroneous as the credit had been adequately explained. The appellant sought the deletion of the addition under section 68 due to the absence of unexplained credit. Issue 4: Interest levy The appellant denied liability to pay interest under sections 234B and 234C of the Act, claiming that the interest was erroneously levied and should be deleted. Judicial Precedents The appellant cited a similar case before the ITAT, Kolkata Bench, where the addition was deemed unsustainable due to procedural irregularities. The Revenue, however, referenced cases before the Bengaluru ITAT where issues were restored to the AO for re-adjudication to ensure proper confrontation and rebuttal opportunities. Judgment After considering the arguments and precedents, the ITAT set aside the AO's orders and directed the matter of treatment of profit from the sale of shares to be re-adjudicated. The AO was instructed to provide all relevant documents to the appellant for rebuttal and allow cross-examination, following the principles of natural justice. Consequently, the appeal was allowed for statistical purposes, rendering other grounds on merits unnecessary for adjudication at that time.
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