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2018 (12) TMI 1412 - AT - Income TaxAddition u/s 68 - Rejecting the claim of the assessee that he had earned Long Term Capital Gains on purchase and sale of the shares - Held that - CIT(A) has in his order relied upon circumstantial evidence and human probabilities to uphold the findings of the AO. He also relied on the so called rules of suspicious transaction . No direct material was found to controvert the evidence filed by the assessee, in support of the genuineness of the transactions. The overwhelming evidence filed by the assessee remains unchallenged and uncontroverted. The entire conclusions drawn by the revenue authorities, are based on a common report of the Director of Investigation, Kolkata, which was general in nature and not specific to any assessee. The assessee was not confronted with any statement or material alleged to be the basis of the report of the Investigation Wing of the department and which were the basis on which conclusion were drawn against the assessee. Under the circumstances, in a number of cases this bench of the Tribunal has consistently held that decision in all such cases should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. We have in all cases deleted such additions - addition made u/s 68 and the consequential addition made u/s 69C of the Act, are deleted. - Decided in favour of assessee.
Issues involved:
Determining the validity of the Assessing Officer's rejection of the claim of Long Term Capital Gains on the purchase and sale of shares by the assessee for Assessment Year 2014-15. Analysis: Issue 1: Rejection of Long Term Capital Gains Claim The primary issue in this case was whether the Assessing Officer (AO) was justified in rejecting the assessee's claim of Long Term Capital Gains on the shares of M/s. NCL Research & Financial Services Ltd. The AO, based on general observations and a common report, concluded that the claimed gains were bogus, adding the entire sale proceeds as income and denying exemption under section 10(38) of the Income Tax Act, 1961. The evidence provided by the assessee to support the transaction's genuineness was dismissed by the AO. Issue 2: Upholding of Addition by CIT(A) Upon appeal, the Commissioner of Income Tax (Appeals) upheld the AO's addition, relying on circumstantial evidence, human probabilities, and rules of suspicious transactions. The CIT(A) did not have any direct material to counter the evidence presented by the assessee, which remained unchallenged and uncontroverted. The conclusions drawn by the revenue authorities were primarily based on a general report from the Investigation Wing, without specific details related to the assessee or providing a copy of the report. Issue 3: Tribunal's Decision The Tribunal emphasized that decisions should be evidence-based rather than relying on generalizations, suspicions, or conjectures. Referring to previous cases, the Tribunal consistently ruled in favor of the assessee when faced with similar situations. The Tribunal highlighted specific cases where additions were deleted due to lack of concrete evidence against the genuineness of the transactions. It was noted that the decisions of the Jurisdictional High Court and ITAT Kolkata were directly applicable to the current case. Conclusion Considering the lack of substantial evidence against the genuineness of the transactions and the reliance on general reports without specific details, the Tribunal decided to delete the addition made under sections 68 and 69C of the Income Tax Act. The Tribunal allowed the appeal of the assessee, emphasizing the importance of evidence-based decision-making in such matters. This comprehensive analysis outlines the key issues, arguments, and decisions made in the legal judgment, providing a detailed overview of the case's intricacies and the reasoning behind the Tribunal's final ruling.
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