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2019 (1) TMI 108 - AT - Income TaxAddition u/s 68 - assessee has entered into a colourable device for avoiding the tax and receipt of sale proceeds by way of cheque is nothing but unexplained cash credit u/s 68 - Held that - The lower authorities have proceeded to tax the profit arising out of sale of such shares in the hands of the assessee on the ground that the assessee may be one of such beneficiaries. However, the shares according to the AR were sold through D-mat account maintained with Kotak Mahindra Bank, there were contract notes for purchase of the shares and the sale proceed were received by cheque. It is the submission of the Dr that the shares were purchased off market and there is no proper justification for huge rise in the price of the shares when the company has not done any substantial business so as to command such huge premium. Considering all restore the matter back to the file of the Assessing Officer with the direction to provide the statements of the persons which are the basis for making the addition in the instant case. - decided in favour of assessee for statistical purpose. Depreciation on motor car - denial of claim as assessee has received only remuneration and interest from the partnership firm M/s. Jay Kay Enterprises and the vehicle is not used for the purpose of own business but for the purpose of the business of the firm - Held that - Since the assessee did not give any submission before the CIT(A) on this issue either written or oral, the Ld. CIT(A) dismissed the ground raised by the assessee. Even before me also the assessee did not make any submission on this issue. Under these circumstances the ground raised by the assessee is dismissed.
Issues Involved:
1. Addition of ?21,65,606/- under Section 68 read with Section 115BBE. 2. Disallowance of car depreciation claimed at ?62,210/-. Issue-wise Detailed Analysis: 1. Addition of ?21,65,606/- under Section 68 read with Section 115BBE: The assessee challenged the addition of ?21,65,606/- under Section 68 read with Section 115BBE, arguing that the ITO and CIT(A) erred by making the addition based on doubts without any concrete evidence. The assessee claimed the amount as exempted income of Long Term Capital Gains (LTCG) under Section 10(38) of the Act, derived from the sale of shares of M/s. Turbotech Engineering Ltd. The shares were purchased for ?10,000/- and sold for ?21,75,606/-, resulting in a significant appreciation. The Assessing Officer (AO) noted that M/s. Turbotech Engineering Ltd. had no financial capabilities or future income prospects at the time of investment, and the extraordinary performance of its stock was not justified by its financials. The AO referred to investigations and statements from individuals like Nikhil Jain and Sanjay Vora, indicating that the shares of M/s. Turbotech Engineering Ltd. were used for generating bogus LTCG. Consequently, the AO concluded that the assessee entered into a colorable device for tax avoidance, treating the receipt of ?21,65,606/- as unexplained cash credit under Section 68. The CIT(A) upheld the AO's decision, noting that the AO had issued letters to SEBI, BSE, Kotak Securities Ltd., and M/s. Shreeji Broking Pvt. Ltd. for information, and the trading of M/s. Turbotech Engineering Ltd.'s securities was banned by SEBI. The CIT(A) relied on various decisions and the Third SIT report on Black Money by the Supreme Court of India, which pointed out the modus operandi of generating bogus LTCG. The assessee's counsel argued that the transactions were genuine, supported by purchase bills, payment receipts, D-mat account statements, and bank statements. The counsel contended that the statements relied upon by the AO were not confronted to the assessee. The Tribunal considered the arguments and the material on record, noting that the assessee's transactions were through a D-mat account and sale proceeds were received by cheque. The Tribunal restored the matter to the AO for reconsideration, directing the AO to provide the statements of the individuals which formed the basis for the addition and to decide the issue afresh after giving the assessee an opportunity of being heard. 2. Disallowance of Car Depreciation Claimed at ?62,210/-: The assessee claimed depreciation of ?62,210/- on a motor car, which was disallowed by the AO on the ground that the car was used for the business of the partnership firm M/s. Jay Kay Enterprises, and not for the assessee's own business. The CIT(A) upheld the disallowance, noting that the assessee did not provide any submission in support of the claim during the appellate proceedings. The Tribunal observed that the assessee did not make any submission on this issue before the CIT(A) or the Tribunal. Consequently, the Tribunal dismissed the ground raised by the assessee regarding the disallowance of car depreciation. Conclusion: The appeal filed by the assessee was partly allowed for statistical purposes. The matter regarding the addition of ?21,65,606/- was remanded back to the AO for reconsideration, while the disallowance of car depreciation was upheld.
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