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2019 (8) TMI 1320 - AT - Income TaxBogus LTCG - addition u/s 68 - HELD THAT - Purchase and sale consideration have passed through the banking channel and the shares were in demat account and sale took place electronically through the platform of stock exchange and assessee has remitted STT. Thus, the assessee had discharged the onus casted upon him to make the claim. AO without finding any fault with the documents as discussed supra has relied on the third party statements which were taken behind the back of assessee; and neither the copy of which was given to the assessee nor an opportunity to cross examine the makers of the statement make the reliance of the statement by AO bad in law as held by the Hon ble Supreme Court in case of CCE vs. Andaman Timber Industries 2015 (10) TMI 442 - SUPREME COURT and cannot be the basis to disallow the claim and without finding fault with the evidences furnished by the assessee. It is noted that the facts of the case of the assessee are identical with the facts in the above case wherein the co-ordinate bench of the Tribunal has deleted the addition in the case of Acchyalal Shaw 2009 (1) TMI 303 - ITAT CALCUTTA-B in respect of sale of shares of M/s QFSL. As inclined to set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital on sale of shares of M/s QFSL and also the commission expenses as bogus and delete the consequential additions. Therefore, the appeal of assessee is allowed. Addition on account of commission payment for earning the LTCG u/s. 69C - HELD THAT - Since, we have allowed the assessee s claim of LTCG, the consequential expenses incurred by the assessee in this regard is also allowed.
Issues Involved:
1. Confirmation of the addition of ?16,19,881/- made by the AO under Section 68 of the Income-tax Act, 1961. 2. Confirmation of the addition of ?80,994/- on account of payment of commission. Issue-wise Detailed Analysis: 1. Confirmation of the Addition of ?16,19,881/- under Section 68 of the Income-tax Act, 1961: The assessee claimed long-term capital gains (LTCG) of ?16,19,881/- from the sale of shares of Quest Financial Services Ltd. (QFSL), which was treated as unexplained cash credit by the AO under Section 68 of the Income-tax Act, 1961. The AO's decision was based on the suspicion that the transactions were part of a "Bogus LTCG" scheme uncovered by the Investigation Wing of the Department. The AO relied on the investigation report and statements from third parties, including Prakash Jajodia, who admitted to providing accommodation entries for bogus LTCG through QFSL. The assessee argued that all relevant documents, such as purchase bills, sale bills, bank statements, contract notes, demat statements, and share broker ledgers, were provided to substantiate the genuineness of the transactions. The AO, however, disregarded these documents and relied on third-party statements, which were not provided to the assessee for cross-examination, rendering the reliance on these statements legally untenable as per the Supreme Court's ruling in CCE vs. Andaman Timber Industries. The Tribunal noted that the assessee had discharged the onus of proving the genuineness of the transactions by providing substantial documentary evidence. The Tribunal also referenced a similar case (Acchyalal Shaw Vs. ITO) where the LTCG claim was upheld. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition of ?16,19,881/-. 2. Confirmation of the Addition of ?80,994/- on Account of Payment of Commission: Since the Tribunal allowed the assessee's claim of LTCG, the related commission expenses of ?80,994/- incurred for earning the LTCG were also allowed. The Tribunal directed the AO to delete the addition of ?80,994/- as well. Separate Judgments Delivered by Judges: The judgment was delivered by a single judge, and no separate judgments were mentioned. Conclusion: The Tribunal allowed the appeal of the assessee, setting aside the order of the CIT(A) and directing the AO to delete the additions of ?16,19,881/- and ?80,994/-. The Tribunal emphasized the importance of providing the assessee with an opportunity to cross-examine third-party statements and upheld the documentary evidence provided by the assessee as sufficient to substantiate the genuineness of the transactions.
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