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2021 (7) TMI 511 - AT - Income TaxBogus LTCG - Unexplained cash credit u/s 68 - penny stock purchases - during hearing, a clarification was sought by the bench as to the outcome of the investigations carried out by SEBI in the case of this scrip - HELD THAT - The bench deem it fit to set-aside the findings of Ld. CIT(A) and restore the matter back to the file of Ld. CIT(A) for fresh adjudication after affording due opportunity of hearing to the assessee. CIT(A) is directed to reconsider the factual matrix in terms of the cited decision of the co-ordinate bench of this Tribunal as relied upon by Ld. AR as well as also consider the events arising out of orders passed by SEBI in case of this scrip. All the issues are kept open. The grounds thus raised stands allowed for statistical purposes.
Issues:
1. Addition under Section 68 of the Income Tax Act, 1961 2. Addition under Section 69C of the Income Tax Act, 1961 3. Calculation of Gross Tax in income computation form 4. Rejection of claim of income exempt under section 10(38) of the Act Analysis: Issue 1: Addition under Section 68 of the Income Tax Act, 1961 The assessee contested the addition of ?2,36,02,476 under Section 68 of the Income Tax Act, 1961, related to the sale proceeds of certain shares. The Assessing Officer (AO) concluded that the long-term capital gains (LTCG) earned by the assessee were arranged and added them as unexplained cash credit. The assessee denied the allegations, providing purchase & sale notes, demat account statement, and other documents. However, the AO rejected the submissions, citing lack of proof for the rise in share prices. The Appellate Tribunal set aside the findings of the CIT(A) and directed a fresh adjudication, considering a similar case law and SEBI investigation outcomes. Issue 2: Addition under Section 69C of the Income Tax Act, 1961 Additionally, an estimated expenditure of ?7,08,074 was added under Section 69C, representing 3% of the alleged expenditure paid by the assessee in procuring bogus long-term capital gains. The Tribunal's decision to reassess this addition was part of the overall direction to reconsider all issues in light of relevant case law and SEBI investigation findings. Issue 3: Calculation of Gross Tax in income computation form The assessee challenged the calculation of Gross Tax in the income computation form, stating a discrepancy of ?48,594. The Tribunal directed the lower authorities to apply the correct tax rates to the income finally computed, as applicable, addressing this issue for statistical purposes. Issue 4: Rejection of claim of income exempt under section 10(38) of the Act The CIT(A) upheld the rejection of the claim of income exempt under section 10(38) of the Act, citing the abnormal increase in share prices without commercial justification. The Tribunal's decision to remand the matter back to the CIT(A) for fresh adjudication included reconsideration of this issue in light of relevant judicial pronouncements and SEBI investigation outcomes. In conclusion, the Appellate Tribunal's judgment involved a detailed analysis of various issues concerning additions under different sections of the Income Tax Act, discrepancies in tax calculations, and the rejection of income exemption claims. The decision emphasized the need for a fresh adjudication considering relevant legal precedents and SEBI investigation findings, ultimately directing the lower authorities to reevaluate the case comprehensively.
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