2021 (12) TMI 1211 - AT - Income Tax

Bogus LTCG - undisclosed income u/s. 69 - HELD THAT - The factual contentions of the assessee, vis- -vis the addition made on account of alleged bogus Long Term Capital Gain pertaining to the investment made in the securities therein as detailed in the reasons recorded for reopening the case of the assessee as reproduced was never considered either by the A.O. or the Ld. CIT(A). This despite the fact that the assessee had filed all documents before them in support of its contention that it had never claimed any Long Term Capital Gain or for that matter the impugned investment did not relate to it at all. We are of the view that the issue needs to be reconsidered and decided in the light of the factual contentions made by the assessee after duly verifying the same. The issue is therefore restored back to the A.O. to consider both the factual contentions of the assessee as stated above regarding no claim of any Long Term Capital Gain made by it nor any such investment ,as stated in the reasons recorded ,being made. The A.O. is directed to verify the claim of the assessee and thereafter adjudicate the issue in accordance with law. . Appeal of the assessee is therefore allowed for statistical purpose.

Summary

Issues:
Appeal against addition of income from Long Term Capital Gains in reassessment proceedings for A.Y. 2009-10.

Analysis:
The appeal was filed against an order by the Commissioner of Income Tax (Appeals) confirming the addition of income from Long Term Capital Gains made by the Assessing Officer. The Assessee contended that the alleged Long Term Capital Gain claimed was bogus and not earned, emphasizing that the investments mentioned in the reasons for reopening the case did not belong to the Assessee. The Assessee consistently denied making any such investments or claiming Long Term Capital Gain. The reasons for reopening the case highlighted alleged bogus claims of Long Term Capital Gains made by the Assessee. The Assessee's responses to the notice and submissions before the CIT(A) reiterated the absence of any such investments or gains. The Assessing Officer, however, added the amount as undisclosed income without addressing the Assessee's contentions.

The Assessing Officer based the addition solely on information gathered from various agencies, indicating transactions through the Assessee's Demat account. The Assessing Officer concluded that the Assessee had invested from undisclosed sources, matching information received from the Principal Director of Income Tax. The CIT(A) upheld the addition without addressing the Assessee's denial of the Long Term Capital Gain claim. The Assessee provided evidence from their account in Motilal Oswal Securities Ltd. to show that the impugned transactions were not recorded. The Department failed to counter the Assessee's contentions.

The Tribunal found that the factual contentions of the Assessee were not considered by the Assessing Officer or the CIT(A), despite the Assessee providing supporting documents to prove the absence of claimed Long Term Capital Gain or related investments. The Tribunal concluded that the issue needed reconsideration based on the Assessee's contentions and directed the Assessing Officer to verify the claims and decide accordingly, granting the Assessee a hearing opportunity. Consequently, the appeal of the Assessee was allowed for statistical purposes, and the issue was remanded back to the Assessing Officer for a fresh decision.

In summary, the Tribunal's decision emphasized the importance of considering the Assessee's factual contentions regarding the alleged Long Term Capital Gain addition, directing a reevaluation by the Assessing Officer with proper verification and opportunity for the Assessee to present their case.