2022 (6) TMI 181 - AT - Income Tax

Unexplained investment - investment in shares - HELD THAT - On perusal of the bank statement furnished in the paper-book clearly reveals that out of Rs. 4 lakhs invested in shares of M/s. SSKS Estates Pvt. Ltd., an amount of Rs. 2 lakhs was invested on 09.04.2012 falling in financial year 2012-13 corresponding to assessment year 2013-14. Therefore, the said investment in shares of Rs. 2 lakhs cannot be taken as the investment of the assessee in the impugned assessment year. Thus, what remains is an amount of Rs. 3 lakhs. Out of the said 3 lakhs, admittedly, the assessee has invested an amount of Rs. 2 lakhs in shares of M/s. SSKS Estates Pvt. Ltd. From the materials placed before us, including the bank statement, it is very much clear that the sale proceeds received from sale of shares of M/s. GL Estates Pvt. Ltd. were invested in shares of M/s. SSKS Estates Pvt. Ltd. Therefore, the source of investment qua the shares of M/s. SSKS Estates Pvt. Ltd. stands explained. The balance investments of Rs. 1 lakh is stated to be out of past savings/drawings from the bank account. Considering the length of service of the assessee, it cannot be said that the assessee did not have the capacity to invest Rs. 1 lakh in shares. Thus, in our considered opinion, the source of investment in shares is properly explained. In view of the aforesaid, we delete the addition - Decided in favour of assessee.

Summary

Issues:
Appeal against order of Commissioner of Income Tax for assessment year 2012-13 - Addition of Rs. 9 lakhs towards unexplained investment.

Detailed Analysis:

1. Grounds 1, 2, 3 Dismissed:
The counsel for the assessee did not press ground nos. 1, 2, and 3, leading to their dismissal. Ground no. 6, being a general ground, was not adjudicated.

2. Common Issue of Unexplained Investment:
Grounds 4 and 5 raised the common issue of the addition of Rs. 9 lakhs towards unexplained investment. The Assessing Officer added this amount to the assessee's income as unexplained investment, as the source of the investment could not be furnished.

3. Assessee's Submission:
The counsel for the assessee argued that the actual investment in shares was Rs. 3 lakhs, not Rs. 9 lakhs as alleged. The shares in question were sold and the proceeds reinvested in other shares. The counsel provided evidence to support this claim, including bank statements and purchase details.

4. Department's Stand:
The Departmental Representative contended that the assessee's stand was contradictory and lacked supporting evidence. Due to the controversy over the actual investment amount, they suggested the issue be sent back to the Assessing Officer for verification.

5. Tribunal's Analysis and Decision:
Upon review, the Tribunal found discrepancies in the Assessing Officer's calculations. The actual investments were clarified through bank statements and transaction details. It was concluded that only Rs. 3 lakhs was invested in shares during the year, with the source of funds adequately explained. The addition of Rs. 9 lakhs was deemed unjustified and deleted.

6. Final Verdict:
Considering the assessee's service length and financial capacity, the Tribunal ruled in favor of the assessee, deleting the addition of Rs. 9 lakhs. The appeal was allowed, and the judgment was pronounced on 17th May, 2022.