2023 (4) TMI 387 - AT - Income Tax

Bogus LTCG - Addition u/s 68 - AO disallowing the claim of exemption for LTCG and further addition @ 5% of the LTCG as unaccounted commission expenses - HELD THAT - Since the Tribunal has already set aside the case of Hazel Mercantile Ltd. ( 2023 (1) TMI 1216 - ITAT MUMBAI ) to Ld. CIT(A) to decide afresh, on the basis of which addition made in this case was deleted, the present appeal and cross objections are required to be decided by the Ld. CIT(A) afresh in view of the findings returned by the co-ordinate Bench of the Tribunal in Hazel Mercantile Ltd. (supra).Resultantly, the present appeal filed by the Revenue and the cross objections filed by the assessee are allowed for statistical purposes.

Summary

Issues Involved:
The judgment involves issues related to additions made by the Assessing Officer under section 143(3) of the Income Tax Act, 1961, based on a search and seizure operation under section 132 of the Act, concerning accommodation entries in the form of bogus Long Term Capital Gains (LTCG) and unaccounted commission expenses. The appeal and cross objections sought to set aside the impugned order passed by the Commissioner of Income Tax (Appeals) on various grounds.

Revenue's Grounds of Appeal:
The Revenue challenged the deletion of additions related to accommodation entries obtained as bogus LTCG and unaccounted commission expenses. They contended that the CIT(A) erred in not rectifying the mistake of restricting the addition to only 5% of alleged accommodation entries, and in not providing an opportunity for verification of submissions made by the assessee. The Revenue also questioned the CIT(A)'s decision on protective additions and the final income earned by the assessee.

Assessee's Grounds of Appeal:
The assessee disputed the additions made by the Assessing Officer under section 143(3) of the Act, particularly concerning the disallowance of exempt LTCG and the treatment of LTCG as non-genuine under section 68 of the Act. They also raised issues regarding the lack of opportunity for cross-examination of third parties and the retraction of statements relied upon by the AO.

Summary of Judgment:
The ITAT Mumbai, comprising Shri Kuldip Singh and Shri Om Prakash Kant, heard the appeals and cross objections. The Tribunal considered the impugned order passed by the CIT(A) and the facts related to the assessment of LTCG and unaccounted commission expenses. The CIT(A) partly allowed the assessee's appeal, leading both the Revenue and the assessee to approach the Tribunal.

Decision and Rationale:
The Tribunal reviewed the CIT(A)'s decision to delete the additions made by the AO concerning LTCG and unaccounted commission expenses. The Tribunal noted similarities with another case involving Hazel Mercantile Ltd., where the additions were upheld. However, since the case of Hazel Mercantile Ltd. had been remitted back to the CIT(A) for a fresh decision, the Tribunal decided to set aside the present appeal and cross objections for a fresh determination by the CIT(A) in light of the findings in the Hazel Mercantile Ltd. case.

Conclusion:
The Tribunal allowed the present appeal filed by the Revenue and the cross objections filed by the assessee for statistical purposes, directing a fresh decision by the CIT(A) in line with the Tribunal's findings in the Hazel Mercantile Ltd. case. The order was pronounced in open court on 31.03.2023.