2023 (6) TMI 569 - AT - Income Tax

Unexplained investment in the shares - Investment was made in shares out of Appellant Salary Income which was earned out of India - CIT(Appeals) dismissed the appeal of the assessee as assessee has not shown that purchase of shares were out of his income earned outside of India and further declined to send the additional evidence filed by the assessee, with respect to purchase and sale of shares on the ICICI direct platform, to AO u/r 46A on the ground that this may not serve any fruitful purpose. HELD THAT - As during the course of appellate proceedings before Ld. CIT(Appeals), the assessee had sought to file details/statement of ICICI Direct regarding loss on sale of shares on ICICI Direct platform. However, the same was not admitted and referred to the file of AO for his observations. CIT(Appeals) has erred in facts and law in not allowing opportunity of assessee to place on record the relevant facts/information in support of its case. Counsel has also filed certificate from Punj Lloyd to the effect that the assessee was working as General Manager, Malaysia with the aforesaid concern during the period under consideration, and accordingly, the source of investment in the shares of Infosys Tech was duly explained. No addition is called for - Decided in favour of assessee.

Summary

Issues:
The appeal filed by the assessee against the order passed by the Ld. CIT(Appeals) for Assessment Year 2012-13. The appeal was time-barred by 405 days due to the Covid pandemic, but the delay was condoned.

Grounds of Appeal:
The appellant, an NRI, contested the assessment order determining total Assessed Income without appreciating the facts. The appellant submitted documents related to NRI status, sources of income, and investment in shares, which were not considered by the AO. The appellant argued for the consideration of Capital Loss instead of Capital Gain on the entire receipt.

Merits of the Case:
The assessing officer observed unexplained investments in shares and determined total income. In appeal, the assessee claimed short-term capital loss on sale of shares, supported by statements from ICICI direct. The Ld. CIT(Appeals) dismissed the appeal, stating lack of evidence on the source of funds for share purchases and failure to prove income earned outside India. The Ld. CIT(Appeals) confirmed the addition of income.

Appellate Tribunal Decision:
The tribunal found that the Ld. CIT(Appeals) erred in not allowing the assessee to submit relevant facts and information. The tribunal considered the certificate from the employer explaining the source of investment in shares. Consequently, the tribunal set aside the Ld. CIT(Appeals) order and allowed the appeal of the assessee.

Conclusion:
The appeal was allowed by the Appellate Tribunal, emphasizing the importance of providing opportunities to present relevant information and accepting explanations for sources of investment. The tribunal's decision highlighted the need for a thorough consideration of all submitted documents and evidence in tax assessment proceedings.