2023 (12) TMI 404 - AT - Income Tax

Additions u/s 68 - bogus STCG - assessee has sold share within 12 days and earned short term capital gain. Financial result of transaction indicate that rise in price was a result of rigging - HELD THAT - In the present case, the assessee has shown sufficient evidence about the purchase and sale of scrip of M/s Splash Media Infra Ltd.. No adverse material against such evidence was brought on record. No investigation was carried out by the Assessing officer. Assessee by furnishing complete details of their share transaction, has discharged primary onus upon them. As decided in Ranchhod Jivabhai Nakhava 2012 (5) TMI 186 - GUJARAT HIGH COURT that once the assessee has discharged its primary onus, the onus shift upon the revenue to carry out further investigation to disprove the evidence of assessee. We find that in the present case, the Assessing Officer failed to carry out any investigation or brought any adverse material against the assessee. There is no dispute that the assessee made purchases of impugned shares through well-known stock broker Reliance Securities Limited. The transaction was carried out through Bombay Stock Exchange, therefore, find no justification to tax such short term capital gain as unexplained cash credit without bringing any adverse evidence on record. Accordingly, direct to delete the addition made by the Assessing Officer and confirmed by the ld. CIT(A). Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Legitimacy of short-term capital gains treated as unexplained cash credit.
3. Validity of reopening the assessment.

Summary of Judgment:

Condonation of Delay in Filing the Appeal:
The appeal was filed with a delay of 37 days. The assessee argued that the delay was due to the Chartered Accountant's failure to inform them about the outcome. The Tribunal condoned the delay, adopting a pragmatic approach, emphasizing that the delay was neither intentional nor deliberate and citing precedents from the Hon'ble Karnataka High Court and the Hon'ble Jurisdictional High Court.

Legitimacy of Short-Term Capital Gains:
The core issue was whether the short-term capital gain of Rs. 3,43,200/- from the sale of shares of M/s Splash Media & Infra Ltd. was genuine or should be treated as unexplained cash credit under Section 68 of the Income Tax Act. The Assessing Officer (AO) had treated the gains as unexplained, citing information from the Investigation Wing that the company was involved in providing bogus entries. The assessee provided substantial evidence, including contract notes, payment of Share Transaction Tax (STT), and bank statements, to prove the genuineness of the transactions. The Tribunal found that the AO made the addition solely based on third-party information without investigating the evidence provided by the assessee. The Tribunal held that the assessee had discharged the primary onus of proving the genuineness of the transactions and that the AO failed to bring any adverse material on record. Consequently, the addition made by the AO was deleted.

Validity of Reopening the Assessment:
The assessee did not challenge the reopening of the assessment under Section 147 or the validity of the notice under Section 148 before the Commissioner of Income Tax (Appeals) [CIT(A)], and thus, this issue attained finality.

Conclusion:
The Tribunal allowed the appeal, directing the deletion of the addition made by the AO, and confirmed by the CIT(A), treating the short-term capital gain as unexplained cash credit. The order was announced in open court on 29th November 2023.