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2024 (6) TMI 818 - AT - Income TaxIssues Involved: 1. Addition of unexplained cash credit u/s 68. 2. Disallowance of trading loss in shares. 3. Validity of proceedings u/s 143(3) r.w.s. 147. 4. Disallowance of loss due to client code modification. 5. Disallowance of bad debts. Summary: 1. Addition of unexplained cash credit u/s 68: The assessee, a private limited company engaged in shares dealing/trading and investment, was subjected to a search operation revealing incriminating documents indicating accommodation entries provided by SCS. The AO treated a one-time entry of Rs. 12,29,45,000 as unexplained cash credit u/s 68, which was upheld by the CIT-A. The Tribunal noted that the sales consideration of Rs. 4,76,00,000 was already offered to tax, and treating it as unexplained cash credit would result in double addition, which is not permissible. Thus, the addition was deleted. Regarding the intercorporate deposits of Rs. 7,53,45,000, the Tribunal held that the genuineness of the transaction was proved as the loan was received and repaid through banking channels, following the Gujarat High Court's judgment in CIT Vs. Rohini Builders. Therefore, the addition was deleted. 2. Disallowance of trading loss in shares: The AO disallowed the loss of Rs. 9,73,389 in trading shares of M/s Ganesh Spinners Ltd, considering it bogus. The CIT-A upheld the disallowance. The Tribunal, referring to a similar case (Vicky Rajesh Jhaveri V/s ITO), noted that the assessee's transactions were genuine, conducted through stock exchanges and banking channels, and there was no evidence of manipulation. Thus, the disallowance was deleted. 3. Validity of proceedings u/s 143(3) r.w.s. 147: For AY 2010-11 and 2011-12, the assessee challenged the validity of proceedings u/s 143(3) r.w.s. 147 but did not press these grounds. Consequently, these grounds were dismissed as not pressed. 4. Disallowance of loss due to client code modification: For AY 2010-11, the AO disallowed the loss of Rs. 1,41,22,274 due to client code modification, suspecting it belonged to other parties. The Tribunal set aside the issue to the AO for verification to ensure the loss was not claimed by other parties. If not claimed by others, the loss should be allowed to the assessee. 5. Disallowance of bad debts: For AY 2014-15, the AO disallowed the bad debts of Rs. 1,49,00,200, stating they were not related to sales. The Tribunal found that the amount was offered as income in earlier years and written off in the books, following the Supreme Court's judgment in TRF Ltd vs. CIT. Therefore, the disallowance was deleted. Conclusion: The appeals were allowed in favor of the assessee for AY 2012-13, 2013-14, and 2014-15. For AY 2010-11 and 2011-12, the appeals were partly allowed for statistical purposes.
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