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2025 (2) TMI 818 - AT - Income TaxAddition u/s 68 - booking accommodation entry of bogus LTCG/STCG in the garb of sale proceeds on sale of shares - assessee failed to discharge the burden cast upon him to prove the LTCG claim and taking note that the SEBI had suspended the sale of this scrip - CIT HELD THAT - As in assessee s own case in the previous assessment year hon ble Bench has affirmed the decision of the CIT(A) taking into account the contents of the assessment order the investigation report the findings of the appellate order and a catena of judicial decisions involving the same penny stock wherein similar additions made by resorting to section 68 of the Act have been deleted on the ground that the assessee s discharged the primary onus. No reason for drawing any divergent view of the matter and in the light of the doctrine of judicial discipline requiring that benches of judicial and quasi-judicial bodies operate on principles of consistency continuity and certainty hold that the addition was rightly deleted by the ld.CIT(A). Addition u/s 69C - unexplained commission expenditure - AO alleged that the assessee might have incurred unaccounted expenditure on account of payment of commission to the entry operators and accommodation entry providers alleging them to have assisted him to claim bogus Short Term Capital Gain - HELD THAT - As this ground of appeal is consequential to the main ground of the appeal regarding addition u/s 68 of the Act in respect of exempt LTCG claim. Since ground relating to the addition made u/s 68 of the Act has already been decided in favour of the assessee this ground is also dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Deletion of Addition under Section 68 Legal Framework and Precedents: Section 68 of the Income Tax Act pertains to unexplained cash credits. The burden is on the assessee to prove the genuineness of the transactions. The CIT(A) relied on multiple judicial precedents where similar additions were deleted, including decisions from the jurisdictional ITAT and other tribunals. Court's Interpretation and Reasoning: The Tribunal noted that the assessee had provided substantial documentary evidence, including share application forms, allotment letters, bank statements, and demat account statements, to substantiate the LTCG claim. The CIT(A) found these documents credible and consistent with market practices. Key Evidence and Findings: The assessee had purchased shares of M/s. Shree Shaleen Textile Limited (STL) through preferential allotment and sold them on the stock exchange. The AO's reliance on a generalized investigation report without specific evidence against the assessee was deemed insufficient. Application of Law to Facts: The Tribunal emphasized that the AO failed to establish a direct link between the assessee and any alleged price manipulation or bogus transactions. The documentary evidence provided by the assessee was not refuted by the AO. Treatment of Competing Arguments: The Tribunal considered the AO's argument regarding the alleged involvement in price manipulation but found it lacking in specific evidence against the assessee. The Tribunal upheld the CIT(A)'s decision to delete the addition. Conclusions: The Tribunal affirmed the CIT(A)'s decision, concluding that the assessee had discharged the burden of proof regarding the genuineness of the LTCG claim. 2. Deletion of Addition under Section 69C Legal Framework and Precedents: Section 69C pertains to unexplained expenditure. The AO alleged that the assessee incurred unaccounted expenditure as commission to entry operators. Court's Interpretation and Reasoning: The Tribunal noted that this addition was consequential to the main issue under section 68. Since the primary addition was deleted, the consequential addition under section 69C was also dismissed. Key Evidence and Findings: The AO's allegation of commission expenditure was based on presumption rather than concrete evidence. Application of Law to Facts: The Tribunal found no evidence of actual commission payments by the assessee, and thus, the addition under section 69C was not sustainable. Treatment of Competing Arguments: The Tribunal dismissed the AO's presumption-based argument due to lack of evidence. Conclusions: The Tribunal upheld the CIT(A)'s decision to delete the addition under section 69C. SIGNIFICANT HOLDINGS The Tribunal's significant holdings include:
In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the additions under sections 68 and 69C of the Income Tax Act. The Tribunal's reasoning was grounded in the lack of specific evidence against the assessee and the robust documentary evidence provided by the assessee to substantiate the LTCG claim.
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