2013 (7) TMI 39 - AT - Income Tax

Addition of unexplained income CIT deleted addition Held that - As assessee declared short term capital gain/loss in respect of various scripts and PMS Schemes it clearly establishes that transaction was for sale of shares Transaction fully reflected in computation of income CIT rightly deleted addition Appeal dismissed.

Summary

Issues:
1. Addition of Rs.11,07,707 made by Assessing Officer on account of unexplained investment.
2. Justification for allowing the appeal of the assessee due to unexplained source of investment share.

Analysis:
1. The appeal filed by the revenue challenged the order of Ld CIT(A) deleting the addition of Rs.11,07,707 made by the Assessing Officer. The Assessing Officer observed a share transaction not disclosed by the assessee and made the addition based on AIR information. The assessee's reply was deemed unsatisfactory, leading to the addition of the amount as investment from undisclosed sources. The Ld CIT(A) deleted the addition after considering submissions and finding that the transaction was not unexplained investment but a difference in profit or loss from transactions with a portfolio manager. The Ld CIT(A) highlighted the failure of the Assessing Officer to provide transaction details requested by the appellant, leading to the deletion of the addition.

2. The revenue appealed the decision, arguing that exact transaction details were not provided, justifying the Assessing Officer's addition. The appellant contended that the amount in question was not an investment but comprised various amounts related to share transactions. The appellant presented detailed breakups and comparisons of transactions to demonstrate that all sales and purchases were disclosed in the computation of income, refuting any investment from undisclosed sources. The ITAT analyzed the computation of short-term capital gain, scripts-wise differences in sales and purchases, and explanations regarding specific transactions. The ITAT found that the transaction details were fully reflected in the income computation, supporting the Ld CIT(A)'s decision to delete the addition. Ultimately, the ITAT dismissed the revenue's appeal, upholding the decision of the Ld CIT(A).

This detailed analysis covers the issues raised in the legal judgment comprehensively, outlining the arguments presented by both parties and the rationale behind the decisions made by the authorities involved.