2016 (7) TMI 371 - AT - Income Tax

Reopening of assessment - undisclosed sale consideration received on the sale of shares - Held that - In the present case, the D-mat account which evidences the sale of shares does justify an inference that the assessee was indeed in possession of the shares of M/s. Essar Oil Ltd. prior to its sale. There is no material on record to suggest that the sale consideration received by the assessee in question is on account of any transaction other than the sale of shares of M/s. Essar Oil Ltd. Thus under these circumstances the onus was entirely on the Assessing Officer to establish that the purchase and sale of the shares of M/s. Essar Oil Ltd. was bogus. There is no clinching material to say that the impugned transaction was bogus. Though a reference has been made to the investigation in the case of Shri Mukesh Chokshi, but no effort has been made by the AO to demonstrate that qua the instant transaction of the assessee, any infirmity has been confessed by Shri Mukesh Chokshi. Be that as it may, assessee has been consistently canvassing before the lower authorities that the statement of Shri Mukesh Chokshi be confronted to him. Find nothing on record to suggest that any specific statement Shri Mukesh Chokshi has been confronted to the assessee. Another addition made by the Assessing Officer which is stated to have been the purchase amount of another scrip of M/s. Kiri Dyes and Mahar Poly find no material to suggest that any such transaction has been undertaken by the assessee. Therefore there is no justification to sustain the addition - Decided in favour of assessee

Issues Involved:
1. Addition of income from undisclosed sources
2. Addition of purchase amount of shares of M/s. Kiri Dyes and Mahar Poly
3. Addition of commission payable on accommodation entries

Issue 1: Addition of income from undisclosed sources

The appeal pertains to an addition of &8377; 8,80,332/- as income from undisclosed sources by the income tax authorities. The Assessing Officer reopened the assessment based on information received from a search and seizure action in the case of a broking concern from whom the assessee claimed to have purchased shares. The authorities held that there was no real purchase and sale of shares, adding the entire sale consideration to the returned income. The assessee contended that the purchase and sale of shares were genuine, supported by documents such as contract notes, bank statements, and D-mat account statements. The Tribunal observed that the sale consideration was received through banking channels and the sale of shares was evidenced in the D-mat account. It was noted that the Assessing Officer failed to establish that the purchase and sale of shares were bogus, leading to the deletion of the addition.

Issue 2: Addition of purchase amount of shares of M/s. Kiri Dyes and Mahar Poly

Another addition of &8377; 2,10,998/- was made by the Assessing Officer for the purchase amount of shares of M/s. Kiri Dyes and Mahar Poly. The assessee denied purchasing any such shares, supported by the absence of transactions in the D-mat statement. The Tribunal found no evidence to support the transaction and directed the deletion of the addition.

Issue 3: Addition of commission payable on accommodation entries

The Assessing Officer added &8377; 21,826/- as commission payable on accommodation entries related to the purchase and sale of shares. Since the additions on account of purchase and sale of shares were deleted, the Tribunal ruled that the commission addition did not survive and directed its deletion.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the additions made by the Assessing Officer. The judgment emphasized the importance of establishing the genuineness of transactions and the burden of proof on the tax authorities to demonstrate any alleged discrepancies.

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