2021 (6) TMI 397 - AT - Income Tax

Bogus LTCG - unexplained cash credit u/s.68 - HELD THAT - Both the parties before us stated that both the issues in dispute in original grounds as well as in additional grounds are already covered in the decision of this Tribunal in the case of sister concerns of the Jajoo Enterprises Ltd. 2020 (11) TMI 646 - ITAT MUMBAI wherein in respect of same fact of the receipt of share application money from companies allegedly belonging to Shri Shirish Chandrakant Shah, this Tribunal had remitted the issue to the file of the ld. AO. Thus the grounds raised by the assessee for both the years are remitted to the file of the ld. AO to decide the same in the light of the aforesaid decision of this Tribunal. Appeals of the assessee are allowed for statistical purposes.

Summary

Issues involved:
Appeal against addition of share application money as non-genuine for A.Y. 2011-12 and 2012-13. Additional grounds raised regarding breach of natural justice in treating share application money as unexplained cash credit. Admissibility of additional evidence under Rule 29 of ITAT Rules.

Detailed Analysis:
1. Addition of Share Application Money for A.Y. 2011-12 and 2012-13:
The appellant contested the addition of share application money as non-genuine by the ld. D.C.I.T, holding it as unexplained cash credit under section 68 of the Income Tax Act. The ld. AO based this decision on statements from third parties, particularly Shri Shirish Chandrakant Shah, who was involved in providing accommodation entries. Despite the appellant providing substantial documentary evidence to validate the receipt of share application money, the ld. AO disregarded it solely based on Shri Shah's statement. This action was upheld by the ld. CIT(A) for both assessment years.

2. Breach of Natural Justice and Additional Evidence:
The appellant raised additional grounds asserting a breach of natural justice as the ld. AO relied on third-party statements without providing an opportunity for cross-examination. The appellant submitted an affidavit from Shri Shah as additional evidence under Rule 29 of ITAT Rules. The Tribunal deemed these additional grounds and evidence crucial, admitting them for adjudication as they were fundamental to the case and did not require further factual verification.

3. Remittance of Issues to AO:
Both parties referenced a prior Tribunal decision involving similar facts, where the issue was remitted to the AO for further examination regarding the genuineness of the transaction, identity of the payer, and creditworthiness. Following this precedent and with mutual consent, the Tribunal remitted the present grounds to the AO for reevaluation in light of the previous decision. The Tribunal directed the AO to issue necessary notices, examine documents thoroughly, and pass a reasoned order after due consideration, granting the appellant an opportunity to present relevant documents.

In conclusion, the Tribunal allowed the appeals for statistical purposes, remitting the issues to the AO for a fresh decision based on the principles of natural justice and the Tribunal's previous directive, emphasizing the importance of verifying the genuineness of transactions and ensuring due process in assessments.