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2022 (1) TMI 91 - AT - Income TaxAssessment u/s 153A - beneficiary of bogus LTCG - Addition u/s 68 - onus to prove - HELD THAT - Upon perusal of all the documents, it is quite discernible that the assessee had furnished all the requisite documentary evidences to substantiate the transactions and discharged the primary onus as required under law to establish the genuineness of the gains so earned during the year. No defect has been pointed out by the revenue in documentary evidences furnished by the assessee. Therefore, the onus had, thus, shifted on revenue to disprove assessee s claim and establish with cogent evidences that the transactions were non-genuine transactions through which assessee s unaccounted money has flown back to assessee in the garb of bogus capital gains. We find that except for general findings of investigation wing and third-party statements on the basis of which it has been alleged that the scrip of Unisys was penny stock, there is nothing in the kitty of the revenue to prove the assessee s involvement in manipulating the prices of the scrip. No exchange of cash between the assessee and the various exit providers could be proved. Therefore, the onus as casted upon revenue to dislodge the assessee s claim, remain un-discharged. The proposition that additions made purely on the basis of suspicious, conjectures or surmises could not be sustained in the eyes of law stem from the decision in Omar Salay Mohamed Sait 1959 (3) TMI 2 - SUPREME COURT wherein it was held that the suspicion however strong could not partake the character of legal evidence as held in Umacharan Shaw Bros. 1959 (5) TMI 11 - SUPREME COURT . The additions made on mere presumptions could not be sustained and there must be something more than mere suspicion to support the assessment as per the decision in Dhakeshwari Cotton Mills Ltd. 1954 (10) TMI 12 - SUPREME COURT . The assessment should not be based merely on suspicion or guess work but on legitimate material from which reasonable inference of income could have been drawn. Addition u/s 68, in our considered opinion, is not sustainable in view of the fact that credit in assessee s bank account represents sale proceeds of shares sold in recognized stock exchange through registered stock broker. The sale transactions have taken place through recognized stock exchange and the money was received in settlement through banking channels. The assessee had delivered the shares from his demat account to the broker, who, in turn, paid sale consideration to the assessee. In such a case, there could be no doubt as to fulfillment of primary ingredients of Sec.68 viz. identity of the payer, their creditworthiness and the genuineness of the transactions. The source of credit received in the bank account could not be held to be unexplained unless it was established that assessee s own money was routed in his bank account in the garb of Capital gains. The whole basis of making additions is third-party statement and no opportunity of cross-examination has been provided to the assessee to confront these parties. As against this, the assessee s position that that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. Hence, going by the factual matrix and respectfully following the binding judicial precedents as enumerated in the order, the additions made by Ld. AO and confirmed by Ld. CIT(A), are not sustainable in the eyes of law. Therefore, we are inclined to delete the same. We order so. Consequentially, the addition of estimated commission also stands deleted. Resultantly, the appeal, on merits, stand allowed. Assessment u/s 153A - As we find that subsequent to framing of assessment u/s 143(3) r.w.s. 153A, Ld. AO came into possession of tangible material in the shape of investigation wing report which indicated possible escapement of income in the hands of the assessee. In our opinion, at this stage, nothing more was required to reopen the case of the assessee. Therefore, we concur with the findings of Ld.CIT(A) as given in the impugned order, in this regard. The legal ground, thus raised, stand dismissed.
Issues Involved:
1. Reopening of assessment. 2. Additions under sections 68 and 69C. 3. Non-application of mind by the CIT(A) and failure to consider judicial pronouncements. Detailed Analysis: I. Reopening of Assessment: 1. The assessee contended that the reopening of the assessment was invalid as it was based on a change of opinion, without any fresh, tangible material. The original assessment had already considered the transactions in shares. 2. The CIT(A) upheld the reopening, stating that the information received from the Kolkata Investigation Wing was credible and actionable, justifying the invocation of Section 147. 3. The Tribunal agreed with the CIT(A), noting that the AO had tangible material indicating possible income escapement, which was sufficient to reopen the case. II. Additions Under Sections 68 and 69C: 1. The AO added the gains from the sale of shares as unexplained cash credit under Section 68 and an estimated commission under Section 69C, based on the investigation wing's report alleging the transactions were bogus. 2. The assessee argued that the transactions were genuine, supported by documentary evidence such as contract notes, bank statements, DEMAT account statements, and balance sheets. The transactions were conducted through recognized stock exchanges and were subject to Securities Transaction Tax (STT). 3. The CIT(A) upheld the AO's additions, relying on the investigation findings and statements of entry operators, which indicated that the scrip of Unisys was manipulated. 4. The Tribunal found that the assessee had provided sufficient documentary evidence to substantiate the transactions and discharged the primary onus of proving the genuineness of the gains. The revenue failed to disprove the assessee's claim with cogent evidence. 5. The Tribunal noted that the adverse statements used against the assessee were not corroborated with any specific evidence linking the assessee to the alleged bogus transactions. The failure to provide the assessee an opportunity to cross-examine the witnesses further weakened the revenue's case. 6. The Tribunal emphasized that additions could not be made based on suspicion, conjectures, or surmises, and the assessee's documentation was sufficient to establish the genuineness of the transactions. 7. Consequently, the Tribunal deleted the additions made under Sections 68 and 69C, including the estimated commission. III. Non-application of Mind by CIT(A) and Failure to Consider Judicial Pronouncements: 1. The assessee argued that the CIT(A) failed to consider various judicial pronouncements that supported the assessee's case. 2. The Tribunal noted that the CIT(A) had considered the investigation wing's findings but did not adequately address the judicial precedents cited by the assessee. 3. The Tribunal, after considering the relevant judicial precedents, found that the additions were not sustainable in the eyes of law. Conclusion: The Tribunal partly allowed the appeals, deleting the additions made under Sections 68 and 69C for both assessment years. The reopening of the assessment was upheld, but the merits of the additions were found to be unsustainable. The appeals were disposed of accordingly.
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