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2025 (4) TMI 780 - AT - Income TaxAddition u/s 68 - bogus share transaction - Long Term Capital Gains (LTCG)/ Short Term Capital Loss (STCL) qua trading in the identified scrips - HELD THAT - Commissioner thoroughly examined the case of the Assessee and also taken into consideration the peculiar facts and circumstances that the Assessee has duly supported its transactions by filing the relevant documents such as copies of contract notes D-mat statement bank statements evidencing the transactions and prima-facie discharged onus cast upon him Commissioner also taken into consideration the fact that the Assessee has not claimed any LTCG/STCG but in fact purchases and sales have been shown part of profit and loss account meaning thereby the addition in our considered view on this aspect itself is un-sustainable. Therefore we are of the considered view that the Ld. Commissioner righty deleted the addition made by the AO. Appeal filed by the Revenue Department stands dismissed.
ISSUES PRESENTED and CONSIDERED
The primary legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Reopening of the Case under Section 147 Legal Framework and Precedents: Section 147 of the Income Tax Act allows for the reopening of an assessment if the AO has reason to believe that any income chargeable to tax has escaped assessment. The reopening must be based on tangible material and not merely on suspicion. Court's Interpretation and Reasoning: The Tribunal reviewed the decision of the Ld. Commissioner, who found the reopening of the case to be legally unsustainable. The Ld. Commissioner concluded that the AO did not provide sufficient justification for reopening, relying instead on presumptions without concrete evidence. Key Evidence and Findings: The Tribunal noted that the Ld. Commissioner had thoroughly evaluated the documents provided by the Assessee, including contract notes and bank statements, which supported the Assessee's position. Application of Law to Facts: The Tribunal agreed with the Ld. Commissioner that the AO's basis for reopening the case lacked substantive evidence, thus rendering the reopening invalid. Treatment of Competing Arguments: The Tribunal considered the Revenue's arguments but found them insufficient to counter the detailed findings of the Ld. Commissioner. Conclusions: The Tribunal upheld the Ld. Commissioner's decision that the reopening of the case was not justified. 2. Addition of Rs. 8,47,321/- as Unexplained Income Legal Framework and Precedents: Section 68 of the Income Tax Act deals with unexplained cash credits, allowing the AO to add such amounts to the income of the Assessee if they are not satisfactorily explained. Section 10(38) provides an exemption for LTCG from the sale of equity shares subject to certain conditions. Court's Interpretation and Reasoning: The Ld. Commissioner found that the AO's addition was based on the assumption of price rigging and manipulation without concrete evidence. The Tribunal noted that the Ld. Commissioner relied on precedents from the Hon'ble Delhi and Gujarat High Courts, emphasizing the need for substantive evidence over mere presumptions. Key Evidence and Findings: The Assessee had provided relevant documentation, including contract notes and bank statements, which the AO failed to effectively challenge. The Ld. Commissioner observed no evidence of cash trails or admission of rigging by brokers. Application of Law to Facts: The Tribunal found that the Assessee had adequately discharged the burden of proof by providing documentary evidence supporting the transactions. The absence of claims for LTCG/STCG in the profit and loss account further weakened the AO's position. Treatment of Competing Arguments: The Tribunal evaluated the Revenue's appeal but found that the Ld. Commissioner had already addressed and dismissed these points effectively. Conclusions: The Tribunal upheld the Ld. Commissioner's decision to delete the addition, agreeing that the AO's conclusions were not supported by evidence. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal emphasized, "The Ld. Commissioner righty deleted the addition made by the AO and thus order deleting the addition does not require any interference." Core Principles Established: The necessity for tangible evidence in reopening assessments and making additions under section 68 was reinforced. Mere presumptions and assumptions are insufficient bases for such actions. Final Determinations on Each Issue: The Tribunal dismissed the Revenue's appeal, affirming the Ld. Commissioner's decision to invalidate the reopening of the case and delete the addition of Rs. 8,47,321/- as unexplained income.
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