2014 (12) TMI 1305 - AT - Income Tax

Addition u/s 68 - transaction of shares - Held that - There is complete absence of such material according to which it can be said that assessee infact had made investment in the purchase of shares. The books of accounts maintained by M/s Alliance Intermediaries and Network Private Limited would have been proper evidence to come to such conclusion that whether or not any investment is made by the assessee in the purchase of shares which is not done by the AO. The addition cannot be upheld on the basis of presumptions and assumptions when the assessee has discharged primary onus by submitting all the details. Without bringing any material on record to suggest the transaction made by the assessee with M/s Alliance Intermediaries and Network Private Limited are bogus the addition could not be sustained in the hands of the assessee. One of the solution can be that matter may be restored back to the file of the AO for proper examination of the case but that would amount to give second inning to the revenue. Before confirming the addition CIT(A) also could made further enquiries as he is vested with these powers so that addition could be sustained on the proper basis. But learned CIT(A) did not do so. Keeping in view all these facts and also the fact that matters in the present cases are very small that addition in the present case has wrongly been sustained by learned CIT(A) for which there is no basis except assumption and presumptions. The additions sustained by learned CIT(A) is deleted in both the cases and the appeals filed by the assessee are allowed.

Summary

Issues involved:
1. Upholding the action of the Assessing Officer in issuing notice under section 148 of the Income-tax Act and framing the impugned order.
2. Treating certain amounts as unexplained investments under section 69 of the Act.

Detailed analysis:
1. The judgment involved two appeals filed by separate assessees against orders passed by the CIT(A) upholding the action of the Assessing Officer in issuing notice under section 148 of the Income-tax Act. The grounds of appeal in both cases were identical, except for differences in figures. The Assessing Officer had issued notices under section 148 and treated specific amounts as unexplained investments under section 69 of the Act. The CIT(A) upheld these actions, leading to the appeals before the tribunal.

2. In the first case, the assessee had shown a capital gain on the sale of shares, supported by relevant documents. However, the Assessing Officer added the purchase amount and profit earned as income of the assessee under section 69. The CIT(A) confirmed these additions based on discrepancies in the timing of transactions and doubts regarding the genuineness of the share purchase. Similarly, in the second case, additions were made concerning the purchase of shares and short-term capital gains. The tribunal considered the arguments presented by both parties. The assessee contended that no investment was made for the purchase of shares and that all transactions were supported by documentary evidence. The revenue argued that based on information about the broker's activities, the additions were justified. However, the tribunal found that there was no concrete evidence to prove that the assessee had made any investment in the purchase of shares. The tribunal noted that the Assessing Officer did not conduct proper inquiries and relied on irrelevant information from stock exchanges. Ultimately, the tribunal concluded that the additions made by the Assessing Officer and upheld by the CIT(A) lacked a factual basis and were based on assumptions. Therefore, the tribunal allowed the appeals and deleted the additions made by the revenue authorities.

In conclusion, the tribunal ruled in favor of the assessees, highlighting the importance of concrete evidence and proper inquiries in tax assessments to avoid unjustified additions based on assumptions.