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2021 (10) TMI 792 - AT - Income TaxBogus LTCG - Violation of principles of natural justice - assessee was subjected to search u/s 132 - addition in the hands of assessee were not supplied to the assessee nor any opportunity was provided to cross verify the persons whose statement were utilized against the assessee - HELD THAT:- Nowhere in the assessment order any detail of alleged report of the Investigation wing is available nor copy of the same has been filed before us. It is also not proved that in which statement the name of assessee was taken by so-called brokers engaged in providing accommodation entry. There is also no whisper that whether the assessee was provided an opportunity to go through material gathered by the revenue authorities. Nor any opportunity seems to have been provided to cross examine those persons whose statements were used to make addition in the hands of assessee. There seems to be a clear violation of principles of natural justices and it is judicially settled that in case any addition is made in the hands of assessee on the basis of any material gathered behind the assessee in the form of documentary material or statement of any 3rd party then before making addition in the hands of assessee proper opportunity of cross examining and opportunity to reply to such material gathered behind the assessee is mandatory before taking any adverse view or making any addition in the hands of assessee - additions for the alleged bogus LTCG and unexplained expenditure are unjustified and liable to be deleted. Bogus LTCG - Whether no incriminating material pertaining to these additions were found during the course of search and the additions are based purely on the statement given during the course of search which was subsequently retracted? - HELD THAT:- No merit in the contention of ssessee that the alleged addition is purely based on the statement recorded during the course of search. Ld. AO has extensively dealt with the issue by referring to various material gathered before the search, though not specifically related to the assessee but related to such type of transaction carried out in some other cases and in the statement during the course of search assessee has clearly spelt out to have accepted the accommodation entry and further ld. AO made enquiries about the purchasers of the equity shares, their bank accounts and other details as mentioned in the assessment order. Therefore, since addition is not based purely on the statement recorded during the course of search, this legal issue raised in ground stands dismissed. Whether earning Long Term Capital Gain is genuine and condition of section 10(38) of the Act are fulfilled and the addition for commission payment is not based on any evidences? - From perusal of the above finding of the Coordinate Bench of Mumbai in the case of Amit Mafatlal Shah [2020 (4) TMI 894 - ITAT MUMBAI]we find that this decision is squarely applicable on the facts of the instant appeal and we thus have no hesitation to hold that the assessee has rightly claimed the exemption u/s 10(38) of the Act from sale of equity shares of PCSL and also addition for unexplained expenditure is uncalled for.
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