2015 (6) TMI 972 - AT - Income Tax

Appeals Allowed in Share Transaction Case, Assessees' Position Upheld

Mr. Ashok Kumar Gupta, Mrs. Amita Gupta Versus Dy. Commissioner of Income Tax

The Tribunal allowed all appeals filed by the assessees, setting aside the CIT(A)'s order. It found that the assessees had established the legitimacy of ... Addition made u/s 68 - sale consideration received by the assessee on the sale of the shares of M/s Continental Fiscal Management Limited - Held that:- The assessee filed all the documents and these purchases were made by the assessee through account payee cheque have not been doubted by the Revenue. The action u/s. 68 of the Act has been taken on the basis of the statement of the third party. During the course of search at the premises of Shri Narendra Kumar Shyamsukha no iota of evidence was found which could prove / lead to any inference that assessee had paid cash to Shyamsukha or the cheque has been received or paid to the broker in lieu of cash except a statement which is not in the handwriting of the assessee and which contains numerous details. No action has been taken by the Revenue in treating the purchase to be the bogus. Under these facts and circumstances, is of the view that it is not the case where the addition u/s. 68 of the Act could be made. The assessee duly proved the identity, creditworthiness and genuineness of the broker as well as that assessee received the consideration on the sale of the shares from the broker. I, accordingly set aside the order of CIT(A). - Decided in favour of assessee. Issues involved:1. Addition made under section 68 of the Income Tax Act in relation to sale consideration received on the sale of shares of a company.Detailed analysis:The judgment by the Appellate Tribunal ITAT Kolkata involved multiple appeals by different assessees on a common issue, which was the addition made under section 68 of the Income Tax Act concerning the sale consideration received on the sale of shares of a company. The Tribunal noted that all three appeals shared common grounds, and therefore, they were disposed of by a single order. One of the grounds was not pressed and dismissed, while another ground was deemed general and did not require adjudication. The primary issue revolved around the addition made under section 68 in connection with the sale of shares of M/s Continental Fiscal Management Limited (CFML). Both parties agreed to dispose of the appeals based on the facts of a specific case, leading to the disposal of all three appeals based on those facts.The background of the case revealed that the assessments of the assessees were re-opened due to a search operation conducted in the case of another individual. The seized documents indicated that certain individuals, including the assessees, had laundered unaccounted money through Long Term Capital Gains (LTCG) on the sale of penny stocks. The seized papers contained details of transactions involving significant amounts, with a commission earned by an intermediary facilitating these transactions. The Assessing Officer (AO) made additions under section 68 based on these findings, linking the transactions to the assessees. The assessees then appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who confirmed the additions.Upon hearing the contentions and reviewing the orders of the tax authorities below, the Tribunal observed that the shares in question were purchased through legitimate means, with payments made via account payee cheques. The sales of shares also involved account payee cheques received through a broker. The Tribunal highlighted that the presumption under section 292C of the Act applies to the person in possession of relevant documents and not against third parties in transactions through Demat accounts. The Tribunal found that the Revenue's action under section 68 was solely based on a third party's statement, without concrete evidence linking the assessees to any wrongdoing. It was concluded that the assessees had established the identity, creditworthiness, and genuineness of the transactions, leading to the setting aside of the CIT(A)'s order and allowing all the appeals filed by the assessees.In conclusion, the Tribunal's detailed analysis focused on the legitimacy of the share transactions, the lack of concrete evidence linking the assessees to any wrongdoing, and the establishment of the genuineness of the transactions, ultimately resulting in the allowance of all appeals filed by the assessees.