2017 (4) TMI 1263 - AT - Income Tax

Tribunal Rules in Favor of Assessees, Rejects Cash Credit Treatment

The Tribunal allowed both appeals of the assessees, directing the Assessing Officer to accept their claims based on the previous Tribunal decision. The ... Treatment of long-term capital gains as unexplained cash credit - addition under section 69C as cash credit - covered by earlier Tribunal decision - condonation of delayCondonation of delay - Delay of two days in filing the appeal was condoned. - HELD THAT: - The Tribunal considered the application for condonation of delay in filing appeal ITA No.6103/M/2016 and, having heard the assessee's representative and noting the smallness of the delay (two days), treated the case as fit for condonation without examining merits of reasonable and sufficient cause. The Tribunal therefore admitted the appeal for adjudication on merits. [Paras 2]Delay of two days in filing the appeal is condoned and the appeal is admitted for hearing on merits.Treatment of long-term capital gains as unexplained cash credit - addition under section 69C as cash credit - covered by earlier Tribunal decision - Additions made treating long-term capital gains as unexplained cash credit under section 69C were deleted and the appeals allowed as covered by the Tribunal's earlier decision in the case of Sri Indravadan Jain HUF. - HELD THAT: - The Tribunal examined the assessment additions under section 69C which treated the assessees' sales proceeds from shares as unexplained cash credit. On consideration of the facts - including purchase and sale of shares through a broker and the absence of any direct investigation into the assessees' transactions - the Tribunal found the facts of the present appeals identical to those in the Tribunal's earlier decision in Sri Indravadan Jain HUF. The Tribunal held that the earlier decision applies to the instant matters and, notwithstanding the CIT(A)'s distinction, there was no case for confirming the additions. Consequently the Tribunal directed the Assessing Officer to accept the claims of the assessees and to give effect to the Tribunal's earlier decision. [Paras 3, 4, 5]Additions under section 69C treating long-term capital gains as unexplained cash credit are deleted; appeals allowed as covered by the earlier Tribunal decision.Final Conclusion: Both appeals for AY 2005-06 are allowed: the two-day delay in one appeal is condoned and the additions under section 69C treating long-term capital gains as unexplained cash credit are deleted, the Assessing Officer being directed to accept the assessees' claims in accordance with the Tribunal's earlier decision. Issues:- Treatment of long term capital gains as cash credit u/s 69C of the Act- Validity of re-assessmentAnalysis:1. Treatment of long term capital gains as cash credit u/s 69C of the Act:- The appeals under consideration pertain to two different assessees for the AY 2005-06, with identical issues raised. Both appeals are clubbed and disposed of together.- In one appeal, there was a delay of 2 days in filing the appeal before the Tribunal, which was condoned due to the smallness of the delay.- The common issue raised in both appeals was the treatment of long term capital gains as cash credit u/s 69C of the Act. The validity of re-assessment was also questioned but dismissed as not pressed.- The assessee's argument was that shares were purchased at a certain price and sold later at a higher price, involving a broker. There was no investigation into the transaction by any agencies.- The Tribunal had previously deleted similar additions in a related case, citing violations by the broker. The CIT (A) was criticized for not following the Tribunal's order in the related case.- After considering the arguments and previous Tribunal decisions, the Tribunal found no basis for confirming the additions u/s 69C of the Act. The additions were deleted, and the Assessing Officer was directed to accept the claims of the assessees based on the previous Tribunal decision.2. Validity of re-assessment:- While the validity of re-assessment was raised, it was not pressed and dismissed as such.The Tribunal allowed both appeals of the assessees based on the covered nature of the issues and the previous Tribunal decision. The orders were pronounced in favor of the assessees, directing the Assessing Officer to accept their claims and the previous Tribunal decision.