Tribunal directs acceptance of disclosed capital gains due to lack of verification, non-confrontation with assessee.

The Tribunal allowed the appeal, directing the Assessing Officer to accept the disclosed long term capital gains. The decision was based on the lack of proper verification and reliance solely on a statement without confronting the assessee or examining relevant documents. Other grounds raised by the assessee were not addressed due to the favorable outcome on the main issue.

---

---

Issues:
Validity of reopening of assessment and assessment of long term capital gain as undisclosed income.

Validity of Reopening of Assessment:
The Assessing Officer reopened the assessment based on information received regarding bogus transactions involving the assessee. The assessee challenged the validity of reopening before the CIT(A), arguing lack of specific evidence and cross-examination opportunity. The CIT(A) upheld the reopening, citing the decision in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. The assessee's contention of not being allowed to cross-examine Mukesh Chokshi was rejected by the CIT(A) due to lack of evidence of a specific request for cross-examination.

Assessment of Long Term Capital Gain:
The Assessing Officer assessed long term capital gain as undisclosed income based on the belief that the assessee obtained backdated purchase bills for shares and sold them for bogus gains. The CIT(A) confirmed this assessment, stating that the transactions matched the modus operandi of providing accommodation bills by Mukesh Chokshi's group. The assessee argued against the assessment, presenting evidence of share transactions and challenging the lack of inquiry into the broker's note. The Tribunal found merit in the assessee's contentions, noting that the AO solely relied on Mukesh Chokshi's statement without verifying the documents or confronting the statement with the assessee. Consequently, the Tribunal directed the AO to accept the disclosed long term capital gains.

Conclusion:
The Tribunal allowed the appeal, setting aside the CIT(A)'s order and directing the AO to accept the disclosed long term capital gains. Other grounds raised by the assessee were not adjudicated due to the favorable decision on the main issue. The order was pronounced on 05.10.2016.

---