Tribunal overturns tax assessment, directs deletion of unexplained income, citing lack of evidence.

The Tribunal set aside the CIT(A)'s decision and directed the AO to delete the assessment of Rs. 1 crore as unexplained income made against the assessee. The Tribunal found that the tax authorities' assessment was based on suspicion and lacked concrete evidence, noting that the transactions were legitimate and not supported by disproven evidence. Consequently, the appeal filed by the assessee was allowed.

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Issues Involved:
1. Reopening of the assessment.
2. Assessment of Rs. 1 crore as unexplained income under section 69A of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Reopening of the Assessment:
- At the time of hearing, the counsel for the assessee did not press the ground relating to reopening of the assessment. Consequently, this issue was dismissed as not pressed.

2. Assessment of Rs. 1 Crore as Unexplained Income under Section 69A of the Income Tax Act, 1961:
- Facts of the Case:
- The assessee filed a return declaring total income of Rs. 4.83 crores, including Long Term Capital Gain (LTCG) of Rs. 4.46 crores.
- The Assessing Officer (AO) received information that M/s Mahasagar Securities Pvt. Ltd. and its related companies were providing bogus speculation profits/losses, and LTCG/losses to convert undisclosed income into income from share trading.
- The assessee sold 2,00,000 shares of M/s Buniyad Chemicals Ltd through M/s Goldstar Invest Pvt. Ltd. and received a cheque of Rs. 99,69,498.
- The AO, based on the statement of Shri Mukesh Chokshi, Director of M/s Mahasagar Securities Pvt. Ltd., concluded that the transactions were merely accommodation entries, thus assessing Rs. 1 crore as unexplained money under section 69A.

- Appellate Proceedings:
- The assessee provided all relevant details before the CIT(A), who called for a remand report from the AO.
- The Stock Exchange confirmed that the transactions did not occur in the names of M/s R.C. Enterprises or M/s Goldstar Finvest Pvt. Ltd.
- The CIT(A) upheld the AO's decision, referencing the Supreme Court case CIT V/s Durga Prasad More and a Mumbai Tribunal decision in Ramesh Kumar D Jain V/s ITO.

- Tribunal's Analysis:
- The Tribunal reviewed the fact sheet provided by the assessee, detailing the sequence of purchase and sale of shares.
- The assessee purchased 2,00,000 shares of M/s Buniyad Chemicals Ltd. in April 2001, which were later dematerialized and sold in May 2002 through M/s Goldstar Finvest Pvt. Ltd.
- The Tribunal noted that the shares were held in demat form with M/s CDSL, a reputable depository, and the transactions were off-market.
- The AO relied on generalized statements by Shri Mukesh Choksi without specific inquiries into the assessee's transactions.
- The Tribunal found that the tax authorities did not disprove the purchase and dematerialization of shares nor conducted specific inquiries with brokers or M/s CDSL.
- The Tribunal concluded that the tax authorities' assessment of Rs. 1 crore as unexplained income was based on suspicion and not supported by disproven evidence.

- Conclusion:
- The Tribunal set aside the CIT(A)'s order, directing the AO to delete the assessment of Rs. 1 crore made in the hands of the assessee.
- The appeal filed by the assessee was allowed.

Pronouncement:
- The judgment was pronounced in the open court on 8.04.2015.

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