2015 (8) TMI 213 - AT - Income Tax

Appellate tribunal upholds CIT(A) decisions on long term capital gains and unverifiable creditors

Asstt. Commissioner of Income Tax Versus Sh. PKN Nambira

Asstt. Commissioner of Income Tax Versus Sh. PKN Nambira - TMI Issues involved:1. Deletion of addition on account of bogus long term capital gains.2. Deletion of addition on account of fresh unverifiable creditors.3. Misconstruing the remand report of the AO.Analysis:Issue 1: Deletion of addition on account of bogus long term capital gains:The appellant Revenue challenged the deletion of an addition of Rs. 9,38,920 on the grounds of bogus long term capital gains. The assessee claimed to have acquired 10000 shares of a company but failed to provide the contract note for the purchase. However, the appellate tribunal found that the shares were indeed credited and debited from the demat account of the assessee, with supporting documents confirming the transactions. The tribunal noted that the Assessing Officer's conclusion regarding off-market share dealings was misconceived, as both market and off-market transactions are permissible in demat accounts. The tribunal upheld the deletion of the addition, concluding that the assessee was eligible to claim long term capital gains on the shares.Issue 2: Deletion of addition on account of fresh unverifiable creditors:The second issue pertained to the deletion of an addition of Rs. 28,71,564 related to fresh unverifiable creditors. The Assessing Officer had added this amount to the total income of the assessee under section 68 of the Income Tax Act due to the lack of bank account details of the creditors. However, the CIT(A) observed that the assessee had provided confirmations, PAN numbers, and addresses of the alleged creditors, meeting the burden of proof. Citing a Supreme Court decision, the CIT(A) held that the assessee had discharged the burden placed on them by providing necessary details. The tribunal agreed with the CIT(A)'s decision, emphasizing that the AO could have conducted further inquiries to verify the transactions. Consequently, the addition was deleted, and the tribunal upheld the decision based on the principles established in the Supreme Court ruling.Issue 3: Misconstruing the remand report of the AO:The third issue raised was the alleged misconstruing of the remand report of the Assessing Officer. The details provided in the judgment did not elaborate on this issue further. However, it is evident that the tribunal did not find merit in this ground of appeal, as the focus of the judgment primarily addressed the deletion of additions related to long term capital gains and unverifiable creditors.In conclusion, the appellate tribunal upheld the decisions of the CIT(A) in deleting the additions on both grounds, emphasizing the importance of providing necessary documentation and meeting the burden of proof in such cases. The appeal of the Revenue was dismissed, and the tribunal's order was pronounced on 28/11/2014.