Tribunal upholds CIT(A)'s decision on genuine transactions with substantial evidence. Off-market transactions valid. Revenue appeal dismissed.

The Tribunal upheld the CIT(A)'s decision, confirming the genuineness of the assessee's transactions supported by substantial evidence. It noted that off-market transactions are valid and cannot be deemed non-genuine solely for not being recorded on the stock exchange. The Tribunal dismissed the Revenue's appeal, affirming the deletion of additions made under Section 68 of the Income Tax Act. The assessee's cross-objection was also dismissed as not pressed.

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Issues Involved:
1. Dismissal of the assessee's cross-objection.
2. Deletion of addition made under Section 68 of the Income Tax Act by the Assessing Officer (AO) on account of credits as Long Term Capital Gains (LTCG) and Short Term Capital Gains (STCG).

Detailed Analysis:

1. Dismissal of the Assessee's Cross-Objection:
The assessee did not press the cross-objection before the Tribunal, leading to its dismissal as not pressed.

2. Deletion of Addition under Section 68 by the AO:
The Revenue challenged the deletion of additions made under Section 68 by the AO, which were on account of credits of Rs. 94,49,384/- as LTCG and Rs. 19,76,810/- as STCG. The AO had disallowed these gains, treating them as unexplained cash credits, arguing that the share transactions were not recorded in the assessee's name on the stock exchange and were thus bogus.

Facts and Submissions:
- The assessee declared income from the sale of shares of Prranet Industries and Talent Infoways Limited, supported by purchase and sale bills from M/s. Goldstar Finvest Pvt. Ltd. and M/s. Mahasagar Securities Pvt. Ltd.
- The AO's inquiries with NSE, BSE, and ISE revealed no trades executed in the assessee's name during the relevant period.
- The AO relied on a search operation on Mahasagar Securities Pvt. Ltd. and Goldstar Finvest Pvt. Ltd., which allegedly provided accommodation entries, and treated the sale proceeds as unexplained cash credits under Section 68.

Assessee's Defense:
- The assessee provided detailed purchase and sale invoices, demat account statements, and bank statements showing the transactions were genuine and conducted through proper channels.
- The assessee argued that the transactions were conducted in the normal course of business, and any discrepancies in reporting by the brokers or exchanges were beyond their control.
- The assessee emphasized that the shares were held in a demat account and sold after dematerialization, with payments received through account payee cheques.

CIT(A)'s Observations and Decision:
- The CIT(A) found the transactions to be genuine, supported by documentary evidence such as demat statements, sale invoices, and bank statements.
- The CIT(A) noted that the brokers involved were registered with NSE and ISE at the time of transactions, though they were expelled later.
- The CIT(A) observed that the AO did not provide any adverse evidence directly linking the assessee to the alleged bogus transactions.
- The CIT(A) emphasized the importance of cross-examining the third party (Shri Mukesh Choksi) whose statement was heavily relied upon by the AO, and noted the lack of such an opportunity for the assessee.
- The CIT(A) referred to various judicial precedents supporting the principle that additions based on third-party statements without cross-examination are not justified.

Tribunal's Judgment:
- The Tribunal upheld the CIT(A)'s decision, agreeing that the transactions were genuine and supported by substantial evidence.
- The Tribunal noted that similar cases involving the same brokers and third parties had been decided in favor of the assessees by various judicial authorities, including the ITAT Mumbai and the Bombay High Court.
- The Tribunal emphasized that off-market transactions are not illegal and cannot be deemed non-genuine solely because they were not recorded on the stock exchange floor.
- The Tribunal dismissed the Revenue's appeal, confirming the deletion of additions made under Section 68.

Conclusion:
The Tribunal concluded that the assessee's transactions were genuine, supported by documentary evidence, and the AO's reliance on third-party statements without cross-examination was insufficient to justify the additions under Section 68. The Revenue's appeal was dismissed, and the assessee's cross-objection was also dismissed as not pressed.

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