Tribunal allows appeals, deletes additions under IT Act, emphasizes documentary evidence & cross-examination. Assessees prevail.

Shri Amar Nath Goenka, Shri Arvind Goenka, Smt. Preeti Yadav, Smt. Sneha Yadav And Smt. Pooja Yadav Versus The ACIT, Circle-20 (1), Circle-20 (2), Ward-33 (5), New Delhi

Shri Amar Nath Goenka, Shri Arvind Goenka, Smt. Preeti Yadav, Smt. Sneha Yadav And Smt. Pooja Yadav Versus The ACIT, Circle-20 (1), Circle-20 (2), Ward-33 ... Issues Involved:
1. Addition under section 68 of the I.T. Act, 1961, on account of long-term capital gains.
2. Question of genuineness of long-term capital gains from sale of shares.
3. Application of Section 115BBE of the I.T. Act.
4. Right to cross-examine witnesses whose statements are used against the assessee.
5. Relevance of documentary evidence versus circumstantial evidence.

Issue-wise Detailed Analysis:

1. Addition under Section 68 of the I.T. Act, 1961, on Account of Long-Term Capital Gains:
The primary issue in all five appeals was the addition made under section 68 of the I.T. Act, 1961, concerning the claim of long-term capital gains (LTCG) by the assessees. The A.O. did not accept the LTCG claims, considering them as accommodation entries without real substance. The A.O. observed that the gains were windfall profits from investments in relatively unknown companies with inexplicable rises in share prices. The assessees argued that they provided all necessary documentary evidence, including bank statements, Demat account statements, and stock broker notes, to support the genuineness of their transactions. However, the A.O. applied the test of human probability and concluded that the LTCG claims were not genuine.

2. Question of Genuineness of Long-Term Capital Gains from Sale of Shares:
The A.O. found that the transactions related to the sale of shares of M/s. Esteem Bio Organic Food Processing Ltd. and M/s. KAPPAC Pharma Limited were prearranged and collusive, aimed at generating tax-exempt gains. The assessees countered by providing detailed documentation, including purchase and sale records, bank statements, and evidence of payment of Security Transaction Tax (STT). The Ld. CIT(A) upheld the A.O.'s findings, relying on circumstantial evidence and the rule of preponderance of probability, and dismissed the appeals.

3. Application of Section 115BBE of the I.T. Act:
The A.O. applied Section 115BBE, which taxes unexplained income at a higher rate of 30%, to the additions made under section 68. The assessees contested this application, arguing that their transactions were genuine and supported by documentary evidence.

4. Right to Cross-Examine Witnesses Whose Statements are Used Against the Assessee:
The assessees argued that statements from entry operators, including Shri Sanjay Vohra, were used against them without providing an opportunity for cross-examination. They contended that such statements should not be admissible as evidence. The Ld. CIT(A) dismissed this argument, stating that the A.O. was not obligated to allow cross-examination.

5. Relevance of Documentary Evidence Versus Circumstantial Evidence:
The Tribunal considered whether the documentary evidence provided by the assessees was sufficient to establish the genuineness of the transactions. The assessees submitted various documents, including Demat account statements, bank statements, and contract notes, to prove that the transactions were conducted through recognized stock exchanges and were genuine. The Tribunal noted that the A.O. did not conduct any specific inquiry to disprove the documentary evidence provided by the assessees.

Judgment:

For ITA.No.5882/Del./2018:
The Tribunal found that the assessee had provided sufficient documentary evidence to support the genuineness of the transactions. The Tribunal noted that the A.O. did not confront the assessee with the statements of entry operators or provide an opportunity for cross-examination. The Tribunal also considered various precedents, including decisions from the ITAT and High Courts, which supported the assessee's claims. Consequently, the Tribunal set aside the orders of the authorities below and deleted the addition of Rs. 14,61,585/-.

For ITA.No.5883/Del./2018:
The facts were similar to ITA.No.5882/Del./2018, and the Tribunal followed the same reasoning to delete the addition of Rs. 7,00,793/-.

For ITA.No.6457/Del./2018, ITA.No.6458/Del./2018, and ITA.No.6459/Del./2018:
In these cases, the assessees had sold shares of M/s. KAPPAC Pharma Limited. The Tribunal noted that the issues were identical to those in ITA.No.5882/Del./2018. Following the same reasoning, the Tribunal deleted the additions of Rs. 33,79,407/-, Rs. 34,70,815/-, and Rs. 34,10,399/- respectively.

Conclusion:
The Tribunal allowed all the appeals, setting aside the orders of the lower authorities and deleting the additions made under section 68 of the I.T. Act. The Tribunal emphasized the importance of documentary evidence and the necessity of providing an opportunity for cross-examination when statements are used against an assessee. The judgments were delivered in favor of the assessees, establishing that their transactions were genuine and supported by substantial evidence.