Assessee's Appeal Partially Allowed: Remand for Reconsideration of Income Addition

The appeal filed by the assessee was partly allowed for statistical purposes. The matter concerning the addition of Rs. 21,65,606 under Section 68 read with Section 115BBE was remanded back to the Assessing Officer for reconsideration. The disallowance of car depreciation claimed at Rs. 62,210 was upheld.

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Issues Involved:
1. Addition of Rs. 21,65,606/- under Section 68 read with Section 115BBE.
2. Disallowance of car depreciation claimed at Rs. 62,210/-.

Issue-wise Detailed Analysis:

1. Addition of Rs. 21,65,606/- under Section 68 read with Section 115BBE:

The assessee challenged the addition of Rs. 21,65,606/- under Section 68 read with Section 115BBE, arguing that the ITO and CIT(A) erred by making the addition based on doubts without any concrete evidence. The assessee claimed the amount as exempted income of Long Term Capital Gains (LTCG) under Section 10(38) of the Act, derived from the sale of shares of M/s. Turbotech Engineering Ltd. The shares were purchased for Rs. 10,000/- and sold for Rs. 21,75,606/-, resulting in a significant appreciation.

The Assessing Officer (AO) noted that M/s. Turbotech Engineering Ltd. had no financial capabilities or future income prospects at the time of investment, and the extraordinary performance of its stock was not justified by its financials. The AO referred to investigations and statements from individuals like Nikhil Jain and Sanjay Vora, indicating that the shares of M/s. Turbotech Engineering Ltd. were used for generating bogus LTCG. Consequently, the AO concluded that the assessee entered into a colorable device for tax avoidance, treating the receipt of Rs. 21,65,606/- as unexplained cash credit under Section 68.

The CIT(A) upheld the AO's decision, noting that the AO had issued letters to SEBI, BSE, Kotak Securities Ltd., and M/s. Shreeji Broking Pvt. Ltd. for information, and the trading of M/s. Turbotech Engineering Ltd.'s securities was banned by SEBI. The CIT(A) relied on various decisions and the Third SIT report on Black Money by the Supreme Court of India, which pointed out the modus operandi of generating bogus LTCG.

The assessee's counsel argued that the transactions were genuine, supported by purchase bills, payment receipts, D-mat account statements, and bank statements. The counsel contended that the statements relied upon by the AO were not confronted to the assessee. The Tribunal considered the arguments and the material on record, noting that the assessee's transactions were through a D-mat account and sale proceeds were received by cheque. The Tribunal restored the matter to the AO for reconsideration, directing the AO to provide the statements of the individuals which formed the basis for the addition and to decide the issue afresh after giving the assessee an opportunity of being heard.

2. Disallowance of Car Depreciation Claimed at Rs. 62,210/-:

The assessee claimed depreciation of Rs. 62,210/- on a motor car, which was disallowed by the AO on the ground that the car was used for the business of the partnership firm M/s. Jay Kay Enterprises, and not for the assessee's own business. The CIT(A) upheld the disallowance, noting that the assessee did not provide any submission in support of the claim during the appellate proceedings.

The Tribunal observed that the assessee did not make any submission on this issue before the CIT(A) or the Tribunal. Consequently, the Tribunal dismissed the ground raised by the assessee regarding the disallowance of car depreciation.

Conclusion:

The appeal filed by the assessee was partly allowed for statistical purposes. The matter regarding the addition of Rs. 21,65,606/- was remanded back to the AO for reconsideration, while the disallowance of car depreciation was upheld.

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