Tribunal upholds deletion of excessive addition for genuine sale consideration of shares.

The Tribunal upheld the deletion of the addition of Rs. 69,00,000 made by the Assessing Officer, ruling that the sum constituted genuine sale consideration for shares and the excess amount was promptly returned. The Tribunal found no material evidence contradicting the CIT(A)'s findings and dismissed the Revenue's appeal, affirming the deletion of the addition.

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Issues Involved:
1. Deletion of addition of Rs. 69,00,000/- made by the Assessing Officer on account of unexplained cash credit in the guise of sale of shares.

Detailed Analysis:

Issue 1: Deletion of Addition of Rs. 69,00,000/- as Unexplained Cash Credit

The sole issue in this appeal is whether the learned CIT(A) erred in deleting the addition of Rs. 69,00,000/- made by the Assessing Officer on account of unexplained cash credit, which was claimed to be in the guise of sale of shares.

The Assessing Officer's findings were based on information received from the Assistant Director of Income Tax (Investigation), New Delhi. The information indicated that certain individuals, including Shri Pradeep Kumar Jindal and others, were involved in providing accommodation entries through bogus share premium, exempt Long Term Capital Gain, and advance against property. Smt. Reeta Singhal was identified as a beneficiary who allegedly received Rs. 69 lac as an accommodation entry.

The AR of the assessee submitted that Smt. Reeta Singhal sold shares of Shri Ganga Paper Mills Pvt. Ltd. for Rs. 50 lac, received through RTGS, and returned Rs. 19 lac. The shares were acquired during Assessment Year 2009-10 and sold to M/s. Mayank Medilab Pvt. Ltd. in Assessment Year 2010-11. The Assessing Officer found the submission unconvincing and treated the Rs. 69 lac as unexplained cash credit, adding it to the income of the assessee.

On appeal, the Ld. CIT(A) deleted the addition, observing that the assessee received Rs. 69 lac through RTGS from M/s. Mayank Medilab Pvt. Ltd. The Rs. 50 lac was received as sale consideration for 5 lac shares of M/s. Shri Ganga Paper Mills Pvt. Ltd., sold at face value. The shares were acquired in earlier years (Assessment Years 2006-07 and 2009-10) and were reflected in the balance sheet. The Assessing Officer did not question the sale of 10,27,000 shares to other parties at the same value and time. The Ld. CIT(A) found that the Assessing Officer had no reason to doubt the sale of 5 lac shares to M/s. Mayank Medilab Pvt. Ltd. when other similar transactions were accepted.

The Ld. CIT(A) also noted that the Rs. 19 lac received in excess was returned within two days, without any benefit derived, thus not constituting an accommodation entry. Further, the assessee requested cross-examination of the individuals whose statements were used against her, which was denied by the Assessing Officer. The Ld. CIT(A) held that denying cross-examination violated principles of natural justice, referencing the Supreme Court's decision in M/s. Andaman Timber Industries.

Upon review, the Tribunal found no material evidence from the Department to contradict the findings of the Ld. CIT(A). The Tribunal upheld the deletion of the Rs. 69 lac addition, confirming that the sum was received as genuine sale consideration for shares, and the Rs. 19 lac was promptly returned. The Tribunal dismissed the Revenue's appeal, finding no error in the Ld. CIT(A)'s order.

Conclusion: The appeal of the Revenue is dismissed, and the deletion of the Rs. 69,00,000/- addition by the Ld. CIT(A) is upheld.

Order pronounced in the Court on this day, the 17/01/2019.

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