Tribunal orders deletion of additions under section 68, citing lack of evidence and genuineness of transactions.

The Tribunal allowed the appeal filed by the assessee, directing the Assessing Officer to delete the addition made under section 68 of the Income-tax Act. The Tribunal found that the AO's findings lacked specific evidence and were based on presumptions, noting that the assessee had provided necessary documents supporting the genuineness of the transactions. Consequently, the Tribunal also deleted the consequential addition related to commission on the alleged accommodation entry.

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Issues Involved:
1. Reopening of assessment under section 148 of the Income-tax Act, 1961.
2. Treatment of Long Term Capital Gains (LTCG) as unexplained cash credits under section 68 of the Act.
3. Alleged non-provision of adverse statements/documents to the assessee.
4. Levy of interest under sections 234B and 234C of the Act.

Issue-wise Detailed Analysis:

1. Reopening of Assessment under Section 148:
The assessee contested the reopening of the assessment, arguing that the Assessing Officer (AO) failed to provide necessary statements relied upon for reopening and did not offer an opportunity to cross-examine the individuals who had given adverse statements. The assessee claimed that this was in gross contravention of the principles of natural justice and thus, the reopening of the assessment was bad in law.

2. Treatment of Long Term Capital Gains (LTCG) as Unexplained Cash Credits:
The AO treated the LTCG on the sale of shares of M/s. Shreenath Commercial & Finance Ltd. as unexplained cash credits under section 68 of the Act. The AO based this on information from the Directorate of Investigation, Kolkata, which indicated that the assessee was a beneficiary of bogus LTCG entries. Despite the assessee providing documentary evidence showing that the transactions were conducted through recognized stock exchanges and brokers, the AO rejected the assessee's contention. The AO relied on the investigation findings and circumstances to conclude that the transactions were bogus.

3. Alleged Non-provision of Adverse Statements/Documents:
The assessee argued that they were not provided with any adverse statements or documents from the Kolkata Investigation Directorate, which were used against them. The assessee maintained that without these documents, the AO's reliance on them was unjustified. The assessee emphasized that all transactions were genuine and supported by documentary evidence, including demat statements and bank records.

4. Levy of Interest under Sections 234B and 234C:
The AO levied interest under sections 234B and 234C of the Act due to the addition of Rs. 2,12,47,086/- as unexplained cash credits. The assessee contested this levy, arguing that the addition itself was unjustified.

Tribunal’s Findings:
The Tribunal considered the rival submissions and material on record. It observed that similar facts and issues were addressed in the cases of Mrs. Pallavi Pandey and Shri Rajendra Chaturvedi, where the ITAT had ruled in favor of the assessee. The Tribunal noted that the assessee had furnished all necessary documents and evidence to support the genuineness of the transactions. The AO had failed to bring any specific evidence to prove that the transactions were bogus, relying solely on the investigation report.

The Tribunal referenced the Bombay High Court decision in CIT vs. Shyam R. Pawar, which emphasized the need for deeper scrutiny and evidence to prove transactions as sham or bogus. The Tribunal found that the AO had not conducted further verification or provided concrete evidence to support the claim of bogus transactions.

Conclusion:
The Tribunal concluded that the AO's findings were based on presumptions and lacked specific evidence. It found merit in the assessee's arguments and directed the AO to delete the addition made under section 68 of the Act. Consequently, the Tribunal also deleted the consequential addition related to commission on the alleged accommodation entry.

Order:
The appeal filed by the assessee was allowed, and the order was pronounced in the open court on 12.04.2022.

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