Tribunal upholds tax assessment decision for 2015-16, rejects appeal on unexplained cash credit

The Tribunal upheld the decision of the departmental authorities and dismissed the appeal by the assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2015-16. The additions made by the Assessing Officer under section 68 of the Act for unexplained cash credit and commission paid for the long term capital gain were confirmed. The Tribunal found no merit in the grounds raised by the assessee, citing lack of substantial evidence to counter the adverse findings of the department.

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Issues:
Appeal against order of Commissioner of Income Tax (Appeals) for assessment year 2015-16 - Non-appearance of assessee during appeal hearings - Addition of unexplained cash credit under section 68 of the Act and commission paid for bogus long term capital gain.

Analysis:
The judgment pertains to an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2015-16. Despite multiple hearing dates and notices served, the assessee did not appear before the Tribunal, leading to the appeal being disposed of ex-parte. The grounds raised by the assessee related to the addition of Rs.29,18,507 under section 68 of the Act and Rs.30,689 under section 69C of the Act.

The assessee, a resident Hindu Undivided Family, had declared income of Rs.6,27,900 and claimed long term capital gain exempt under section 10(38) of the Act. However, the Assessing Officer discovered discrepancies in the sale of equity shares of a company, where the price had increased significantly. The company was identified as a penny stock company, raising suspicions about the genuineness of the transaction. Despite explanations from the assessee, the Assessing Officer treated the long term capital gain as unexplained cash credit under section 68 of the Act and added a commission amount to the income.

During the appeal hearing, the Departmental Representative presented the findings of the investigation, highlighting the price manipulation and rigging in the shares of the company. The Tribunal noted the lack of substantial evidence from the assessee to counter the adverse findings of the department. As the assessee failed to provide convincing evidence or appear before the authorities, the Tribunal upheld the decision of the departmental authorities and dismissed the appeal.

In conclusion, the Tribunal found no merit in the grounds raised by the assessee and dismissed the appeal, upholding the additions made by the Assessing Officer and confirmed by the Commissioner (Appeals) regarding the unexplained cash credit and commission paid for the long term capital gain. The judgment was pronounced in open court on 10th June 2022.

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