Tribunal directs AO to delete disallowance & cash credit, finds genuine investment.

The tribunal directed the Assessing Officer to delete the disallowance under section 69 of the Act for unexplained investment in jewellery for A.Y. 2011-12, as payments were made through banking channels and properly reflected in the books. Regarding the assessment of sale value of shares as unexplained cash credit under section 68 of the Act for A.Y. 2014-15, the tribunal found the shares were held for a substantial period, indicating genuine investment, and overturned the addition, directing the AO to delete it. The tribunal also removed a 1% expenditure added by the AO as consequential.

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Issues involved:
- Appeal against addition made under section 69 of the Act towards unexplained investment in jewellery for A.Y. 2011-12.
- Appeal against assessment of sale value of shares as unexplained cash credit under section 68 of the Act for A.Y. 2014-15.

Issue 1: Addition under section 69 of the Act towards unexplained investment in jewellery for A.Y. 2011-12:

The assessee contested the addition made under section 69 of the Act towards unexplained investment in jewellery. The Assessing Officer treated purchases of jewellery from certain concerns as unexplained investment. The assessee argued that payments were made through banking channels and reflected in the balance sheet under "Jewellery". The tribunal found merit in the assessee's submission, noting that purchases were for personal use, payments were made through banking channels, and properly reflected in the books of account. Consequently, the tribunal directed the Assessing Officer to delete the disallowance under section 69 of the Act.

Issue 2: Assessment of sale value of shares as unexplained cash credit under section 68 of the Act for A.Y. 2014-15:

The Assessing Officer treated the capital gains declared by the assessee from the sale of shares as bogus based on an investigation report. The Assessing Officer assessed the entire sale consideration as taxable income under section 68 of the Act. The tribunal observed that the shares were held for more than two years, indicating genuine investment behavior. The assessee's history as a regular investor with a substantial portfolio was also considered. It was noted that no investigation was conducted on the assessee or the stockbroker by SEBI. The tribunal concluded that the tax authorities were not justified in assessing the sale consideration of shares as unexplained cash credit under section 68 of the Act. The order of the CIT(A) was set aside, directing the AO to delete the addition. Additionally, a 1% expenditure added by the AO was also deleted as consequential.

Separate Judgement:
- No separate judgment was delivered by the judges in this case.

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