Appeal granted due to lack of evidence in tax assessment, invalid addition of trading income

The appeal against the order passed by CIT(A) at NFAC, Delhi for the Assessment Year 2012-13 involved trading in VAS Infrastructure Limited shares. The Assessing Officer's addition of Rs. 3,33,411 was deemed unjustified as the authorities failed to provide essential transaction details and reasons for treating the transactions as bogus. The appeal of the assessee was allowed, highlighting the inadequacy of evidence and reasoning in the decision-making process.

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Issues involved:
The appeal against the order passed by CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2012-13.

Grounds of appeal:
1. The CIT(A) passed an ex-parte order without considering the circumstances.
2. The CIT(A) erred in confirming the AO's reopening of the case under Section 147.
3. The CIT(A) confirmed the addition without considering documentary evidences.
4. The addition made treating sale of shares as a penny stock transaction was erroneous.
5. The order passed by the CIT(A) was contrary to law and facts.

Details of the Judgment:

1. The case involved trading in VAS Infrastructure Limited shares for Rs. 3,33,411 during the Financial Year 2011-12. The Assessing Officer reopened the case under Section 147, making an addition of Rs. 3,33,411 due to non-compliance with notices. The assessee declared total income of Rs. 1,99,700.

2. The assessee appealed the Assessment Order to the CIT(A), who dismissed the appeal.

3. The assessee requested details of the broker involved in the transactions but was not provided with the opportunity to respond adequately. The transactions were disclosed in audited accounts and returns filed under the Income Tax Act. However, the authorities did not consider the details provided by the assessee.

4. The Assessing Officer and CIT(A) failed to provide essential transaction details like date, broker's name, and quantity traded, leading to the assessee's inability to explain. The assessee traded through specific brokers, and the transactions were reflected in audited accounts. The Tribunal in a similar case had clarified that VAS Infrastructure Limited was not declared as a penny stock during the relevant period.

5. The Assessing Officer made the addition without specifying how the company was blacklisted or how the assessee manipulated gains or losses. The CIT(A) also did not provide reasons for treating the transactions as bogus. The addition of Rs. 3,33,411 was deemed unjustified, and the appeal of the assessee was allowed.

6. The appeal filed by the assessee was allowed.

Order pronounced on 6th September 2023.

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