Delay condoned for portal access issues, section 68 addition deleted for genuine share transactions with proper documentation

The ITAT Surat condoned a 160-day delay in filing appeal after the assessee explained the delay was due to inability to access the ITBA portal caused by frequent password changes by their regular CA. Regarding the substantive issue, the tribunal deleted the addition under section 68 treating long-term capital gains on listed shares as bogus income. The assessee successfully proved the genuineness of share transactions through contract notes, bank statements, and demat account records showing share transfers. Following precedent, the AO was not justified in treating legitimate capital gains as unexplained cash credits, resulting in deletion of the addition and allowance of the appeal.

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Issues involved:
The appeal by the assessee against the order of National Faceless Appeal Centre, Delhi for the assessment year 2015-16 involving the disallowance of exempt income u/s 10(38) of the IT Act and addition u/s 68 of the IT Act.

Delay Condonation:
The appeal filed by the assessee had a delay of 160 days in filing before the Tribunal. The assessee explained that the delay was due to the frequent changing of passwords by their regular Chartered Accountant, causing a lack of access to the ITBA portal. The delay was condoned by the Tribunal considering the reasonable explanation provided by the assessee and the lack of benefit to the assessee in filing the appeal belatedly.

Merits of the Case:
The case involved the purchase of shares of Conart Traders Ltd., which was later amalgamated with Sunrise Asian Ltd. The assessee claimed long-term capital gains (LTCG) as exempt income u/s 10(38) of the Act. The Assessing Officer made an addition without considering the evidence provided by the assessee, mainly relying on a report from the Investigation Wing. The assessee demonstrated the genuineness of the transaction with evidence such as bank statements, contract notes, and details of the sale. The Tribunal found that the assessee had discharged the onus of proving the genuineness of the transaction, and no adverse findings were made against the evidence provided. Citing relevant case laws, the Tribunal concluded that there was no justification for treating the LTCG as unexplained cash credit. Consequently, the addition of undisclosed income u/s 68 was deleted, and the appeal of the assessee was allowed based on the consistent view taken on similar facts in previous cases.

Decision:
The Tribunal allowed the appeal of the assessee based on the merits of the case, finding that the assessee had proven the genuineness of the transaction and there was no justification for the addition made by the Assessing Officer. The grounds of appeal raised by the assessee were allowed, and the appeal was pronounced in the open court on 28/03/2024.

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