Bogus capital gains and unexplained cash credit addition deleted for lack of cogent evidence and proper record examination.

An addition for alleged bogus capital gains, treated as unexplained cash credit, was found unsustainable where the assessee's return, supporting documents and bank statement did not support the transaction alleged by the revenue. The reassessment and the addition were held to lack cogent evidentiary support, and the first appellate authority had confirmed the addition without proper examination of the material on record. The addition was directed to be deleted.

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Issues: Whether the addition made on account of alleged bogus capital gains and treated as unexplained cash credit could be sustained when the assessment and first appellate orders were passed without proper examination of the assessee's records and bank statement.

Analysis: The assessee's return for the relevant assessment year, supporting documents, and bank statement showed that the impugned transaction had not taken place as alleged. The reopening and the consequent addition were found to be unsupported by cogent evidence. The first appellate authority also failed to examine the material placed before it and confirmed the addition without appreciating the merits.

Conclusion: The addition was not sustainable and was directed to be deleted; the assessee succeeded on the substantive tax issue.

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