TaxTMI 
TaxTMI 
2023 (8) TMI 1595
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....cted for limited scrutiny for the following three reasons: (a) Substantial increase in capital (Reason Code BL01. 02), (b) Large value sale of futures (derivatives) in recognized stock exchange reported in Securities Transaction Tax Return STT code 06 (Reason Code TX08.02), (c) Low capital gains with respect to sales consideration, i.e. whether capital gain or loss is genuine and has been correctly shown in the return of income (Reason Code CG01.05). 2.1. Ld. AO issued statutory notices u/s. 143(2) and 142(1) of the Act, which were served on the assessee. Ld. AO observed that there has been persistent, continuous, systematic and calculated non-compliance or belated compliance by which assessee had dragged the proceedings to the fag-end of the assessment year, such that requisite enquiry/investigation into the affairs of the assessee on the above three noted issues would be either delayed or scuttled. Ld. AO had made additions to the tune of Rs. 16,21,89,184/- on account of the following: a) Addition on account of transfer entries in the personal capital account for unsubstantiated increase in capital as unexplained cash credit u/s. 68 of the Act ....
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.... consist of any conclusive proof as regards the time of acquisition of various items of transfer entries claimed to be introduced as capital from individual Balance Sheet into proprietorship Balance Sheet and the source of funds used for the same. Ld. AO thus held that since assessee has not been able to explain the credit in his books of accounts as regards this increase in capital brought in, added it to the total income as it remained unsubstantiated. 4. On the second issue of addition in respect of LTCG and STCG totalling to Rs. 2,58,69,249/-, Ld. AO noted that assessee has claimed an amount of Rs. 2,45,80,798/- as per schedule EI of his return as exempt income u/s. 10(38) of the Act towards LTCG. To examine the genuineness of claim of LTCG, Ld. AO called for details of shares of RSWM Ltd. on which this LTCG was claimed as exempt. From the DMAT account furnished by the assessee, Ld. AO noted certain discrepancies in respect of the opening balance of shareholding and thus concluded that the claim of exemption is untenable in law. Similar view was taken in respect of STCG of Rs. 12,88,451/-. 5. In respect of the third issue relating to disallowance of loss on account of tra....
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....d, New Delhi-2 PAN: AAECM3698K Appellant is a director of the company 1,30,48,000/ 2013-14 31/03/2016 2. Mezzo Trading Pvt. Ltd. 416, Dreamland Building 1/18B, Asaf ali Road, New Delhi-2 PAN: AAACE7690K Appellant is a director of the company 1,59,70,000/ 2013-14 31/03/2016 3. Bonaza Commodity Brokers Pvt. Ltd/Bonanza Portfolio Ltd 4353-4C Madan Mohan Street Ansari Road, Daryaganj New Delhi-110002 PAN:AACCB1987C/ AAACB0764B None, Stock broker of the appellant 1,51,354/ 2014-15 31/03/2016 4. Pradeep More Old Srimanta Shankar Road, Haibargaon, Nagaon-782002 PAN: NOT AVAILABLE None 15,00,000/ 2007-08 31/03/2016 5. Share of image insurance Pvt. Ltd. 13 Community Center, East of Kailash, New Delhi-65 None 16,72,455/ 2015-16 31/03/2016 6. Gautam Bhansali C/o H M Traders, Tura the Appellant Bazar, TURA-794001 PAN: AFUPB8995A Nephew of the appellant 7,00,000/ 2012-13 (18/10/2012 31/03/2016 7. Global School 416. Dreamland Building 1/18B, Asaf ali Road, New Delhi-2 Prop. Concern of the Appellant 1,43,09,409/ Prior to 2015-16 (Opening Balance 2430 9409.24) 31/03/2016 ....
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....evant previous year. Since there is no fresh credit during the year in the books of account of the assessee, provisions of sec. 68 of the Act cannot be applied. He thus, deleted the addition so made. On this issue, Ld. Counsel for the assessee has reiterated the submissions made before the Ld. CIT(A) which are not repeated for the sake of brevity, as already noted above. 7. Ld. CIT DR has placed on record a detailed written submission for each of the grounds. Ld. CIT DR submitted that while deleting the addition, Ld. CIT(A) has made a remark that in case, any of the documentary evidence filed by the assessee during the course of appellate proceedings are found to be incorrect or false or fabricated then, assessee would be liable for requisite action under law for wrong verification and also for wilful attempt to evade taxes. According to him, this remark is important in the backdrop of the observation made by Ld. CIT(A) that the addition was made by the AO since assessee could not satisfactorily explain/ substantiate to build- up his capital. All this had been explained only during the course of appellate proceeding, by filing documentary evidence. Ld. CIT DR stated that assesse....
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.... that he has exercised his powers u/s. 250(4) of the Act, there is nothing on record which enables us to discern that he has made enquiries or directed the AO to make further enquiry for the purpose of disposing of the appeal. He has simply taken on record, the material furnished by the assessee and after citing various judicial pronouncements, deleted the addition so made by the Ld. AO. 8.3. When we further delved into other items of capital in the table extracted above, we find that there are transactions by the assessee with his daughter Smt. Liza Bhansali, there are transactions with spouse of the assessee, Smt. Santosh Bhansali, also with his another proprietary concern named as Global School. Further, there is a transaction with nephew of the assessee, Shri Gautam Bhansali and there are another transactions with PLB Finance & Services Pvt. Ltd. wherein again, assessee is the director. The nature of these transactions with the aforesaid related parties in most of the cases, have been explained to be gifts, without substantiating the source of the same. 8.4. One of the items relates to dividend from RSWM amounting to Rs. 1,03,830/- which forms part of increase in the capi....
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....necessary enquiries either himself or by the Ld. AO. He may call for a report from the Ld. AO on the enquiries conducted so as to arrive at appropriate conclusion. Needless to say that assessee be given reasonable opportunity of being heard. Accordingly, ground taken by the revenue in this respect is allowed for statistical purposes. 9. On the second issue relating to addition towards LTCG and STCG on share transaction, Ld. AO had called for all the relevant documentary evidence and explanation which were partially complied with. Ld. CIT(A) had given the relief in respect of this addition by holding that addition was made relying on wrong DMAT account i.e. of the HUF of the assessee and not of the assessee himself. While granting relief by holding so, Ld. CIT(A) made a remark that in case, if this documentary evidence filed by the assessee during the course of appellate proceeding is found to be incorrect or false or fabricated, then the assessee would be liable for requisite action under law for wrong verification and also for wilful attempt to evade taxes. This remark by the Ld. CIT(A) itself demonstrates a doubt and a double mind while granting the relief. 9.1. It is impor....