Addition u/s 69 towards Unexplained Investment not permissible in the absence of Corroborative Evidence: ITAT [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT)has held that addition under section 69 of the Income Tax Act,1961 towards unexplained investment is not permissible in the absence of corroborative evidence.

The assessee was represented by Shri Vishnunarayan Modani and the department was represented by Shri Vivek Upadhyay.

On a search conducted in M/s. Mahasagar Securities Pvt. Ltd. Group, it was found that they were indulging in providing accommodation bills for generating capital gains through suspicious transactions, in which the assessee was one of the beneficiaries.

The assessee purchased shares of Reliance Energy on 20.9.2007 for a sum of Rs. 2,93,653/- and sold them on 1.10.2007 for a sum of Rs. 4,34,465/- and generated capital gain for a sum of Rs. 1,36,812/- which was failed to disclose in his returnof income filed for A.Y. 2008-09.

The Assessing Officer also assessed the purchase value of Rs. 2,97,653/- as an unexplained investment under section 69 of the Act. Further assessed a sum of Rs. 2,000/- as brokerage expenses for procuring the above-said capital gains.

The assessee admitted that he purchased shares of Spice Communication on 11.2.2009 for a sum of Rs. 1,68,145/- from M/s Alliance Intermediaries& Network Pvt. Limited ( a company belonging to Mahasagar group) and sold them on 13.2.2009 for a sum of Rs. 3,18,720/-.  In the return of income filed by him, the assessee declared short-term capital gains of Rs. 1,51,188/- from the above transactions.The CIT(A) confirmed the additions made by the Assessing Officer in both years.

It wascontended by asseseeethat he has not paid any money for the purchase of shares, which was also evidenced by the fact that his bank account does not depict any such payment.

A single-member bench of Shri B.R. Baskaran (AM) noticed that the assessee has not furnished any material to show that the share transactions entered by him are genuine transactions and viewed that the Assessing Officer was justified in treating the capital gain of Rs.136,812/- and Rs.150,575/- as income under the head ‘income from other sources’ respectively in A.Y. 2008-09 & 2009-10.

It was observed that the assessee has purchased and sold shares within a short period of ten days in A.Y. 2008-09 and two days in A.Y. 2009-10. The assessee has furnished a copy of the bank statement and it has shown no movement of funds from the assessee to M/s. Alliance Intermediaries& Network Pvt. Limited.

In light of the circumstance the Tribunal held that there was no scope for making any addition u/s 69 of the Act towards unexplained investment and directed the Assessing Officer to delete the addition of Rs. 297,653/- and Rs. 168,145/- made respectively in A.Y. 2008-09 and 2009-10 as an unexplained investment. 

While partly allowing the appeal, the Tribunal upheld the other additions made by the Assessing Officer.The assessee was represented by Shri Vishnunarayan Modani and the department was represented by Shri Vivek Upadhyay.

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