ITAT deletes Addition made on account of Unexplained Cash Credits to tune of Rs.5.76 Cr

ITAT - unexplained cash credits - Taxscan

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench  deletes additions made on account of unexplained cash credits to the tune of Rs.5.76 Crores.

The assessee, Mukesh Mittal had sold 7,50,000 shares of M/s Radford Global Ltd. for a total consideration of Rs. 5,99,40,819 against the purchase of 1,50,000 shares at Rs. 22,50,000 resulting into long term capital gains of Rs. 5,76,90,819/-. The assessee was allotted 1,50,000 preferential shares on 20.1.2012 at a price of Rs. 15 per share which included premium of Rs. 5 per share.

The return declaring taxable income of Rs. 85,85,510 was filed through e-filing and was processed under section 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny through CASS. During the year under consideration, the assessee has declared income from house property, short term capital gain and other sources. Besides this, the assessee has declared income from long term capital gains to the tune of Rs. 5,83,61,303 which has been claimed exempt under section 10(38) of the Act.

The brokers as well as many employees of these share broking companies in Kolkata, in their statements recorded under section 131 of the Act, have admitted to the fact that they have artificially inflated the prices of the shares of their dummy companies to deliberately provide bogus accommodation entries of the long term capital gain/loss, short term capital gain/loss to the beneficiaries.

However, no such statement has been confronted or supplied to the assessee during the course of assessment proceedings. In fact no specific statement has even been referred to by the AO in the order of assessment or in the show cause notice extracted in the order of assessment. On the contrary, the fact is that the assessee is a habitual investor.

The Coram N.K.Billaiya and Sudhanshu Srivastava noted that the assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act and such discharge is purely a question of fact.

The tribunal directed the Assessing Officer to accept the long term capital gain of Rs. 5,76,90,819 declared as such and allow exemption under section 10(38) of the Act.

The Tribunal deleted the impugned addition made of Rs.5,76,90,819 on account of unexplained cash credits under section 68 of the Act.

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