The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the revenue’s appeal, upholding the Commissioner of Income Tax (Appeals) [ CIT(A) ]’s decision to delete the addition made by the Assessing Officer ( AO ). The ITAT noted that the AO had not found any issues with the documents provided by the assessee and had relied solely on a general report from the Investigation Wing without conducting an independent inquiry.
PrakashmalMalraj Jain,the respondent-assessee, filed return of income ( ROI ) on September 29, 2014, declaring a total income of Rs.4,22,420. By selling 32,000 shares of M/s. Moryo Industries Limited for Rs.63,51,287,the assessee earned a Long Term Capital Gain ( LTCG ) of Rs.59,74,380.
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The AO received information that Giriraj Kishore Agarwal was providing fake LTCG through shares of M/s. Moryo Industries Limited. Suspecting the LTCG declared by the assessee to be bogus, the AO reopened the assessment year( AY ) 2014-15 assessment by issuing a notice under Section 148. Relying on the Investigation Wing’s report, the AO concluded that the LTCG of Rs.59,74,380 was fraudulent and assessed the entire sale proceeds of Rs.63,51,287 as the assessee’s income.
The CIT(A) during the appellate proceedings deleted the addition, noting that the AO did not find any fault with the documents provided by the assessee supporting the purchase and sale of shares. The CIT(A) relied on the Mumbai Tribunal’s decision in Srichand Chaturmal ( HUF ) vs. ACIT and similar cases. Consequently, the addition made by the AO was deleted,leading the revenue to appeal.
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The tribunal heard both sides of the parties and observed that the assessee purchased shares, dematerialized them, and later sold them through a registered broker, with all transactions done via banking channels. The demat statement provided by the assessee confirmed the entry and exit of the shares.As noted by the CIT(A), the AO did not find any issues with the documentation and did not conduct an independent inquiry, relying only on a general report from the Investigation Wing.
The tribunal relied upon the decision made by the Bombay High Court in the case of PCIT vs. Ziauddin A Siddique and noted that the decision is applicable in the present case.
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The division bench comprising Anikesh Banerjee ( Judicial Member ) and B.R Baskaran ( Accountant Member ) dismissed the appeal filed by the revenue, stating that there was no infirmity in the order of the Ld. CIT(A).
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