RASHMI SINGHANIA,KOLKATA vs. ITO, WARD-2(4), JAMSHEDPUR

1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified inconfirming the addition of Rs. 17,72,000/- made by the A.O. on account of alleged bogus LongTerm Capital Gain.

I have heard the rival contentions of the respective parties and also gone through the records. The assessee, in the appeal, has pleaded that though the Assessing Officer had declared the long-term capital gains of Rs.17,72,000/- as bogus and added the said amount into the income of the assessee, however, he has totally overlooked the long-term capital loss booked during the year of Rs.21,71,801/-. The assessee has set off the aforesaid capital gain of Rs.17,72,000/- against the loss of Rs.21,71,801/- and has returned the net capital loss amounting to Rs.3,42,499/-. However, the Assessing Officer treated the long-term capital gains shown by the assessee of Rs.17,72,000/- as bogus and added the same into the income of the assessee u/s 69A of the Income Tax Act as income from unexplained sources.

The main reason on the basis of which the Assessing Officer has made the impugned addition is that the assessee has shown the aforesaid long-term capital gains from the share transactions made in respect of shares of Kailash Auto Finance Ltd. As per the information available with the Assessing Officer, the said Kailash Auto Finance Ltd. was involved in bogus entries and thereby providing bogus long-term capital gains/losses to the investors. On being asked to explain in this respect, the assessee furnished detailed submissions wherein it has been pleaded that the assessee has not directly made investments in the said Kailash Auto Finance Ltd. The assessee, in fact, had purchased 50000 shares of M/s Careful Projects Advisory Ltd. which was later on taken over/merged in Kailash Auto Finance Ltd. by the orders of the High Court. The assessee had made investment in the equity shares of M/s Careful Projects Advisory Ltd. 2 Rashmi Singhania Assessment Year: 2014-15 out of his bank account by way of cheques. It was also pleaded that the assessee was in the activity of share transactions for more than 15 years and has made several losses during the years. The investments made in the shares of M/s Careful Projects Advisory Ltd. was only of Rs.50,000/- which was only 1.13% of the total investment made by the assessee as on 31.03.2012. The assessee’s investments during the year in securities were at Rs.44,38,115/- and that the investment in M/s Careful Projects Advisory Ltd. was very meagre as compared to the total investments made by the assessee. The assessee furnished all the details including contract notes etc. to the Assessing Officer to prove the genuineness of the transactions. The assessee further submitted that the assessee, during the year, has not claimed any tax exempt income rather the long-term capital gains have been set off against the capital losses and that there was no intention on the part of the assessee to introduce any unaccounted money during the year. Even the long term capital lossess have not been doubted by the Assessing officer. Even the assessee has returned the losses during the year,all the transactions were made through banking channels and all the necessary details,whatever, called upon by the Assessing Officer were submitted by the assessee. However, the Assessing Officer, without considering the reply andevidences furnished by the assessee, has made the additions merely on the basis of some general information received from the Investigation Wing that the Kailash Auto Finance Ltd. was involved in some bogus transactions. However, there was no discussion by the Assessing Officer in the assessment order regarding bogus transaction entered into the name of the assessee. The Assessing Officer even has not pointed out any defect in the evidences and details furnished by the assessee to prove the genuineness of the transaction done by the assessee in the shares.

Even the ld. CIT(A) who has reproduced the reply of the assessee in the impugned order and thereafter, upheld the order of the Assessing Officer in a mechanical manner without any discussion as to why he was not satisfied with the reply of the assessee. The additions, in this case, appear to be made on assumptions and presumptions basis without any material being brought on record showing any defect or discrepancy in the evidences furnished by the assessee and even without bringing on record any reliable material to Rashmi Singhania Assessment Year: 2014-15 show that the assessee’s long-term capital gains which have been set off against long- term capital loss, was not genuine.

In view of the above, I do not find justification on the part of the lower authorities in making/confirming the impugned additions and the same are accordingly set aside.

In the result, the appeal of the assessee stands allowed.