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Facts
The assessee received Rs. 94 lakhs from M/s Brahma Trade Link Pvt. Ltd. for the sale of shares, which was declared in their income tax return. The Assessing Officer, based on information from the Investigation Wing, treated this amount as unexplained cash credit under Section 68, deeming it accommodation entries, which the Ld. CIT(A) confirmed.
Held
The Tribunal held that since the assessee had shown the share sale proceeds in their profit and loss account and no defects were pointed out in the evidences submitted, merely relying on the Investigation Wing's report was insufficient. Therefore, the addition made under Section 68 was unsustainable, and the order of the Ld. CIT(A) was set aside.
Key Issues
Whether an addition under Section 68 for share sale proceeds is sustainable when the assessee has disclosed the transaction in their accounts and no defects are found in the evidence, despite a report from the Investigation Wing suggesting accommodation entries.
Sections Cited
148, 142(1), 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR & SHRI PRADIP KUMAR CHOUBEY
O R D E R
Per Rajesh Kumar, AM :
This is an appeal filed by the assessee against the order dated 14.11.2024, passed by the ld. CIT(A), National Faceless Appeal Centre, Delhi, for the assessment year 2013-2014.
The only issue raised by the ld. counsel of the assessee against confirming the addition of Rs.94 lakhs by the ld.CIT(A) as made by the ld. Assessing Officer in respect of money received from Brahma Trade Link Private Limited against the sale of shares.
The facts in brief are that the assessee filed its return of income on 19.09.2013 declaring total income at Rs.30,660/-. The Assessing Officer reopened the assessment of the assessee after receiving information from the ADIT(Inv.), OSD, Unit-4, Kolkata that the assessee has received Rs.94 lakhs from shell company i.e. M/s Brahma Trade Link Pvt. Ltd.. Finally a notice u/s.148 of the Act was issued on 16.03.2020 which was complied with by the assessee by filing return of income on 09.08.2020. Thereafter the Assessing Officer issued questionnaire along with notice u/s.142(1) of the Act, which was replied by the assessee. Finally an addition of Rs.94 lakhs was made by the Assessing Officer as unexplained cash credit u/s.68 of the Act.
In the appellate proceedings, the ld.CIT(A) confirmed the same on the ground that the said shares were sold by the assessee had no loss nor profit and the same is nothing but accommodation entries received by the assessee from M/s Brahma Trade Link Pvt. Ltd.
After hearing the rival contentions and perusing the material available on record, we find that in this case the assessee has sold shares during the year to M/s Brahma Trade Link Private Limited and received Rs.94 lakhs. It is pertinent to mention here that the assessee engaged in purchase and sale of shares which has been acknowledged by the Assessing Officer. The said receipt of Rs.94 lakhs from sale of shares was duly shown in the profit and loss account and the profit was accordingly determined and offered to tax by the assessee. The Assessing Officer after receiving the credible information from ADDIT(Inv), OSD Unit-4, Kolkata came to the conclusion that the assessee has received accommodation entries in the form of sale of shares. We note that either of the authorities below have not pointed out any defects in such evidences filed by the assessee in support of sale of shares. Merely relying on the report of the Investigation Wing is not enough and the addition made based thereupon is unsustainable. We also find that the