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Judgment
PER C.N. PRASAD, JM,
This appeal is filed by the assessee against the order of the CIT(A)/ NFAC, Delhi dated 18.09.2023 for the A.Y. 2018-19 in sustaining the addition of Rs.34,50,858/- made u/s.69A of the Act. The assessee in its appeal raised following concise grounds of appeal :-
1.That having regard to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in upholding the action of Ld. AO in assuming jurisdiction u/s 147 and passing the impugned assessment order without complying with the mandatory conditions as envisaged under Section 147 to 151 of the Act.
2.That in any case and in view of the matter, the impugned assessment order is bad in law on various legal and factual grounds.
3.That having regard to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in confirming the action of L.d. AO in making an addition of Rs.34,50,858/- u/s 69A as alleged unexplained money invested in the shares of Eicher Motors Ltd. and Yes Bank Ltd. and further taxing the same u/s 115BBE of the Act, and that too by disregarding the submissions, evidences and documents placed on record by the assessee and without appreciating the facts and circumstances of the case.
The Ld. Counsel for the assessee at the outset referring to page -5 of the paper book which is the reasons recorded for reopening the assessment submitted that the assessment was reopened on the ground that Long Term Capital Gains in respect of sale of shares of Yes Bank Ltd and EICHER Motors Ltd. and Assessee claimed exemption u/s.10(38) of the Act. Ld. Counsel for the assessee submitted that according to the AO the assessee did not declare bogus long term capital gains claimed as exempt u/s. 10(38) of the Act in the return filed for the A.Y. 2018-19 and accordingly the assessment was reopened. Ld. Counsel for the assessee referring to page-21 of the paper book which is the acknowledgment for the submissions made on 16.02.2023 before the AO, submitted that in the course of assessment proceedings it was clearly brought to the notice of the AO that during the year under consideration the assessee has not sold any of these shares and therefore, the question of claiming any bogus deduction of long term capital gains of Rs.34,50,858/- u/s.10(38) of the Act does not arise and the same can be verified from the computation of income attached by the assessee.
Ld. Counsel for the assessee submits that the AO, however, completed the assessment making addition of Rs.34,50,858/- as unexplained investment u/s.69A of the Act. Ld. Counsel for the assessee submitted that the assessee purchased these shares during the Financial Year 2009-10 and the assessee has not made any investment during the year under consideration and not claimed any long term capital gain as the assessee did not sell any shares during the year under consideration.
On the other hand the Ld. DR relied on the orders of the authorities below.
Head rival submissions. In this case assessment was reopened based on the investigation report that the assessee had obtained bogus long term capital gain and claimed exemption u/s.10(38) of the Act in respect of investments made in Yes Bank Ltd. and EICHER Motors Ltd. with the help of the broker-lifeline Securities Ltd. by forging, antedated contract notes. Accordingly, the AO in the reasons he was of the view that the assessee has neither declared such bogus capital gains of Rs.34,50,858/- in his ITR, neither in the schedule of capital gains nor schedule of exempt income and therefore income chargeable to tax has escaped assessment for A.Y.2018-19.
In the course of assessment proceedings the assessee contended that during the year under consideration the assessee has not made any sale of these shares and no long term capital gains was earned by the assessee. However, the AO treated the investment in shares by the assessee as unexplained investment u/s.69A of the Act. It is observed that the reason for reopening of assessment is that the assessee had claimed bogus long term capital gain as exempt. However, while framing the assessment the AO made addition u/s.69A of the Act in respect of investment made by the assessee though in the course of assessment proceedings a show cause notice was issued to treat sale consideration of Rs.34,50,858/- as unexplained cash credit u/s.68 of the Act.
In our consideration view when the assessee has not made any sale of these shares and not claimed any long term capital gain during the assessment year 2018-19, we are failed to understand as to how the AO concluded that the assessee claimed bogus long term capital gain and claimed exemption u/s.10(38) of the Act. We observed that the conclusion drawn and reasons recorded are based only on the investigation wing report without making any independent enquiries by the AO. Moreover, the contention of the assessee is that all these shares were procured during the Financial Year 2009-10 and the assessee never sold these shares during the financial year 2017-18. Even the investment made by the assessee in purchase of shares cannot be treated as unexplained investment during the assessment year 2018-19 since the shares were not purchased during the assessment year 2018-19. Thus, for these reasons the AO is directed to delete the addition made u/s.69A of the Act.
In the result, appeal of the assessee is allowed.