ITO Vs Nawabkhan Imamkhan Baloch (ITAT Ahmedabad)
ITAT Upholds Deletion of ₹26.56 Lakh Bogus LTCG Addition Because No Evidence Linked Assessee to Accommodation Entries; No Corresponding Bank Credits, No Section 69A Addition: ITAT; Bogus LTCG Addition Deleted Because AO Relied Only on Investigation Report Without Independent Verification; Section 69A Addition Quashed Because AO Failed to Prove Specific Share Transactions; ITAT Deletes Bogus LTCG Addition Because No Independent Inquiry Was Conducted.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, dismissed the Department’s appeal and upheld the deletion of an addition of ₹26,56,595 made under Section 69A of the Income-tax Act, holding that the Assessing Officer (AO) had failed to establish any factual or legal basis for treating the amount as unexplained money.
The assessee’s case was reopened under Section 147 on the basis of information received from the Investigation Wing alleging that the assessee had entered into share transactions through certain entities and an alleged accommodation entry provider to obtain bogus long-term capital gains and short-term capital gains/losses. Based on this information, the AO initiated reassessment proceedings under Sections 147, 144 and 144B of the Act.
During the reassessment, the AO examined the assessee’s transactions in the shares of Goenka Business and Finance Ltd. and Ejecta Marketing Ltd. The AO recorded that these transactions resulted in a nominal short-term capital gain of ₹1,766.60, which had already been disclosed and offered to tax by the assessee. However, relying on the investigation report, the AO concluded that the assessee had obtained accommodation entries amounting to ₹26,56,595 in the guise of bogus long-term capital gains. The AO observed that the assessee had failed to produce satisfactory documentary evidence, including contract notes and complete transaction details, and accordingly treated the amount as unexplained money under Section 69A.
