The appeal was filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals), confirming an assessment framed under Section 153A read with Section 143(3) of the Income-tax Act, 1961 for Assessment Year 2013-14.

The assessee had originally filed a return of income declaring total income of ₹92,34,610. Pursuant to a search conducted under Section 132 in the Bhushan Steel Group, the assessee was also covered, leading to issuance of notice under Section 153A. The return filed in response remained unchanged.

During assessment proceedings, the Assessing Officer treated the long-term capital gains arising from the sale of shares of M/s Anukaran Commercial Enterprises Ltd. as bogus, alleging the same to be accommodation entries, and made an addition of ₹1,25,47,408. A further addition towards alleged commission expenditure at 6% was also made.

The additions were primarily based on statements recorded from a third party during the course of search proceedings, without any incriminating material being found from the possession of the assessee. The assessee had duly substantiated the transactions by producing documentary evidence including demat statements, contract notes, bank statements, and proof of payment of Securities Transaction Tax. The shares were held for more than the prescribed period and were sold through a recognised stock exchange.

The Tribunal observed that no material incriminating in nature was discovered during the search insofar as the assessee was concerned. It was further noted that the statements relied upon by the Assessing Officer did not name or implicate the assessee directly. The Tribunal also took cognisance of the fact that the assessee’s request for cross-examination of the concerned person was not granted.

Relying on the earlier decision of the Coordinate Bench in the case of Brij Bhushan Singal involving identical facts and the same scrip, the Tribunal held that the long-term capital gains declared by the assessee were genuine and could not be treated as unexplained income. Consequently, the related addition towards alleged commission was also deleted.

Accordingly, the appeal of the assessee was allowed, and the additions made under Section 68 and consequential commission expenditure were set aside.

Source Link- https://itat.gov.in/public/files/upload/1767164491-cP9dTG-1-TO.pdf

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