2009 (9) TMI 967 - AT - Income Tax

Summary

Issues Involved:
1. Verification of the genuineness of share transactions.
2. Treatment of long-term capital gain as income from unaccounted sources.

Summary:

Verification of the Genuineness of Share Transactions:

The assessee, an individual housewife, earned a long-term capital gain of Rs. 14,15,750/- on the sale of 25,000 shares of M/s. Gautam Resources Ltd. The AO scrutinized the transactions and issued notices u/s 132 to verify the buyers and sellers, which were returned unserved. A commission u/s 131(1D) was issued to ACIT, Circle-32, Calcutta, who reported that the broker's son, Mr. Aditya Chirimar, indicated the transactions were speculative. The AO concluded that the assessee converted unaccounted income into long-term capital gain.

Treatment of Long-Term Capital Gain as Income from Unaccounted Sources:

The assessee provided substantial evidence, including contract notes, DEMAT account details, and broker confirmations. The CIT(A) found the AO's addition based on conjecture and surmises, noting the shares were of a public limited company quoted on the stock exchange, and payments were received by cheque. The CIT(A) directed the AO to treat the amount as long-term capital gain, not as income from unaccounted sources.

Appeal and Judgment:

The Revenue appealed, arguing the transactions were speculative and aimed at converting unaccounted income to avoid higher tax rates. The Tribunal, after hearing both sides, noted the AO accepted the purchase price and the source of investment. The shares were held for over 12 months, qualifying for long-term capital gain taxed at 10%. The Tribunal upheld the CIT(A)'s decision, finding no basis to interfere, and dismissed the Revenue's appeal.

Conclusion:

Order pronounced in the open court on 23-09-2009, dismissing the appeal of the Revenue.