2013 (1) TMI 843 - AT - Income Tax

Addition on account of long-term capital gains on sale of shares - bogus accommodation entry - Held that - Assessee sold shares through two brokers and their copies of sale bills and contract notes are filed and sale consideration of share is given to the assessee through banking channel and the rates at which the shares are transferred are similar as approved by M.P. Stock Exchange. The ld. CIT(A) asked the Income-tax Authorities to produce all relevant evidences and material before him to prove that the assessee has accepted bogus accommodation entry but no material was produced before him in this regard. Therefore the ld. CIT(A) on proper appreciation of facts and material on record rightly deleted the addition. Further whatever material was collected at the back of the assessee was not forwarded to the assessee. Therefore same cannot be read in evidence against the assessee. - Decided against revenue

Summary

Issues:
Challenge to deletion of addition of long-term capital gains on sale of shares for the assessment year 2002-03.

Analysis:
The appeal by the Revenue contested the deletion of an addition of Rs. 10,78,043 made on account of long-term capital gains on the sale of shares. The assessee purchased shares of a company directly and later sold them through brokers. The Revenue authorities doubted the genuineness of the transactions and made the addition under section 68 of the IT Act. The assessee claimed the transactions were legitimate, providing documents to support the purchase and sale. The ld. CIT(A) directed the authorities to produce evidence, but no adverse material was presented against the assessee. Consequently, the addition was deleted by the ld. CIT(A).

The Revenue, represented by the ld. DR, relied on the AO's order, while the assessee's counsel reiterated the genuineness of the transactions, referencing documents and legal precedents. The Tribunal considered the facts of the case, noting similarities with another case where additions were deleted by the ITAT and confirmed by the High Court. The Tribunal found no merit in the Revenue's appeal, as the assessee had provided evidence of genuine transactions, and no adverse material was produced to challenge the ld. CIT(A)'s decision.

In light of the Tribunal's previous decision and the evidence provided by the assessee, the Tribunal upheld the ld. CIT(A)'s order to delete the addition. The Tribunal emphasized that the assessee had proven the legitimacy of the transactions through documented evidence, and no material was presented to refute the ld. CIT(A)'s findings. Therefore, the departmental appeal was dismissed, affirming the deletion of the addition of long-term capital gains on the sale of shares for the assessment year 2002-03.

In conclusion, the Tribunal dismissed the departmental appeal, upholding the deletion of the addition of long-term capital gains on the sale of shares for the assessment year 2002-03.