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Issues Involved:
1. Addition of Rs. 1,44,01,601/- on account of Long Term Capital Gains. 2. Validity of the statement given by the husband of the assessee during the search. 3. Authenticity of the purchase and sale transactions of shares. 4. Addition of Rs. 7,20,080/- as alleged estimated expenses for availing bogus profits. Issue-wise Detailed Analysis: 1. Addition of Rs. 1,44,01,601/- on account of Long Term Capital Gains: The assessee claimed that she sold 1,65,000 shares of M/s. DFL in October 2002 for Rs. 1,44,01,601/-, purchased on 04.05.2001, and disclosed a long-term capital gain of Rs. 1,40,71,601/-. The entire capital gain was invested in National Housing Bank Bonds, showing taxable capital gain as NIL by claiming deduction under section 54EC of the Income Tax Act. The Assessing Officer (AO) rejected this claim, considering the transactions as bogus and treating the entire sale consideration as unaccounted income. The AO's decision was based on the denial by M/s. DFL and the broker M/s. G.R. Pandaya Broking Private Limited (GRPBL) of any such transactions. The CIT(A) upheld the AO's decision, noting that the shares were dematerialized on 01.10.2002 and sold in the same month, thus categorizing the gain as short-term capital gain, not eligible for deduction under section 54EC. 2. Validity of the statement given by the husband of the assessee during the search: The husband of the assessee, during the search, admitted that he would declare the capital gain as income and pay taxes accordingly. However, this statement was later retracted through an affidavit, claiming it was made under duress. The Tribunal found that the retraction was supported by evidence, as the husband was hospitalized due to health issues and the affidavit was sworn immediately after discharge. The Tribunal held that the statement was made under pressure and should not be given much weight. 3. Authenticity of the purchase and sale transactions of shares: The Tribunal examined the evidence, including the balance sheet of AY 2002-03 showing the purchase of shares, and found that the shares were indeed purchased on 04.05.2001. The Tribunal criticized the reliance on the letter from M/s. DFL dated 06.08.2007, which stated that the assessee was not a shareholder, as this was irrelevant for the period under consideration. The Tribunal also noted that the broker GRPBL, who initially denied the transaction, later confirmed the account of the assessee. The Tribunal directed the AO to re-verify this aspect and decide the issue afresh after affording a reasonable opportunity of being heard to the assessee. 4. Addition of Rs. 7,20,080/- as alleged estimated expenses for availing bogus profits: The AO made an addition of Rs. 7,20,080/- (5% of the total transaction) under section 69C of the Act, assuming that the assessee must have paid this amount to arrange the bogus transaction. The Tribunal found no material evidence to support this assumption and held that in the case of a search, additions can only be made based on material found during the search. Since no such material was found, the Tribunal deleted this addition. Conclusion: The Tribunal allowed the appeal partly, setting aside the matter regarding the genuineness of the purchase and sale transactions of shares to the AO for re-verification, and deleted the addition of Rs. 7,20,080/- for alleged expenses. The Tribunal emphasized the need for corroborative evidence and reasonable verification in tax assessments.
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