9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (3) TMI 1737 - AT - Income TaxClaim for long-term capital gains - Income from undisclosed sources - The assessee claimed deduction u/s 054E. The Assessing Officer was not satisfied with the explanation of the assessee and, therefore, he treated the long-term capital gains shown by the assessee to be the income from other sources by holding that the assessee could not prove the sale of shares and genuineness of the receipt of money. The assessee went in appeal before the CIT(A). The CIT(A) deleted the addition. HELD THAT - Considering the facts and circumstances and evidence on record, I am of the considered view that the action of the CIT(A) was not correct in confirming the assessment of ₹ 12,19,538/- as the income from undisclosed sources as against the sale consideration of shares declared by the assessee. The CIT(A) was not justified in rejecting the claim of Long Term Capital Gain of the assessee from sale of shares. I accordingly direct the AO to assess the income declared from the sale of shares under the head income from Long Term Capital Gain.
Issues Involved:
1. Whether the sum of Rs. 24,34,665/- declared by the assessee as long-term capital gains should be treated as income from undisclosed sources. Issue-wise Detailed Analysis: 1. Treatment of Rs. 24,34,665/- as Long-Term Capital Gains or Income from Undisclosed Sources: The core issue in this appeal is the treatment of Rs. 24,34,665/- declared by the assessee as long-term capital gains, which the Assessing Officer (AO) treated as income from undisclosed sources. The assessee had purchased 35,000 shares of Suma Finance & Investment Ltd. on 07.06.2000 for Rs. 1,17,985/- through North India Securities Pvt. Ltd., a registered broker. The shares were sold in October and November 2001 through Agarwal and Company, with the sale proceeds amounting to Rs. 24,34,665/-. The AO was not satisfied with the genuineness of the sale and receipt of money, leading to the reclassification of the income. CIT(A)'s Findings: The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition made by the AO, treating the share transaction as genuine. The CIT(A) directed that the income derived from the sale of shares be taxed as income from capital gains under Section 112 of the Income Tax Act, 1961, rather than as income from other sources. Arguments by the Revenue: The Departmental Representative (DR) argued that the assessee did not provide complete information regarding the sale of shares. The DR emphasized the substantial increase in the share price, suggesting that the profit was taken under the guise of share sales. Arguments by the Assessee: The Assessee's Representative (AR) relied on previous Tribunal decisions, particularly in the case of Shri Satya Pal Singh vs. ITO, where similar transactions involving Suma Finance & Investment Ltd. were accepted as genuine long-term capital gains. The AR also cited the Third Member decision in ITO vs. Bibi Rani Bansal, which supported the genuineness of share transactions. Tribunal's Analysis: The Tribunal examined the rival submissions, the material on record, and previous judgments. It noted that in similar cases, such as ITO vs. Bibi Rani Bansal, the Tribunal had accepted the genuineness of share transactions despite the AO's doubts about the sale consideration and the substantial increase in share prices. The Tribunal emphasized that no addition could be sustained based on statements recorded at the back of the assessee without allowing cross-examination. The Tribunal also referenced several judicial precedents, including the Supreme Court's decisions in CIT Vs. Daulat Ram Rawatmal and Kishan Chand Chellaram vs. CIT, which established that suspicion alone could not replace concrete proof. The Tribunal reiterated that the burden of proving the transaction as bogus lay heavily on the Revenue, which failed to discharge this burden conclusively. Conclusion: The Tribunal found that the assessee had provided sufficient documentary evidence to support the genuineness of the share transactions, including purchase and sale bills, share certificates, contract notes, and transfer letters. The Tribunal concluded that the AO's decision was influenced by general suspicions rather than concrete evidence. Consequently, the Tribunal upheld the CIT(A)'s order, directing the AO to assess the income from the sale of shares as long-term capital gains. Final Order: The appeal filed by the Revenue was dismissed, and the order of the CIT(A) was upheld, affirming that the income from the sale of shares should be taxed as long-term capital gains. Pronouncement: The order was pronounced in the open court on 10.03.11.
|
