2015 (11) TMI 1705 - AT - Income Tax

Addition of income - profit arising out of sale of shares - income from undisclosed sources - capital gains or or not? - assessments u/s 147/143(3) of the Income-tax Act, 1961 - Held that - transactions of shares entered into by the assessee are evidenced by contract note of the share broker and these brokers are duly registered with SEBI and their registration number is mentioned on the contract notes. The complete name of the client, ID of the assessee, date of transaction, settlement numbers and settlement period is mentioned on the contract notes. The CIT(A) has rightly treated the transactions as genuine and profit arising out of the same, i.e. out of sale and purchase of shares is rightly treated as capital gains - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeals by revenue against CIT(A) orders deleting addition on profit from sale of shares as undisclosed income, CIT(A) reliance on previous order, authenticity of share transactions evidenced by contract notes.

Analysis:
1. The appeals by revenue challenged CIT(A) orders deleting additions on profit from sale of shares as undisclosed income instead of capital gains declared by the assessee. The transactions were through registered share brokers with complete documentation, including contract notes and payments by cheques. The AO doubted the transactions, but the High Court upheld similar transactions in the assessee's daughter's case, emphasizing compliance with regulations and payments through bank.

2. The CIT(A) relied on the previous order in the daughter's case to delete the additions, considering the authenticity of transactions and the fact that the brokers were registered with SEBI. The High Court's decision in the daughter's case supported the genuineness of the transactions, leading to the confirmation of capital gains treatment by the CIT(A) in the present case.

3. The Tribunal found the transactions genuine based on the evidence presented, including contract notes and compliance with regulations. The concurrent fact findings by the CIT(A) and the High Court in the daughter's case supported the authenticity of the transactions, leading to the dismissal of all three revenue appeals. The Tribunal upheld the CIT(A) order treating the profit from share transactions as capital gains.

In conclusion, the Tribunal dismissed all three revenue appeals, confirming the CIT(A) order treating the profit from the sale of shares as capital gains based on the authenticity of the transactions and compliance with regulations, as evidenced by contract notes and payments through registered brokers.