2016 (1) TMI 705 - AT - Income Tax

Purchase and sale of shares - ingenuity of transactions - claim of long term capital gains by assessee - CIT(A) allowed the claim - Held that - The assessee had duly furnished the evidence of purchase and sale of shares and the long term capital gain earned therefrom. No discrepancy has been brought out by the ld. D.R. in relation to the share transactions done by the assessee with M/s Database Finance Ltd. We, therefore, do not find any infirmity in the order of the ld. CIT(A) while allowing the claim of the assessee. - Decided in favour of assessee

Summary

Issues:
1. Disputed long term capital gains on shares of Database Finance Ltd.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai involved a dispute regarding the long term capital gains claimed by the assessee on the transactions of purchase and sale of shares of Database Finance Ltd. The Revenue contested the decision of the ld. CIT(A) who deemed the transactions genuine, allowing the capital gains claim.

During the assessment proceedings, the Assessing Officer (A.O.) raised concerns as the assessee failed to provide proof of payment for the purchase of shares, leading to the A.O. treating the entire transaction as bogus income from undisclosed sources. The ld. CIT(A) examined the evidence presented, including broker's notes, certificates, and account entries, to establish the genuineness of the transactions. The broker's note indicated the purchase of shares and the due amount from the broker, which was adjusted against the sale proceeds. The shares were transferred to the assessee's name, and relevant documentation, such as quoted share prices, was provided to support the transaction's authenticity.

The ld. CIT(A) concluded that the assessee had fulfilled its burden of proving the legitimacy of the share transactions, highlighting the lack of evidence from the A.O. to discredit the genuineness. The Tribunal noted that other share transactions handled by the same broker were considered genuine by the A.O., further supporting the legitimacy of the disputed transactions.

The Revenue's argument regarding the broker's past regulatory issues with SEBI was dismissed as irrelevant to the present case, emphasizing that the assessee had adequately substantiated the purchase and sale of shares, demonstrating no discrepancies. The Tribunal upheld the ld. CIT(A)'s decision, dismissing the Revenue's appeal and affirming the legitimacy of the claimed long term capital gains on the shares of Database Finance Ltd.

In conclusion, the Tribunal's judgment favored the assessee, upholding the genuineness of the share transactions and dismissing the Revenue's appeal, emphasizing the importance of providing substantial evidence to support claims in tax matters.