2018 (7) TMI 2149 - HC - Income Tax

Bogus LTCG - share transactions made through broker - non-genuine transaction - HELD THAT - Issue decided in Smt. Pooja Agarwal 2017 (9) TMI 1104 - RAJASTHAN HIGH COURT wherein held Simply mentioning that the findings are in the appraisal report and appraisal report is made by the Investing Wing after considering all the material facts available on record does not help much. AO has failed to prove through any independent inquiry or relying on some material that the transactions made by the appellant through share broker were non-genuine or there was any adverse mention about the transaction in question in statement of broker. Simply because in the sham transactions bank a/c were opened with HDFC bank and the appellant has also received short term capital gain in his account with HDFC bank does not establish that the transaction made by the appellant were non genuine. Considering the share transactions made through broker cannot be held as non- genuine. Consequently denying the claim of short term capital gain made by the appellant before the AO is not approved. AO is therefore, directed to accept claim of short term capital gain as shown by the appellant - Decided in favour of assessee.

Summary

Issues:
- Whether the Tribunal was justified in deleting the addition of amounts made by the Assessing Officer on account of bogus Long Term Capital Gain and related expenses?
- Whether the decision of the Tribunal and CIT(A) to delete the additions was correct based on the facts presented in the case?

Analysis:

Issue 1:
The appellant challenged the Tribunal's decision to delete additions made by the Assessing Officer regarding bogus Long Term Capital Gain and related expenses. The appellant raised substantial questions of law related to the justification of these deletions. The Tribunal and CIT(A) had allowed the appeals of the assessee, leading to the current challenge.

Issue 2:
The court referred to a previous decision in a similar case where the appellant was found to have arranged accommodation entries to convert black money into white. The court highlighted that during a survey operation, the appellant admitted to not making any investments in shares during the relevant period. It was revealed that the share transactions were bogus and obtained from an entry provider. However, the Tribunal and CIT(A) considered various details provided by the appellant, including documents related to share transactions, demat accounts, and stock exchange transactions, to support the genuineness of the transactions. The court emphasized that the transactions were supported by documents, payments were made through cheques, and there was no evidence of cash going back into the appellant's account. The court ultimately upheld the decisions of the Tribunal and CIT(A) to delete the additions made by the Assessing Officer.

Conclusion:
After thorough analysis and considering the facts presented, the court found in favor of the assessee and dismissed the appeals. The court concluded that no substantial question of law arose in this case, and the decisions of the Tribunal and CIT(A) to delete the additions were deemed correct based on the evidence and findings presented.