2019 (8) TMI 1732 - AT - Income Tax

Bogus LTCG - Addition u/s 68 - HELD THAT - Assessee has discharged its onus about the veracity of the transaction and the claim made on the sale consideration of shares of M/s. SESL as claimed u/s 10(38) - AO being influenced by the investigation report of the Investigation Wing of the Department has taken adverse view against the assessee without any direct evidence / material to suggest that the entire claim of assessee was bogus. - Decided in favour of assessee.

Summary

Issues:
Appeal against addition of Long Term Capital Gain (LTCG) on sale of shares under Section 68 of the Income Tax Act, 1961 for assessment year 2015-16.

Analysis:
The assessee appealed against the addition of ?15,95,720 claimed as LTCG on the sale of shares of M/s. Sulabh Engineering and Services Ltd. The Assessing Officer (AO) received information suggesting the assessee's involvement in bogus LTCG activities. The AO questioned the purchase and sale transactions of shares of M/s. SESL, noting the significant price difference within a short period. The AO suspected the transactions were a means to convert unaccounted money into tax-exempt income. The AO considered the entire receipt as a fabricated transaction and added it under Section 68 of the Act. The CIT(A) upheld the AO's decision.

The assessee contended that similar issues were addressed in a previous Tribunal case concerning LTCG on shares of M/s. SESL. The assessee provided various documents supporting the purchase and sale transactions, including contract notes, bank statements, and DEMAT statements. The assessee demonstrated compliance with the requirements under Section 10(38) of the Act. Despite the AO's reliance on an investigation report without direct evidence against the assessee, the Tribunal ruled in favor of the assessee based on the presented documents. The Tribunal emphasized the importance of evidence and documentation in proving the genuineness of transactions.

The Tribunal highlighted the extensive evidence submitted by the assessee, including purchase and sale statements, bank details, NSDL statements, balance sheets, profit & loss accounts, and broker statements. The Tribunal noted that the documents provided by the assessee supported the claim of LTCG on the sale of shares of M/s. SESL. By considering the plethora of evidence and following a previous Co-ordinate Bench decision, the Tribunal allowed the assessee's appeal and directed the deletion of the addition of ?15,95,720.

In conclusion, the Tribunal found in favor of the assessee, emphasizing the importance of substantiating claims with proper documentation and evidence. The appeal against the addition of LTCG on the sale of shares was allowed, and the addition was deleted.