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2018 (11) TMI 1924 - AT - Income TaxBogus LTCG - purchase and sale of the shares - AO based on a general report and modus operandi adopted and concluded that the assessee has claimed bogus long term capital gain - HELD THAT - As in a number of cases this bench of the Tribunal has consistently held that decision in all such cases should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. We have in all cases deleted such additions. As there is no surviving order of SEBI against the assessee or the company, the script of which was purchased and sold by the assessee. When there is no surviving adverse order of SEBI, disputing the claim of the assessee, the judgment in RAKHI TRADING PRIVATE LTD. 2018 (2) TMI 580 - SUPREME COURT cannot be applied to the facts of this case. In view of the above discussion the addition in question is deleted and the appeal of the assessee is allowed.
Issues:
1. Rejection of claim of Long Term Capital Gains on shares 2. Reliance on circumstantial evidence and human probabilities 3. Applicability of case law in similar matters 4. Controverting SEBI judgment in absence of adverse order Analysis: The judgment by the Appellate Tribunal ITAT Kolkata dealt with the appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) concerning the rejection of the claim of Long Term Capital Gains on the purchase and sale of shares of two companies. The Assessing Officer had concluded that the claimed gains were bogus based on general observations and a common report, leading to an addition of the entire sale proceeds as income. The evidence presented by the assessee was dismissed, and the claim under section 10(38) of the Income Tax Act was rejected. The issue revolved around the genuineness of the transactions and the reliance on circumstantial evidence and human probabilities by the revenue authorities. The Tribunal emphasized the need for decisions based on evidence rather than generalization or suspicion. The Commissioner of Income Tax (Appeals) had upheld the addition, relying on circumstantial evidence and rules of suspicious transactions. However, the Tribunal noted that no direct material was presented to challenge the genuineness of the transactions, leaving the evidence filed by the assessee unchallenged. The Tribunal highlighted that the conclusions drawn by the revenue authorities were based on a general report without specific details or confrontation with the assessee. In previous cases, the Tribunal consistently ruled in favor of the assessee when decisions were not based on evidence but on generalization or suspicion. The Tribunal cited various case laws where similar additions were deleted based on the lack of concrete evidence. The Tribunal found the cited decisions of High Courts and ITAT applicable to the current case, leading to the deletion of the addition in question. Additionally, the Tribunal addressed the reliance on a Supreme Court judgment related to SEBI, emphasizing that in the absence of an adverse order from SEBI against the assessee, the Supreme Court judgment was not applicable to the case at hand. As a result, the addition and consequential addition under section 69C were deleted, and the appeal of the assessee was allowed. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the importance of decisions based on concrete evidence rather than generalizations or suspicions. The judgment highlighted the significance of specific material and confrontation with the assessee in cases involving claims of Long Term Capital Gains to ensure fair adjudication.
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