2021 (12) TMI 1406 - AT - Income Tax

Bogus LTCG - Addition u/s 68 - penny stock purchases - exemption u/s 10(38) denied - CIT-A deleted the addition - HELD THAT - After due consideration of the findings of the learned CIT(A) we do not find any error in it. The shares were purchased long back in 2000-2001 and sold after retaining them for more than 10 years. There is nothing with the Assessing Officer to treat it as a bogus investment to earn profit in a short span of time. Therefore the appeal of the Revenue is devoid of any merit and accordingly it is dismissed.

Summary

Issues Involved:
Appeal against deletion of addition under Section 68 of the Income-Tax Act, 1961 for Assessment Year 2011-12.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad concerned the deletion of an addition of Rs.2,10,474 made by the Assessing Officer under Section 68 of the Income-Tax Act, 1961. The Revenue contended that the Commissioner of Income-tax (Appeals) had erred in deleting this addition. The brief facts of the case revealed that the assessee had declared a total income of Rs.3,11,490 and claimed exemption under Section 10(38) of the Act for Long Term Capital Gain arising from the sale of shares of M/s. Devika Proteins Limited. The Assessing Officer treated this as a penny stock transaction and a bogus claim, leading to the addition under Section 68 of the Act.

Upon appeal, the Commissioner of Income-tax (Appeals) deleted the addition after considering the evidence provided by the appellant. The appellant demonstrated that the shares were genuine investments made long back in 2000-2001 and were not to be considered as penny stocks. The appellant submitted transaction statements from 01/06/2001 to 01/10/2010 to support this claim. The appellant's contentions were found to be valid, leading to the deletion of the addition made by the Assessing Officer regarding the alleged bogus capital gain.

The Appellate Tribunal, after reviewing the findings of the Commissioner of Income-tax (Appeals), upheld the decision to delete the addition. The Tribunal noted that the shares were purchased over a decade ago and sold after being held for more than 10 years, indicating a genuine long-term investment. The Tribunal concluded that there was no basis for the Assessing Officer to treat the investment as bogus or aimed at quick profits. Consequently, the appeal by the Revenue was deemed to be without merit and was dismissed.

In conclusion, the Appellate Tribunal ITAT Ahmedabad dismissed the Revenue's appeal against the deletion of the addition under Section 68 of the Income-Tax Act, 1961 for the Assessment Year 2011-12. The Tribunal found no error in the decision of the Commissioner of Income-tax (Appeals) to delete the addition, emphasizing the genuine nature of the long-term investment in shares made by the assessee.