2021 (7) TMI 1439 - AT - Income Tax

Bogus LTCG - sale proceeds of sale of shares u/s 68 - huge jump in the sale price of the scrip - assessee had purchased 20000 shares @ Rs. 1/- per share in October, 2011 and has sold them at Rs. 310/Rs. 311 in July, 2014 - HELD THAT - As stated earlier, none appeared on behalf of the assessee. We heard Ld. D.R. who supported the orders passed by the tax authorities. We notice that the assessee has not filed any evidence/material to controvert the findings given by Ld. CIT(A). Under these set of facts, we have no other option but to confirm the order passed by Ld. CIT(A). Appeal filed by the assessee is dismissed.

Summary

Issues Involved:
Challenge to addition of sale proceeds of shares under section 68 of the Income-tax Act, 1961.

Detailed Analysis:

1. Issue: Addition of sale proceeds of shares under section 68
- The assessee appealed against the order confirming the addition of Rs. 62.09 lakhs as sale proceeds of shares under section 68 of the Income-tax Act, 1961.
- The assessee declared long term capital gain of Rs. 61,73,539 from the sale of shares of M/s. Jackson Investment Ltd., claiming exemption under section 10(38) of the Act.
- The Assessing Officer (A.O.) observed that M/s. Jackson Investment Ltd. was one of the suspended scrips by the Bombay Stock Exchange on SEBI's direction.
- The A.O. concluded that the capital gain declared by the assessee was a fictitious transaction due to the significant price increase of the scrip and its suspension from trading.
- Consequently, the A.O. assessed the entire sale proceeds of Rs. 62,09,600 as the assessee's income, a decision upheld by the Ld. CIT(A).

2. Judgment and Decision
- Despite the absence of the assessee during the hearing, the tribunal proceeded ex-parte due to the notice being duly served.
- The tribunal noted the lack of evidence or material presented by the assessee to challenge the findings of the Ld. CIT(A).
- With no evidence to counter the authorities' conclusions, the tribunal upheld the order passed by the Ld. CIT(A) confirming the addition of the sale proceeds as income.
- Consequently, the appeal filed by the assessee was dismissed, and the order was pronounced on July 20, 2021.

This judgment highlights the importance of providing substantial evidence and material to support claims in tax matters, as failing to do so can result in adverse decisions by the tax authorities and tribunals. The case serves as a reminder for taxpayers to ensure proper documentation and justification for transactions to avoid disputes and unfavorable outcomes.