2022 (11) TMI 1454 - HC - Income Tax

Bogus LTCG - undisclosed income in the garb of Long Term Capital Gain LTGC to claim exemption u/s 10 38 - off line transaction of purchase and sale of shares of penny stock companies - ITAT deleted addition - HELD THAT - Tribunal that the assessee s appeal had allowed following the decision of the Coordinate Bench of the learned Tribunal in the case of Ritin Lakhmani Ors. 2020 (11) TMI 768 - ITAT KOLKATA and allowed the appeal filed by the assessee. The revenue had preferred the appeal against the said order before this court in 2022 (11) TMI 1177 - CALCUTTA HIGH COURT . Decided against revenue.

Summary

Issues:
1. Appeal filed by revenue under Section 260A of the Income Tax Act, 1961 against the ITAT order.
2. Substantial questions of law raised by the revenue:
i. Substantiation of genuineness of transaction for claiming exemption under section 10(38).
ii. Nature of off-line transaction of purchase and sale of shares.
iii. Assessment of liability under section 68 based on documentary evidence and surrounding circumstances.

Analysis:
1. The High Court heard arguments from both parties regarding the appeal filed by the revenue against the ITAT order dated 21.4.2021 for the assessment year 2014-2015.

2. The revenue raised substantial questions of law related to the genuineness of the transaction, the nature of share transactions, and the assessment of liability under section 68. The Court considered these questions in detail.

3. The Court noted that the ITAT had allowed the assessee's appeal based on a decision of a Coordinate Bench in a similar case and dismissed the revenue's appeal in line with previous judgments. The Court referred to a specific case where the appeal filed by the revenue was dismissed due to improper exercise of jurisdiction under section 263 of the Act.

4. Based on the precedent and reasoning provided in the previous judgment, the High Court affirmed the decision of the ITAT and dismissed the revenue's appeal on identical grounds. The Court found no need to decide the substantial questions of law raised by the revenue in this case.

5. Consequently, the appeal filed by the revenue was dismissed by the High Court, following the principles established in previous judgments and based on the specific circumstances of the case.

6. The Court directed that the affidavit filed in reply be kept with the record for future reference and documentation purposes.