2007 (2) TMI 159 - HC - Income Tax

Long term capital gains - transactions of sale of shares, purchase was never challenged by the Revenue - Tribunal also took into consideration that it was only on the basis of a presumption that the AO concluded that the assessee had paid cash and purchased the cheque - No such presumption could be drawn by the AO, merely on surmises and conjectures - absence of any cogent material - AO can not reopen the assessment & can not add income as unexplained income

Summary

Issues:
1. Disputed addition of long-term capital gain by the Assessing Officer.
2. Validity of the Commissioner of Income-tax (Appeals) order deleting the addition.
3. Consideration of evidence by the Income-tax Appellate Tribunal.
4. Comparison with a previous judgment on the genuineness of gifts.

Analysis:
1. The assessment was reopened based on information suggesting false long-term capital gain. The Assessing Officer added an amount as unexplained credit, which the Commissioner of Income-tax (Appeals) later deleted. The Commissioner held that the Assessing Officer failed to provide evidence for deeming the transaction as bogus. The Income-tax Appellate Tribunal, considering various documents, found the transaction genuine as shares were purchased and sold through a registered broker, with sale proceeds received through a cheque.

2. The Income-tax Appellate Tribunal rightly rejected the Revenue's appeal, emphasizing that the assessee was a mere shareholder without control over the company. The Tribunal cited precedents to establish that suspicion cannot substitute legal proof. The absence of concrete evidence led the Tribunal to uphold the deletion of the addition by the Commissioner and dismissed the Revenue's claim.

3. The Revenue's reliance on a previous judgment concerning gifts was deemed irrelevant as the current case pertained to share transactions where the purchase was undisputed. The court clarified that the onus to establish the genuineness of gifts differs from proving the legitimacy of share transactions. The court found no substantial legal questions for consideration and dismissed the appeal.

4. In a separate judgment, the court addressed the burden of proof in establishing the genuineness of gifts, contrasting it with the present case involving share transactions. The court highlighted the importance of evidence and upheld the decision based on the lack of challenge to the share purchase. The court concluded that no significant legal issues arose, leading to the dismissal of the appeal.