2021 (1) TMI 672 - AT - Income Tax

Year of Taxability of LTCG / STCG - Sale of shares - Income Declaration Scheme, 2016 - penny stock company - As per revenue assessee has not sold any shares during the year under consideration, therefore, there is no question of any capital gain/capital loss arises for consideration - HELD THAT - The source of investment was explained by the assessee before the Assessing Officer and the Assessing Officer accepted source and no addition was made. Therefore, as rightly submitted by the ld. Representative for the assessee it cannot be said that the source of investment to the extent of ₹ 50,31,000/- was not explained. Now the assessee claims that the total purchase of shares to the extent of ₹ 98,34,260/- was for two A.Ys.. This fact is admitted by the Assessing Officer. There was no capital gain arises for A.Y. 2014-15. For the A.Y. 2015-16, the assessee sold the shares and declared the same under Income Declaration Scheme, 2016 and paid the taxes. In such circumstances, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the entire addition made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of CIT(A). Accordingly, the same is confirmed.

Summary

Issues:
- Assessment of Long Term/Short Term Capital Gain
- Investment in shares to the extent of ?50,30,000

Analysis:

Assessment of Long Term/Short Term Capital Gain:
The appeal and cross-appeal were directed against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2014-15. The revenue contended that the Assessing Officer had added ?98,34,260 towards Long Term Capital Gain (LTCG) due to alleged manipulation of share prices by the assessee. The revenue argued that since no details were furnished, the LTCG/Short Term Capital Gain was taken at ?98,34,260. However, it was found that there was no transaction of share sale during the relevant assessment year. The assessee explained that the shares were purchased for ?50,31,000, with payments made through banking channels. The source of investment was accepted by the Assessing Officer, and no addition was made. The Tribunal observed that no capital gain or loss arose as no shares were sold during the year under consideration. It was noted that the purchases of shares were spread over two assessment years, and the capital gain was declared in the subsequent year under the Income Declaration Scheme. The Tribunal upheld the CIT(A)'s decision to delete the addition made by the Assessing Officer, as there was no capital gain for the relevant assessment year.

Investment in shares to the extent of ?50,30,000:
The revenue raised a ground regarding investment in shares amounting to ?50,30,000. The material on record showed that the assessee had invested ?50,31,000 in shares of CCL International during the relevant year. The source of this investment was explained to the Assessing Officer, who accepted the explanation and made no addition. The Tribunal confirmed that the source of investment was adequately explained and accepted by the authorities. It was clarified that the total purchase of shares was spread over two assessment years, and no capital loss occurred in the year under consideration. The Tribunal concluded that the CIT(A) rightly deleted the addition, and there was no reason to interfere with the decision.

In conclusion, both the appeal of the revenue and the cross-appeal of the assessee were dismissed, with the Tribunal confirming the CIT(A)'s order. The decision was pronounced in open court on December 31st, 2020.