2021 (6) TMI 360 - AT - Income Tax

Addition u/s 68 - long term capital gain accruing on sale of listed shares - HELD THAT - We note that assessee has filed all the evidences comprising summary of sale and purchase of shares, contract notes/broker notes, details of Dmat account/transaction statement, copies of purchase bills, evidences of payment through banking channels along with bank statements etc. We note that the authorities below have relied merely on the report of investigation wing and SEBI by ignoring the facts on record. We note that the assessee has filed all the evidences and the authorities below could not bring out any material to prove that the capital gain earned by the assessee is bogus except the attribution by the investigation wing and SEBI. In view of these facts and circumstances, the order of ld. CIT(A) can not be sustained . Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Appeal of the assessee is allowed.

Summary

Issues:
1. Addition of long term capital gain on sale of listed shares under section 68 of the Act.
2. Confirmation of addition by Ld. CIT(A) and dismissal of appeal.
3. Addition of commission on accommodation entries on long term capital gain under section 69C of the Act.

Issue 1: Addition of long term capital gain on sale of listed shares under section 68 of the Act:
The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the addition of long term capital gain on the sale of listed shares. The assessee declared income of &8377; 13,96,530/- and earned a long term capital gain of &8377; 1,01,71,119/- from the sale of shares. The AO treated the capital gain as bogus based on investigation wing reports and SEBI findings. The assessee provided evidence including D-mat account copies, contract notes, and payment receipts. The Ld. CIT(A) upheld the AO's decision. In the appellate proceedings, the Ld. Counsel cited various Tribunal decisions supporting the assessee's case. The Tribunal noted that the assessee submitted all necessary evidence, and previous Tribunal decisions favored the assessee. The Tribunal referred to specific Tribunal decisions in Kolkata where similar issues were decided in favor of the assessee. The Tribunal held that the authorities relied on investigation reports and SEBI findings without considering the evidence provided by the assessee. Consequently, the Tribunal directed the AO to delete the addition.

Issue 2: Confirmation of addition by Ld. CIT(A) and dismissal of appeal:
The Ld. CIT(A) dismissed the appeal of the assessee by upholding the AO's order regarding the addition of long term capital gain on the sale of shares. The Ld. AR argued that the addition should be deleted based on decisions of coordinate benches of the Tribunal. The Ld. AR highlighted that all necessary documents were submitted to support the purchase and sale of shares. The Ld. CIT(A) and AO relied on investigation reports and SEBI findings to treat the capital gain as bogus. However, the Tribunal found that the evidence provided by the assessee was genuine and directed the AO to delete the addition.

Issue 3: Addition of commission on accommodation entries on long term capital gain under section 69C of the Act:
The Ld. CIT(A) confirmed the addition of &8377; 3,05,134/- by the AO under section 69C of the Act towards commission of accommodation entries on long term capital gain. However, since the Tribunal had already decided the main issue in favor of the assessee, this addition was automatically deleted as consequential. The Tribunal directed the AO to delete this addition accordingly, and the appeal of the assessee was allowed.

In conclusion, the Tribunal ruled in favor of the assessee, directing the AO to delete the additions made on the long term capital gain and commission of accommodation entries. The Tribunal emphasized the importance of considering the evidence provided by the assessee and highlighted previous Tribunal decisions supporting the assessee's case.