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2023 (2) TMI 497 - AT - Income TaxAddition u/s 68 - bogus LTCG - Unexplained cash credit - HELD THAT - There are large number of assessees, who have transacted with equity shares of M/s. Cressanda Solutions Limited and claimed exemption u/s 10(38) of the Act. Apart from this scrip, there are other scrips also in Kolkata, who were found to be penny stock and transactions on papers only. The Hon ble Calcutta High Court has recently considered this aspect in its judgment in the case of Swati Bajaj Others 2022 (6) TMI 670 - CALCUTTA HIGH COURT In a number of appeals, we have also rejected the claim of the assessees, where the assessee transacted in the shares of M/s. Cressanda Solutions Limited. All these transactions have been held as bogus by the Hon ble Jurisdictional High Court. Therefore, we affirm the view taken by the Revenue Authorities who have rejected the claim of the assessee and made the additions. We do not find any merit in this appeal. Decided against assessee.
Issues:
1. Dismissal of appeal by CIT(A) confirming addition of LTCG as bogus. 2. Assessment of unexplained cash credit u/s. 68 of the Income-tax Act, 1961. 3. Application of section 10(38) for claiming exemption on long-term capital gains. 4. Consideration of shares of M/s. Cressanda Solutions Limited as penny stocks. Issue 1: Dismissal of appeal by CIT(A) confirming addition of LTCG as bogus The appeal filed by the assessee against the order of Ld. CIT(A) was dismissed, confirming the addition of Long-Term Capital Gain (LTCG) as bogus. The Ld. AO observed discrepancies in the shares' purchase and sale transactions, leading to the conclusion that the claim of LTCG under section 10(38) of the Act was unfounded. Despite the assessee's explanation regarding the amalgamation of shares and subsequent sales, the Assessing Officer deemed the claim as false and added the amount to the assessee's total income as unexplained cash credit u/s. 68 of the Act. Issue 2: Assessment of unexplained cash credit u/s. 68 of the Income-tax Act, 1961 The Assessing Officer (AO) scrutinized the transactions involving the purchase and sale of shares by the assessee, particularly focusing on the shares of M/s. Smartchamps IT and Infra Limited and M/s. Cressanda Solutions Limited. Upon discovering inconsistencies in the number of shares purchased and sold by the assessee, the AO considered the Long-Term Capital Gain (LTCG) claim as bogus. This led to the addition of the disputed amount to the assessee's total income as unexplained cash credit under section 68 of the Income-tax Act, 1961. Issue 3: Application of section 10(38) for claiming exemption on long-term capital gains The assessee claimed exemption under section 10(38) of the Income-tax Act, 1961, on the alleged Long-Term Capital Gains (LTCG) arising from the sale of shares. However, the Assessing Officer, after detailed examination, concluded that the LTCG claim was not genuine and added the amount to the assessee's total income as unexplained cash credit under section 68 of the Act. The CIT(A) upheld this decision, leading to the dismissal of the assessee's appeal before the Tribunal. Issue 4: Consideration of shares of M/s. Cressanda Solutions Limited as penny stocks The Tribunal noted a pattern where numerous assessees had transacted with equity shares of M/s. Cressanda Solutions Limited and claimed exemptions under section 10(38) of the Act. Additionally, other scrips in Kolkata were identified as penny stocks with transactions appearing only on paper. Referring to a judgment by the Hon'ble Calcutta High Court in a similar case, the Tribunal affirmed the Revenue Authorities' decision to reject the claim of the assessee regarding LTCG on shares of M/s. Cressanda Solutions Limited. The Tribunal dismissed the appeal, aligning with the High Court's stance on such transactions, considering them as bogus.
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