2023 (5) TMI 581 - AT - Income Tax

Undisclosed income - Bogus share transactions - case of the assessee was selected for complete scrutiny under CASS for examination of suspicious sale transactions in shares (Penny Stock tab in ITS) - HELD THAT - Once the claim of the assessee of having purchased the 3000 shares of CCL International Ltd. on the basis of documents relied upon by it fails, then, the solitary logical view that can be arrived at is that it had not carried out any genuine transaction of purchase/sale of shares, and considering the totality of the facts involved in the case can safely be held to have only obtained an accommodation entry of bogus LTCG. We uphold the addition made by the A.O, on the ground that the same was the undisclosed fund of the assessee that was routed back in the garb of the aforesaid transaction of purchase/sale of shares. Thus, the Grounds of appeal Nos. 1 2 raised by the assessee dismissed. Levy of tax u/s.115BBE - We are unable to concur with the same. As the A.O had in clear and unequivocal terms observed that the sale consideration of 3000 shares of CCL international Ltd. of Rs.5.40 lac, was infact the routing back of the undisclosed fund of the assessee through the medium of transaction of sale of shares, therefore, it can safely; or in fact inescapably be concluded that the same was the assessee s unexplained money u/s.69A of the Act, which it had received back through banking channel in the form of sale consideration of the said shares. Thus, the Ground of appeal raised by the assessee being devoid and bereft of any merit is dismissed in terms of my aforesaid observations.

Summary

Issues Involved:
1. Addition of Rs. 5,40,000/- as undisclosed income.
2. Rejection of the claim of capital gain on sale of shares.
3. Taxation under Section 115BBE.

Summary:

1. Addition of Rs. 5,40,000/- as undisclosed income:
The assessee's appeal against the addition of Rs. 5,40,000/- as undisclosed income was dismissed. The AO conducted extensive verifications and concluded that the transaction of purchase/sale of shares of CCL International Ltd. was bogus. The AO re-characterized the sale proceeds of Rs. 5.40 lac as undisclosed funds of the assessee, rejecting the claim of genuine STCG of Rs. 2,81,049/-.

2. Rejection of the claim of capital gain on sale of shares:
The CIT(A) upheld the AO's decision, noting that the assessee had not carried out any genuine transaction of purchase/sale of shares but had obtained accommodation entries to route undisclosed funds. The Tribunal concurred, highlighting several discrepancies, including the impracticality of offline trading on credit, delayed payment explanations, and the peculiarities of the transactions. The Tribunal found that the assessee's claim lacked credibility and was a premeditated attempt to introduce undisclosed funds.

3. Taxation under Section 115BBE:
The Tribunal rejected the assessee's contention against the taxation of Rs. 5.40 lac under Section 115BBE. The AO had correctly classified the amount as unexplained money under Section 69A, received through the banking channel as sale consideration of shares. The Tribunal upheld this view, dismissing the assessee's appeal on this ground.

Conclusion:
The Tribunal dismissed the appeals of the assessee, upholding the addition of Rs. 5,40,000/- as undisclosed income, rejecting the claim of capital gain, and confirming the taxation under Section 115BBE. The findings in ITA No. 190/RPR/2018 were applied mutatis-mutandis to the remaining appeals (ITA Nos. 191, 192 & 193/RPR/2018).