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2024 (1) TMI 859 - AT - Income TaxAddition u/s 68 - bogus LTCG on shares - sharp scrips gain/prices - HELD THAT - The assessee has purchased this scrip on 02.04.2012 and this fact was undisputed. There was exorbitant scrip increase in the period from 20.04.2012 to 27.12.2014 and prior to the suspension to the BSE Stock of the said scrip assessee has sold these shares on exorbitant market price. AO has doubted the genuineness of the purchase as well, therefore, the impact on market price while selling the said shares was doubted throughout by the Revenue. In fact, the purchase of said scrip appears to be bogus in nature as the scrip when having share price of Rs. 17.45 was purchased by the assessee at Rs. 20 per share. The reliance of the decision of Udit Kalra 2019 (4) TMI 834 - DELHI HIGH COURT categorically treated the said scrip as non-genuine and bogus. The assessee s claim for LTCG cannot be simply proved on the Demat statement but the very effect of the price purchased and price sold of the said scrip determined the same. In fact, the brokers credibility was also doubted by the Assessing Officer and for which the assessee has not given any explanation before any of the Authorities. Thus, the Assessing Officer and the CIT(A) has rightly denied the LTCG exemption u/s 10(38) of the Act to the assessee. Appeal of the assessee dismissed.
Issues involved:
The appeal against the order passed by CIT(A) for the Assessment Year 2015-16 concerning the addition under Section 68 of the IT Act, 1961. Summary: 1. The assessee claimed Long Term Capital Gain (LTCG) of Rs. 7,54,948/- on the sale of shares of Kappac Pharma Limited, which was exempt under Section 10(38) of the Act. The Assessing Officer observed discrepancies in the purchase and sale of shares, suspecting the transaction to be an accommodation entry. The Assessing Officer issued a show cause notice, but the assessee's explanations were deemed insufficient. The Assessing Officer concluded that the shares' sale was not genuine and added Rs. 7,54,948/- under Section 68 of the Act. 2. The assessee appealed to the CIT(A), arguing that no cross-examination was conducted, and the Assessing Officer did not provide specific evidence to support the allegation of bogus LTCG. The assessee claimed the purchase of Kappac Pharma Limited shares was legitimate. The CIT(A) dismissed the appeal based on the Assessing Officer's findings. 3. The Revenue contended that the purchase of Kappac Pharma Limited shares in cash indicated a sham transaction to evade taxes. The Revenue highlighted discrepancies in the share transfer process and the suspicious nature of the purchase. The Revenue emphasized that the Assessing Officer conducted an independent inquiry and gave ample opportunities to the assessee to present their case. 4. After hearing both parties, the Tribunal upheld the Assessing Officer's decision. The Tribunal found the purchase of Kappac Pharma Limited shares to be dubious, with inflated prices and involvement of dubious brokers. The Tribunal rejected the assessee's reliance on certain case laws, stating they did not align with the facts of the present case. Consequently, the appeal was dismissed, affirming the addition under Section 68 of the Act. Conclusion: The Tribunal upheld the addition of Rs. 7,54,948/- under Section 68 of the IT Act, 1961, on the grounds of suspicious share transactions involving Kappac Pharma Limited, dismissing the assessee's appeal.
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