2024 (4) TMI 1204 - AT - Income Tax

Bogus LTCG - non-genuine share transactions - HELD THAT - We note that assessee had purchased 20000 shares on 08.02.2010 for Rs.4,59,800/- at an average value of Rs.23/- per share. The assessee has sold part of the shares in Financial year (FY.) 2011-12 and the balance share being 14394 shares was sold in the assessment year under consideration. Long term capital loss is not claimed in the computation of income hence there is no loss to the revenue. The assessee has submitted the bank statement before the assessing officer and on the said transaction the STT was duly paid by the assessee. The other relevant documents such as debit note etc were filed by the assessee before the assessing officer. Besides, the assessee has not claimed the long term capital loss in her return of income, hence there is no loss to the revenue. Based on this factual position we find that the addition made by the assessing officer needs to be deleted hence we delete the addition. Assessee appeal allowed.

Summary

Issues:
Appeal against addition of Rs.3,29,400 on sale of shares, Allegation of non-genuine transaction, Confirmation of addition by CIT(A), Appeal before ITAT Surat.

Analysis:
The appeal pertains to the addition of Rs.3,29,400 on the sale of shares by the assessee during the Assessment Year (AY) 2013-14. The Assessing Officer alleged the transactions were non-genuine and part of an accommodation entry obtained by the assessee. The assessee argued that the transactions were genuine, resulting in a Long Term Capital Loss (LTCL) of Rs.1,656, which was not claimed for carry forward. The CIT(A) upheld the addition, stating the transactions were arranged to introduce receipts into regular books for undisclosed income. The ITAT Surat heard arguments from both sides. The assessee contended that the shares were purchased online through a registered broker, supported by a debit note, and STT was duly paid. The Revenue argued it was an accommodation entry. The ITAT noted the Assessing Officer's reliance on information from the Investigation Wing and the involvement of shell companies. However, the ITAT found the transactions genuine as they were through account payee cheques and demat accounts, with no cash involvement. The ITAT referred to relevant court decisions and concluded that the addition was unjustified. The ITAT allowed the appeal, deleting the addition.

This case involved a dispute over the genuineness of share transactions leading to a claimed Long Term Capital Loss. The assessee's compliance with legal requirements, such as using account payee cheques and demat accounts, played a crucial role in the ITAT's decision to delete the addition. The ITAT emphasized the absence of cash transactions and the assessee's non-claim of the LTCL for future set off as factors supporting the genuineness of the transactions. The ITAT's reliance on court decisions and detailed analysis of the factual and legal aspects underscored the thoroughness of the judgment in addressing the issues raised by both parties.