2016 (12) TMI 1344 - AT - Income Tax

Share transaction treated as Income from Other Sources - bogus transaction - income from speculation business - Held that - In the case on hand, the assessee was directed by the Tribunal to lead evidence in support of her claim that delivery of the shares was infact taken and given. However, it is seen that inspite of being afforded opportunities in this regard, the assessee failed to bring on record any basic verifiable evidence to support the claim that delivery of shares had taken place. The assessee failed to give even the name and address of the main broker so that enquiries/verification as to the genuineness of the assessee s claim could have been carried out. It is in that view of the matter, that the learned CIT(A) held that income earned in the bogus share transaction as Income from Other Sources . Even before us, no evidence has been brought on record to controvert the findings rendered by the learned CIT(A). In these peculiar facts and circumstances of this case we find no reason to interfere with the findings rendered by the learned CIT(A) on this issue and therefore uphold the same - Decided against assessee

Summary

Issues:
- Nature of income from purchase and sale of shares
- Treatment of income as business income or short term capital gain
- Opportunity of being heard and principles of natural justice

Nature of income from purchase and sale of shares:
The case involved a dispute over the nature of income from the purchase and sale of shares by the assessee. Initially, the Assessing Officer treated the income as short term capital gain (STCG) from speculation business. However, the CIT(A) held the transaction to be capital gains and not speculative. A Coordinate Bench of the Tribunal set aside the CIT(A)'s order and directed a fresh examination. In the subsequent proceedings, the CIT(A) dismissed the assessee's appeal, concluding that all share transactions showing capital gains were bogus. The CIT(A) held that no genuine transaction in shares was done by the appellant, leading to the assessment of income under the head "Income from other sources."

Treatment of income as business income or short term capital gain:
The main issue revolved around whether the income of ?92,76,279 from the sale of shares should be treated as business income or short term capital gain. The assessee contended that the income should be considered as STCG on the sale of shares. The authorities below, however, assessed the income as 'Income from other sources' due to the alleged bogus nature of the share transactions. The Tribunal noted that the assessee failed to provide verifiable evidence to support the claim that delivery of shares had taken place. As a result, the Tribunal upheld the CIT(A)'s decision to assess the income under the head "Income from other sources."

Opportunity of being heard and principles of natural justice:
The appellant raised contentions regarding the dismissal of the appeal by the CIT(A) without allowing a full and proper opportunity of being heard, without appreciating the facts of the case properly, and by taking on record additional evidence not before the Assessing Officer. The Tribunal observed that despite multiple opportunities, the assessee did not present material evidence to challenge the findings of the CIT(A). The Tribunal found no violation of natural justice principles in the CIT(A)'s decision and dismissed the appeal based on the lack of evidence presented by the assessee.

In conclusion, the Tribunal upheld the CIT(A)'s decision to assess the income from share transactions as 'Income from other sources' due to the lack of verifiable evidence provided by the assessee. The appeal was dismissed based on the failure to substantiate the claim of genuine share transactions and the absence of material evidence supporting the nature of income.