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2017 (11) TMI 1150 - AT - Income TaxLong term capital gains arising out of sale of quoted equity shares assessed as unexplained cash credit u/s 68 - AR submitted that once the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue - Held that - In the light of the documents stated i.e. (I to xiv) we find that there is absolutely no adverse material to implicate the assessee to have entered gamut of unfounded/unwarranted allegations leveled by the AO against the assessee, which in our considered opinion has no legs to stand and therefore has to fall. We take note that the ld. DR could not controvert the facts supported with material evidences which are on record and could only rely on the orders of the AO/CIT(A). We note that in the absence of material/evidence the allegations that the assessee/brokers got involved in price rigging/manipulation of shares must therefore also fail. At the cost of repetition, we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares resulting in long term capital gain. These evidences were neither found by the AO nor by the ld. CIT(A) to be false or fictitious or bogus. The facts of the case and the evidence in support of the evidence clearly support the claim of the assessee that the transactions of the assessee were genuine and the authorities below was not justified in rejecting the claim of the assessee that income from LTCG is exempted u/s 10(38) of the Act. - Decided in favour of assessee.
Issues Involved:
1. Whether long-term capital gains (LTCG) of ?29,57,981 from the sale of quoted equity shares can be assessed as unexplained cash credit under Section 68 of the Income Tax Act, 1961. Detailed Analysis: Background: The assessee, a resident individual, filed a return for AY 2013-14 declaring an income of ?3,26,968 and claimed LTCG of ?29,57,981 on the sale of shares. The Assessing Officer (AO) questioned the substantial gain from the sale of shares of M/s Oasis Cine Communication Ltd and M/s BSR Finance & Construction Ltd, suspecting them to be bogus companies. AO's Findings: The AO noted the high gains in a short period and concluded that the transactions were dubious based on a report from the Directorate of Investigation, which indicated that prices of certain shares were artificially inflated to facilitate bogus LTCG claims. Consequently, the AO assessed the LTCG as unexplained cash credit under Section 68 and added a sum of ?29,73,600 to the assessee's income, including an estimated commission. CIT(A) Decision: The CIT(A) upheld the AO's decision, relying on circumstantial evidence and the suspicious nature of the transactions. Assessee's Arguments: The assessee argued that the AO's and CIT(A)'s conclusions were based on presumptions and lacked concrete evidence. The assessee provided extensive documentary evidence, including: - Balance sheets - Purchase bills - Bank statements - Court-approved merger documents - Share allotment letters - Contract notes from registered stock brokers - Demat statements The assessee contended that the purchase transactions were accepted in earlier assessments and that the sale transactions were genuine, conducted through recognized stock exchanges. Tribunal's Findings: The Tribunal examined the provided evidence and noted the following: - The transactions were supported by valid documents, including contract notes, demat statements, and bank statements. - The companies involved, M/s Oasis Cine Communication Ltd and M/s BSR Finance & Construction Ltd, had substantial financial credentials and long-standing existence. - The AO's reliance on the Directorate of Investigation's report was misplaced as it lacked direct evidence implicating the assessee. - The AO failed to prove any manipulation or rigging of stock prices by the assessee. - The transactions were conducted through recognized stock exchanges, and the sale proceeds were received through banking channels. The Tribunal emphasized that suspicion alone cannot replace concrete evidence. It cited several judicial precedents, including decisions from the Bombay High Court and Special Bench of the Mumbai Tribunal, supporting the assessee's claim. Conclusion: The Tribunal concluded that the AO and CIT(A) erred in treating the LTCG as unexplained cash credit under Section 68. The assessee had provided sufficient evidence to substantiate the genuineness of the transactions. The Tribunal directed the AO to delete the addition of ?29,73,600 from the assessee's income. Result: The appeal of the assessee was allowed, and the AO was directed to treat the LTCG as exempt under Section 10(38) of the Income Tax Act, 1961.
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