2019 (2) TMI 355 - AT - Income Tax

Claim of exemption made u/s 10(38) - bogus Long Term Capital Gains on purchase and sale of the shares - Held that - The assessee has filed all necessary evidences in support of the transactions. Some of these evidences are (a) evidence of purchase of shares, (b) evidence of payment for purchase of shares made by way of account payee cheque, copy of bank statements, (c) copy of balance sheet disclosing investments, (d) copy of demat statement reflecting purchase, (e) copy of broker ledger account, (f) evidence of sale of shares through the stock exchange, (g) copy of demat statement after the sale of shares, (h) copy of bank statement reflecting sale proceeds receipts, (i) copy of brokers ledger, (j) copy of Contract Notes etc. Addition u/s 68 of the Act, on account of Long Term Capital Gains - Decided in favour of assessee.

Summary

Issues:
Sole issue: Rejection of claim of Long Term Capital Gains on purchase and sale of shares of M/s Jackson Investments Limited.

Analysis:
The appeals were filed against the order of the Commissioner of Income Tax (Appeals) rejecting the claim of Long Term Capital Gains. The Assessing Officer (AO) rejected the claim based on general observations and a report, treating the gains as bogus and adding the entire sale proceeds as income. The ld. CIT(A) upheld this decision based on circumstantial evidence and human probabilities, without direct material to contradict the evidence provided by the assessee. The evidence remained unchallenged, and the conclusions were drawn from a general report without specific confrontation with the assessee.

The Departmental Representative argued that the transaction was not genuine, relying on previous orders. However, the Tribunal and Calcutta High Court consistently emphasized that decisions should be evidence-based, not on generalizations or suspicions. Various cases were cited where additions were deleted based on detailed findings. The Delhi SMC Bench of the ITAT also ruled in favor of the assessee in a similar case involving M/s Jackson Investments Limited.

The assessee provided extensive evidence to support the transactions, including purchase evidence, bank statements, demat statements, broker ledger accounts, and more. The Jurisdictional High Court and ITAT Kolkata had previously ruled in favor of the assessee on similar issues, and the Departmental Representative could not refute this. Following the precedent and evidence presented, the addition of Long Term Capital Gains under section 68 of the Act was deleted, and the appeals of the assessee were allowed.

In conclusion, the judgment favored the assessee by deleting the addition of Long Term Capital Gains, emphasizing the importance of evidence-based decisions and following the precedents set by the Jurisdictional High Court and ITAT Kolkata.