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2022 (9) TMI 455 - AT - Income TaxAddition u/s 68 - Bogus long term capital gain by sale of shares - onus to prove - deceased assessee earned LTCG from the sale of shares and claimed the exemption under section 10(38) which was denied by the AO - HELD THAT - As decided in case of the father of the deceased assessee namely Shri Jatinder Kumar Jain, 2022 (8) TMI 21 - ITAT CHANDIGARH considering the evidences furnished by the assessee, which the AO did not negate with any counter evidence, we are of the considered opinion that the assessee has successfully discharged the onus cast upon him in terms of provisions of section 68 of the Act and this discharge of onus is a pure question of fact and, therefore, the various decisions relied upon by the Department on the question of law would not be of any assistance to the Department. Since, in our considered view, on the facts of the case, the assessee has been able to successfully discharge the onus cast upon him, the impugned addition has no feet to stand. We accordingly set aside the order of the Ld. CIT (A) and direct the deletion of the impugned addition. - Decided in favour of assessee.
Issues Involved:
1. Confirmation of addition made under Section 68 of the Income Tax Act, 1961. 2. Disallowance of exemption claimed under Section 10(38) for Long Term Capital Gain (LTCG) from the sale of shares. 3. Genuineness of the transaction of sale of shares. 4. Consideration of evidence provided by the assessee during assessment proceedings. 5. Basis of addition made by the Assessing Officer (AO) and reliance on the Investigation Wing's report. 6. Consideration of judicial pronouncements and submissions made during the hearing. Issue-wise Detailed Analysis: 1. Confirmation of Addition Made Under Section 68 of the Income Tax Act, 1961: The primary grievance of the assessee is the confirmation of an addition of Rs. 2,99,97,757/- made by the AO under Section 68 of the Income Tax Act, 1961. The AO disallowed the exemption claimed under Section 10(38) for LTCG from the sale of shares, treating the amount as unexplained cash credit. 2. Disallowance of Exemption Claimed Under Section 10(38) for Long Term Capital Gain (LTCG) from the Sale of Shares: The AO disallowed the exemption claimed under Section 10(38) on the grounds that the transactions were not genuine and were accommodation entries for the purpose of capital gain. The CIT(A) upheld this decision by following a similar case involving the deceased assessee's father, where the issue was decided in favor of the revenue. 3. Genuineness of the Transaction of Sale of Shares: The assessee contended that the transactions of sale and purchase of shares were genuine, supported by documentary evidence such as contract notes, demat account statements, and bank statements. The AO, however, relied on the Investigation Wing's report, which suggested that the transactions were part of a racket to generate bogus LTCG. 4. Consideration of Evidence Provided by the Assessee During Assessment Proceedings: The assessee provided detailed evidence, including contract notes, demat account statements, and bank statements, to support the genuineness of the transactions. However, the AO dismissed these documents, relying instead on the Investigation Wing's report and statements recorded during the investigation. The CIT(A) also did not consider these evidences sufficiently. 5. Basis of Addition Made by the Assessing Officer (AO) and Reliance on the Investigation Wing's Report: The AO based the addition on the Investigation Wing's report, which indicated that the brokers involved manipulated share prices to launder unaccounted money. Statements from brokers involved in the transactions were also considered. The CIT(A) upheld the AO's decision, citing similarities with the case of the deceased assessee's father. 6. Consideration of Judicial Pronouncements and Submissions Made During the Hearing: The assessee's counsel referred to a similar case involving the deceased assessee's father, where the ITAT had decided in favor of the assessee. The CIT(A) had followed the decision in that case while sustaining the addition. The ITAT, in its analysis, noted that the AO did not conduct an independent enquiry and relied solely on the Investigation Wing's report and statements from brokers, which did not specifically mention the assessee. Conclusion: The ITAT concluded that the facts of the present case were identical to those in the case of the deceased assessee's father, where the addition was deleted. The ITAT observed that the AO did not negate the evidence provided by the assessee with counter-evidence and relied heavily on the Investigation Wing's report and statements recorded at the back of the assessee. The ITAT, therefore, deleted the impugned addition made by the AO and sustained by the CIT(A), allowing the appeal in favor of the assessee.
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