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TMI Blog2025 (1) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... R. Pawar [ 2014 (12) TMI 977 - BOMBAY HIGH COURT] held that when details of share transactions are substantiated by DEMAT account statements and contract notes, and the AO fails to prove such transactions as bogus, the capital gains cannot be treated as unaccounted income under Section 68 of the Act. We find no basis to conclude that the assessee was involved in any price rigging or circulation of black money to generate LTCG. The evidence and documents submitted during the assessment proceedings were neither denied nor challenged in terms of their authenticity. - Decided in favour of assessee. - Shri Anikesh Banerjee, Judicial Member And Miss Padmavathy S., Accountant Member For the Assessee : Shri Mehul Shah For the Respondent : Shri He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment years i.e.A.Y. 2014-15 2015-16. The assessee sold the shares for A.Y. 2015-16`amount to Rs. 63,31,089/- and after deduction of the proportionate purchase cost, the assessee earned long term capital gain (LTCG) amount to Rs. 61,75,355/-. Based on the findings of the Kolkata Investigation Directorate, the Ld.AO found that the assessee dealt with the share of Midland Polymers Ltd and considered the said scrip as penny stock and the exemption U/s 10(38) was rejected on LTCG and treated the amount to Rs. 61,75,355/- as a bogus transaction and accordingly, the addition was made under section 68 of the Act. The Ld.AO described the modus operandi of the penny stock in the impugned assessment year but was not able to bring any material fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the report given by the Investigation wing of the Income tax department, Kolkatta in order to arrive at the conclusion that the long term capital gains reported by the assessee in both the years is bogus in nature. We notice that the investigation report prepared by Investigation wing, Kolkatta is a generalized report with regard to the modus operandi adopted in manipulation of prices of certain shares and generation of bogus capital gains. We notice that the AO has placed reliance on the said report without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold by the said broker on various dates in the Kolkatta Stock Exchange. Pursuant to sale of shares the said broker had also issued contract notes cum bill for sale and these contract notes and bills were made available during the course of appellate proceedings. On the sale of shares respondent effected delivery of shares by way of Demat instruction slips and also received payment from Kolkatta Stock Exchange. The cheque received was deposited in respondent s bank account. In view thereof, the CIT(A) found there was no reason to add the capital gains as unexplained cash credit under section 68 of the Act. The Tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Bombay High Court in Shyam R. Pawar, 229 Taxman 256 (Bom) held that when details of share transactions are substantiated by DEMAT account statements and contract notes, and the Assessing Officer fails to prove such transactions as bogus, the capital gains cannot be treated as unaccounted income under Section 68 of the Act. The Ld. AR respectfully relied on the order of the coordinate bench of ITAT, Mumbai, D-Bench in the case of Ramesh Rikhavdas Shah, HUF (supra) where the assessee earned LTCG on same scrip MPL after detailed observation the bench allowed the appeal of the assessee and directed the Assessing Officer to allow the exemption on LTCG. The said order was followed by the ruling of the Hon ble Bombay High Court in case Indrav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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