Smt. Reshmiben P. Kanugo Vs ITO (ITAT Ahmedabad)
The appeals arose from assessment orders passed under Section 143(3) for Assessment Year 2014–15, wherein the Assessing Officer treated the assessees’ long-term capital gains from the sale of shares of Shree Shaleen Textiles Ltd. as unexplained cash credits under Section 68 and denied exemption under Section 10(38). In the lead case of Smt. Reshmiben P. Kanugo, the assessee had purchased 500 shares of Shree Shaleen Textiles Ltd., subsequently received bonus shares and subdivision benefits, and ultimately sold 50,000 shares for ₹31,60,046, claiming exempt long-term capital gain of ₹31,33,677. The Assessing Officer held the transactions to be accommodation entries based on the alleged modus operandi of penny stock transactions, off-market purchases, Investigation Wing reports, statements of operators, and the extraordinary appreciation in share value. The Commissioner (Appeals) affirmed the addition.
Before the Tribunal, the assessee contended that the purchase and sale transactions were supported by documentary evidence including share certificates, demat records, contract notes and banking channels, that no adverse material linked the assessee with any alleged operators, and that no opportunity for cross-examination of the persons whose statements were relied upon had been granted. The Revenue maintained that the assessee had failed to discharge the burden of proving the genuineness of the exempt capital gains.
