Case Law Details
If period of holding is >1yr then it is LTCG & Exempt & Assessing Officer can make addition in the year of purchase if unexplained but no addition can be made in the present year/year of assessment.
Facts of the Case
It was submitted by Learned A. R. of the assessee that photocopy of DEMAT account statement for the period from 01/12/2007 to 31/12/2007 is available on page No. 3 of the paper book and the same for the period from 01/04/2010 to 31/03/2011 is available on page No. 4 of the paper book. He further submitted that as per the DEMAT account statement available on page No. 3 of the paper book, it can be seen that the shares of Allahabad Bank in question were credited in this DEMAT account of the assessee during this period to the extent of 4,400 shares and as per the DEMAT account statement available on page No. 4 of the paper book for financial year 2010-11, it can be seen that during this period, out of the same opening balance of 4,400 shares of Allahabad Bank, 4000 shares were sold out during this period. He submitted that under these facts, even if it is held that the assessee has not explained the source of acquisition of these shares, the addition may be made in the year of purchase i.e. assessment year 2008-09 and not in assessment year 2011-12 when these shares were sold by the assessee.
Held by Hon’ble ITAT
We have considered the rival submissions. We find that as per Para 6(vi) of the assessment order, it is noted by the Assessing Officer that DEMAT account furnished by the assessee do not reflect purchase of shares of Allahabad Bank and therefore, the exemption on account of Long Term Capital Gain of Rs.9,82,448/- is denied and the same is being treated as income from other sources. Before this, in Para 6(v) of the assessment order, it is noted that despite of giving several opportunities, the assessee could not furnish any supportive documents on the basis of which date and rate of purchase of shares could be determined. Hence, it is seen that the Assessing Officer is doubting the date and rate of purchase of these shares of Allahabad Bank which were purchased as per the assessee on 31/08/2002 and thereafter, the same were dematerialized during December 2007 as per the copy of DEMAT account statement available on page No. 3 of the paper book. Even if these shares were purchased during December,2007 being the month in which these shares were noted in the DEMAT account, the addition in respect of these shares to the extent of cost of purchase can be made in that year being assessment year 2008-09 and not in the present year. Regarding the gain on sale of these shares also, it cannot be said that the gain is not Long Term Capital Gain even if the date of purchase is taken as December, 2007 being the date of credit in DEMAT account of the assessee then also, the period of holding is more than one year and therefore, the gain is Long Term Capital Gain on sale of quoted shares which is exempt and once it is held that the Long Term Capital Gain is exempt, what is the cost of acquisition and how much is capital gain is not relevant because whatever be the gain, the entire gain will be exempt. Under these facts, we feel that the addition made is not justified. However, the Assessing Officer is at liberty to examine the evidence and source of acquisition of these shares and if the assessee is not able to explain the source, the addition may be made in the year of purchase which may be assessment year 2003-04 or 2008-09 but no addition can be made in the present year.
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