Case Law Details
Yuvraj Ahuja Vs DCIT (ITAT Delhi)
ITAT Delhi held that addition of unexplained credit u/s 68 of the Income Tax Act sustained as the appellant failed to provide any explanation with regard to the nature and source of the credit.
Facts- The AO made addition of Rs. 1,25,36,661/- u/s. 68 of the Act. During the assessment proceedings, the AO noticed that the assessee had claimed exemption of Rs. 1,20,98,091/- being LTCG u/s 10(38). The assessee had purchased shares of M/s SMP Securities and M/s SS Corporate Security at a very low price and sold it off during the year under consideration at abnormally high price thus having Long Term capital gains of Rs. 1,20,98,091/-. The AO stated that he had received an investigation report of Pr. DIT, mn v. Kolkata, which had carried out a detailed investigation into the LTCG racket carried out by the syndicate of operator throughout the country. He carried out his own independent inquiries and arrived at the conclusion that the assessee had routed his own unaccounted money through this channel and hence the same was added in the hands of the assessee u/s 68 of the Act.
The said order of the above has been confirmed by the CIT(A)
Conclusion- Section 68 of the Act provides that where any sum is found credited in the books of the appellant maintained for any previous year and the appellant offers no explanation about the nature and source thereof or the explanation offered by her is not in the opinion of the AO satisfactory, the sum so credited may be charged to income tax as income of the appellant of that year. There is no economic or financial justification for the sale price of these shares. The fantastic sale price realization is not at all humanly probable, as there is no economic or financial basis that a share of little known company would jump so high. In these circumstances, I do not find any infirmity in the order of the AO. In view of the facts discussed in earlier paras, I am of the considered view that the AO was justified to disallow the claim of long term capital gain of Rs. 1,20,98,091/- and to treat the total sale consideration of Rs. 1,25,36,661/- as income from undisclosed sources.
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