Addition u/s 68 sustained as genuineness of transaction in shares not proved

Meenu Ajay Pathak Vs ITO (ITAT Mumbai)

ITAT Mumbai held that addition of unexplained investment u/s 68 sustained as genuineness of transaction in shares not proved. Further, SEBI also found manipulative trade executed in entities to whom shares were sold by the assessee.

Facts- During the year, the assessee has shown exempted long-term capital gain of Rs.86,03,271, in the return of income filed by her on the sale of scrips of M/s Sunrise Asian Ltd.

During the assessment proceedings, AO considered the information received from the Investigation Wing as well as the statement recorded, during the course of survey and search proceedings, of Mr. Vipul Vidur Bhatt, who has admitted to having controlled the affairs of M/s Sunrise Asian Ltd and also admitted to the fact that the scrips have been used of providing accommodation entries of bogus long term capital gain.

Accordingly, AO passed order u/s. 143(3) of the Act and treated M/s Sunrise Asian Ltd. to be merely a paper company and rejected the claim of the assessee of exemption of long term capital gains in transaction in scrips of the aforesaid company. AO treated the entire amount of Rs. 89,06,550, received by the assessee towards the sale of shares of M/s Sunrise Asian Ltd. as unexplained cash credit u/s. 68 of the Act and added the same to the total income of the assessee. AO also made an addition of Rs. 1,78,131, i.e. 2% of the total traded value as commission being paid for availing the accommodation entry, and made an addition u/s. 69C of the Act.

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