Hiren D. Kubadia HUF Vs ITO (ITAT Mumbai)
In a recent ruling ITAT Mumbai have held that genuineness of sale and purchase of share through stock exchange platform, can not be doubted if AO failed to establish link between assesssee and report of investigation wing.
Assessee during the AY 2013-14 purchased shares of M/s.Tuni Textiles Ltd, which were received in Demat account of the assessee. Subsequently, the face value of shares was split from Rs.10/- per share to Re.1/- per share, resulting into increase in holding to 50000 shares. The assessee sold all the shares for an aggregate sale value of Rs.91,18,672/- and it resulted in long term capital gain of Rs.78,67,422/- and the same was claimed as exempt u/s 10 (38). It was noticed earlier, the AO computed the LTCG at Rs.79,67,422/- by taking sale consideration of shares at Rs.91,27,800/-. On report of Investigation Wing that the bogus capital gains were generated by rigging the price of shares of certain companies (penny stocks), AO asked assessee to prove the genuineness of the LTCG claimed by it. Being unsatisfied from the submissions of the assessee AO made addition of whole amount of Rs, 91,27,800/- u/s 68. AO further added Rs.2,73,834/- u/s 69C by holding that assessee would have incurred commission expenses in procuring the LTCG estimated the commission expenses at Rs.2,73,834/-.
