DCIT Vs Avinash Singla (ITAT Chandigarh)
ITAT Chandigarh held that treating capital gains earned on sale of shares as bogus merely on the basis of warning letter of SEBI without any incriminating material found during course of search demonstrating transaction as bogus is unjustified. Accordingly, appeal of revenue dismissed.
Facts- During course of search a warning letter from SEBI was found, wherein, SEBI has apprised that Assessee had received share of Turbotech Engineering Ltd. in-off market from entities connected to the company and sold these shares in the on-market. The prices of these shares have been manipulated, therefore, assessees are warned to be careful in future to avoid recurrence of such instances. AO was of the view that this letter do indicate that these are the shares whose prices were manipulated by certain professionals and, therefore, capital gains earned on the transactions of these shares deserves to be treated as bogus and required to be added as an income of the Assessee.
CIT(A) deleted all the additions. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that during the course of search details regarding alleged transactions of penni stock was not found. The Department was only able to lay its hands on the letter of SEBI which was missing in the case of Smt. Meenu Singla. The Assessing Officer, thereafter, he himself has not cross verified anything. He only followed some information available on the portal of the Revenue without cross verifying any circumstance. The ld. CIT(A) appreciated the controversy in right prospective and rightly concluded that during the search no incriminating material was found demonstrating the alleged transactions as a bogus one. In view of above discussion, we do not find any merit in these appeals and they are dismissed.
