Saumya Mittal Vs ACIT (ITAT Delhi)
ITAT Delhi held that doubting the whole transaction of sale of shares as sham transaction merely on the basis of discrepancy in the record maintained by ROC not justifiable. Accordingly, appeal allowed stating that suspicion howsoever strong cannot taken place of evidence.
Facts- During the impugned AY, the Assessee was a Managing Director in M/s Eurobearings India Pvt. Limited and a partner in M/s Ultratech Engineers Inc. On 28.03.2018, the Assessee sold 135,86,332 shares of EUBI for Rs. 74,72,480/- which were acquired for Rs. 135,86,332 in Feb-March 2017 and claimed short term capital loss of Rs. 61,13,842. The assessment was completed on 26.03.2021 u/s. 143(3) of the Act wherein AO disallowed the short-term capital loss on the sale of shares of EUBI. CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that merely because the transactions involves the family members of the assessee and that the entities though being private limited companies are owned and controlled by appellant’s family members that cannot be a basis to allege that the entire transactions is a colourable device to avoid payment of taxes arising on account of sale of shares held by appellant in Busybees Logistics Solutions Pvt. Ltd. The assessee had claimed before the tax authorities that there was a reorganization of family business, however, on the basis of that no MOU or any other agreement or settlement deed or partition deed has been furnished by the assessee in support of her claim that there was a reorganization of family business. The claim cannot be doubted unless otherwise any of the parties has disputed the same. An oral agreement between the family members reflected in the transactions should be given equal credibility. Only on the basis of certain deficiencies found in the information maintained by the ROC drawing inferences that transaction has not taken place at all is not justified when the movement of consideration even if by way of book entry is accepted by the tax authorities. If such discrepancy in the record maintained by the ROC is made basis for doubting the whole transaction of sale of shares as a sham transaction, then, that would result into casting an onus on the assessee to prove that what is apparent by way of execution of necessary documents of sale of shares and movement of consideration, in the past or present, while actually the onus should be on the Revenue to prove that apparent is not real. Suspicion howsoever strong cannot taken place of evidence which support the claim of the assessee.
