JigneshRamjibhai Patel Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that addition of LTCG u/s. 68 of the Income Tax Act by treating transaction as bogus cannot be sustained since shares were sold via recognized stock exchange and Security Transaction Tax [STT] duly paid and assessee’s involvement in manipulation of price not pointed.
Facts- The assessee filed return of income on 31.01.2015, declaring total income at Rs.2,45,750/- and agricultural income of Rs.1,56,940/- and Long term capital gain(LTCG) amounting to Rs.2,23,95,400/-. Post scrutiny assessment, AO made addition of Rs.2,23,95,000/- thereby disallowing the claim of LTCG in respect of sale of script of M/s. Comfort Securities Ltd. and added the same u/s.68 of the Income-tax Act 1961.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the dematerialization of the said scrip was in January, 2011. The payment was made through banking channel. The shares were held for more than one year (33 months) and sold on the floor of recognized stock exchange. It is an undisputed fact that the Security Transaction Tax (STT) was duly paid. The details of dematerialization request form, letter with respect to allotment of shares, shares certificate, ledger of Parasnath Textile Ltd., bank statement, IPO documents of the scrip in question, Demat holding statement. The Assessing Officer has not at all pointed out as to how the assessee was involve in the manipulation of the price difference at the time of purchase as well as at the time of sale of the said scrip.The contention of the Ld. AR appears to be correct that it is a mere incidental benefit gained by the assessee due to the rise in price of said script. Therefore, the Assessing Officer as well as the CIT(A) was not correct in treating the same as bogus transaction under Section 68 of the Act. Thus, the appeal of the assessee is allowed.
