PCIT 1 Vs Vinod Premjibhai Gangani (Gujarat High Court)
Gujarat High Court held that claim of exemption of Long Term Capital Gain under section 10(38) of the Income Tax Act cannot be held to be bogus on the basis of presumption in absence of any corroborative evidence. Accordingly, appeal of revenue dismissed.
Facts- The present petition has been preferred by the department. Substantial question involved herein is that whether Hon’ble ITAT was justified in deleting the addition of bogus long term capital gain claimed as exempted u/s 10(38) of the Act of Rs.46,12,790/- made by the Assessing Officer arising out of sale of shares of Sunrise Asian Ltd., a penny stock and without appreciating the findings of the Assessing Officer that the price movement of the company were not supported by financial fundamentals of the company?
Conclusion- This court in Divyaben Prafulchandra Parmar has held that the entire case of Assessing Officer was based on mere presumption that the assessee ploughed back her own unaccounted money in the form of Bogus LTCG. The presumption needs to be corroborated by some evidence to establish the same. It is trite law that presumption, however, strong, cannot be a substitute, nor can it take place of evidence For the said proposition, reliance is placed on Hon’ble Supreme Court decision, in the case of Omar Salas Mohamed Sait reported in (1989) 37 ITR 151 (SC) where in it was held that no addition can be made in the basis of surmise, suspicion and conjectures.
