Roshniben Sumanlal Kapadia Vs ITO (ITAT Ahmedabad)
Accommodation Entry Link Seals Fate- Synchronized Trading Exposed- Demat & STT Not Enough – ITAT Ahmedabad Upholds Addition on Bogus Share Trades
Assessee traded in shares of Safal Herbs Ltd. (earlier Parikh Herbals Ltd.). AO noted that assessee purchased only 50 shares for ₹23,452 but sold 4,350 shares for ₹15.80 lakh within a short period, declaring a loss of ₹2.58 lakh. Based on search findings against Jignesh Shah, an accommodation entry operator, AO held that these were synchronized/manipulated trades, part of a bogus entry racket. AO reopened assessment u/s 147 & made addition of ₹14.49 lakh u/s 68 as unexplained cash credit. CIT(A) upheld the addition.
Assessee argued that Transactions were genuine & Shares sold in open market. STT was duly paid & Shares were transferred from demat account. Sale consideration was received through banking channels. No connection with Jignesh Shah was ever established. Alternatively, if treated as income, the same should have been adjusted against turnover, allowing business loss.
Tribunal noted that Assessee has earned long term capital gain by selling 4350 shares of Safal Herbs Ltd. though the assessee has purchased only 50 shares on 08-04-2011 & sold the said shares on 11 06-2012. Thus, Assessee has earned short term capital gain. Assessee sold share on 29-06-2012 & 13-07 2012 & Assessee has not shown any long term capital gain in the return of income. But this was a mistake on part of Assessee & therefore the sale of shares is shown in trading account thereby offered as income by the assessee. Assessee had contended that n during the year, the total purchase of shares is Rs. 28,95,677/- & sales of share is Rs. 40,65,486/- in various companies and that the purchase price of shares of Safal Herbs Ltd. is only Rs. 23,452/- which is less than 1% of total purchase price but the assessee has not shown this income. This plea of Assessee was held as not sustainable as Assessee has not demonstrated before AO &CIT(A) that his mistake was not intentional or the purchase was genuine.
