Shailesh Subodhchandra Jhaveri Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that claim of exemption u/s. 10(38) on sale of shares rightly disallowed as assessee failed to prove genuineness of transaction and long-term capital gain on sale of shares was an arranged affair to convert its own unaccounted money.
Facts- The assessee filed a return declaring a total loss of Rs. (-)10,08,593. A notice u/s. 148 of the Income Tax Act was issued on 25.03.2015, requiring the assessee to file the return of income within 30 days. The assessee responded on 30.04.2015 stating that the original return should be treated as the return in response to the notice u/s. 148 of the Act. The assessee filed a writ petition before the Hon’ble High Court of Gujarat on 29.10.2015 challenging the reopening of the cases. The writ petition was dismissed by the Gujarat High Court on 14.06.2016.
Thereafter, notice u/s. 142(1) was issued on 01.08.2016, and a show cause notice on 20.09.2016 regarding the proposed disallowance of Rs.1,99,01,199/- on trading in Chandni Textiles Engineering Industries Ltd. shares. CIT(A) confirmed the addition made by AO. Being aggrieved, the present appeal is filed.
Conclusion- In the case of M.K. Rajeshwari v. ITO [2018] 99 taxmann.com 339 (Bangalore – Trib.), the Tribunal held that where assessee claimed exemption under section 10(38) in respect of capital gain arising from sale of shares, in view of fact that financial worth of said company was meagre and, moreover, there was abnormal rise in price of shares, it could be concluded that assessee introduced her own unaccounted money in garb of long term capital gain and, thus, claim raised by her was to be rejected.
