Pratibha S. Mhatre Vs ITO (ITAT Mumbai)
The assessee appealed against the order of the Commissioner (Appeals) for Assessment Year 2014–15, challenging the addition of ₹1,20,11,807 made under Section 68 of the Income-tax Act after the Assessing Officer treated the long-term capital gain arising from the sale of shares of Shree Shaleen Textiles Ltd. as bogus and denied exemption under Section 10(38). The assessee also contended that the assessment was completed in violation of the principles of natural justice as the statements and documents relied upon by the Assessing Officer were not supplied and no opportunity for cross-examination was provided.
The assessee, a partner in a real estate firm, had purchased 50,000 shares of Shree Shaleen Textiles Ltd. through a preferential allotment for ₹5,75,000 during Financial Year 2012–13. Following a stock split, the holding increased to 2,50,000 shares, which were sold during the relevant assessment year for ₹1,26,05,797. The resulting long-term capital gain of ₹1,20,11,807 was claimed as exempt under Section 10(38). The Assessing Officer concluded that the transactions were sham and represented accommodation entries intended to introduce unaccounted money in the guise of exempt long-term capital gains, and accordingly treated the amount as unexplained cash credit under Section 68.
