Kantaben Bhogilal Kubadia Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, decided the appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, for Assessment Year 2013-14. The assessee challenged the confirmation of additions made under Section 68 of the Income Tax Act, 1961 amounting to ₹80,35,770 in respect of long-term capital gains (LTCG) claimed as exempt under Section 10(38), and ₹6,42,862 towards alleged commission paid at 8% of the LTCG.
The assessment had been reopened on the basis of information that the exempt LTCG arising from the sale of shares of NCL Research and Financial Services Ltd. represented unexplained cash credit. The Assessing Officer (AO) relied upon an investigation conducted by the Investigation Wing, Kolkata, concerning alleged accommodation entries involving penny stocks. According to the AO, the assessee’s LTCG transaction was pre-arranged and bogus, and the entire capital gain was added under Section 68 after denying exemption under Section 10(38).
The assessee submitted that she had purchased 20,000 preferential shares of NCL Research and Financial Services Ltd. for ₹35 lakh and produced documentary evidence including the purchase bill, bank statements, balance sheet, and demat account. During the relevant year, she sold 6,200 shares through Bombay Stock Exchange via M/s. MNS Securities Ltd. In support of the sale transactions, she furnished contract notes, bank statements, and demat account statements before the AO.
