Saroj Baid Vs ITO (ITAT Kolkata)
The Kolkata ITAT dismissed the assessee’s appeals for Assessment Years 2013-14 and 2014-15 concerning long-term capital gains (LTCG) claimed on sale of shares of NCL Research and Financial Services Ltd.
For A.Y. 2013-14, the assessee had purchased 33,800 shares of NCL Research and Financial Services Ltd. in F.Y. 2008-09 at Rs.2 per share for a total cost of Rs.67,600. During the relevant year, 26,000 shares were sold for Rs.69,39,029, resulting in LTCG of Rs.68,87,029. The assessee claimed exemption under Section 10(38) of the Income Tax Act. The Assessing Officer treated the LTCG as bogus, denied the exemption and added the sale consideration as unexplained cash credit under Section 68. The Assessing Officer noted that the share price had increased by almost 13,700%, the company had poor financial results, and it appeared in a list of 84 penny stock companies identified by the Investigation Wing.
For A.Y. 2014-15, the assessee claimed exemption under Section 10(38) on LTCG of Rs.1,48,58,305 from shares of the same company. The Assessing Officer similarly treated the transaction as bogus and made an addition under Section 68. The CIT(A) upheld the Assessing Officer’s orders for both years.
Before the Tribunal, the assessee challenged the findings, relying on documentary evidence relating to purchase and sale of shares, demat delivery, recognised brokers and receipt of sale consideration through account-payee cheques. The assessee also challenged the reliance on investigation material and surrounding circumstances.
