Case Law Details
Ramprasad Agarwal Vs ITO (ITAT Mumbai)
Conclusion: Addition made by AO on the reason that assessee had introduced his own unaccounted money by way of bogus long term capital gain was not correct as AO had not brought any material on record to show that assessee had paid over and above purchase consideration of shares as claimed and evident from the bank account and assessee had produced the relevant record to show the allotment of shares by the company on payment of consideration by cheque.
Held: AO received information that some companies were engaged in the business of issuing penny stocks for which there were large number of beneficiaries claiming bogus long term capital gain/short term capital loss/business loss/speculation loss. He, based on the said information, found that assessee was one of the beneficiaries of the said racket and had earned profit on sale of investments in equity shares of R Ltd. to the tune of Rs.83,45,689/- and claimed the same as exempt under section 10(38). AO, therefore, made an addition of said sum under section 68. It was held AO had not brought any material on record to show that assessee had paid over and above purchase consideration as claimed and evident from the bank account then; in the absence of any evidence it could not be held that the assessee had introduced his own unaccounted money by way of bogus long term capital gain. Also, assessee had produced the relevant record to show the allotment of shares by the company on payment of consideration by cheque and therefore, it was not a case of payment of consideration by in cash. But the transaction was established from the evidence and record which could not be manipulated as all the entries were part of the bank account of assessee and assessee dematerialized the shares in the D-mat account which was also an independent material and evidence could not be manipulated. Therefore, the holding of the shares by the assessee could not be doubted and the finding of AO was based merely on the suspicion and surmises without any cogent material to show that the assessee had introduction his unaccounted income in the shape of long term capital gain.
FULL TEXT OF THE ITAT JUDGMENT
The above titled two appeals have been preferred by the assessee against the order dated 31.07.2018 & 15.12.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 2013-14 & 2014-15 respectively.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
