Vivek Agarwal Vs ITO (ITAT Jaipur)
In the case of Vivek Agarwal vs ITO, the Jaipur bench of the Income Tax Appellate Tribunal (ITAT) ruled in favor of the assessee, challenging the addition of ₹4.78 crore made by the Assessing Officer (AO) as unexplained income. The assessee had declared this amount as exempt long-term capital gains (LTCG) from the sale of equity shares, which he contended were acquired legitimately and sold after being dematerialized. The AO rejected the claim, alleging that the transaction was a sham involving accommodation entries facilitated through known operators of bogus capital gains. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s view, prompting the appeal to the ITAT.
Upon reviewing the material, the Tribunal found that the assessee had provided sufficient documentation supporting the purchase and dematerialization of shares, including share certificates, bank statements showing payment, and demat account records. The shares in question were originally purchased from Paridhi Properties Ltd., which later merged with Luminaire Technologies Ltd., and the allotment of new shares was approved by a court-sanctioned scheme. The ITAT emphasized that mere suspicion or reliance on general probabilities could not override documentary evidence. It held that possession of shares in the demat account, supported by verifiable transactions, was sufficient to establish the genuineness of the LTCG. As a result, the Tribunal directed the AO to delete the addition under Section 68 and allowed the assessee’s appeal.
