Kiran Bhanwarlal Jogani Vs ITO (ITAT Mumbai)
The Mumbai Income Tax Appellate Tribunal (ITAT) considered an appeal filed by the assessee against the order of the National Faceless Appeal Centre (NFAC)/CIT(A) arising from an assessment made under Section 143(3) of the Income-tax Act, 1961 for Assessment Year 2014-15. The assessee challenged the validity of the assessment proceedings and the additions made under Sections 68 and 69C after denial of exemption claimed under Section 10(38) in respect of long-term capital gains (LTCG) arising from sale of shares of Shree Shaleen Textiles Ltd.
The assessee had filed the return declaring total income of ₹3,39,920. During scrutiny, the Assessing Officer noted that the assessee had claimed exempt LTCG of ₹31,22,986 under Section 10(38) on sale of listed equity shares. According to the assessee, 500 equity shares purchased in February 2012 underwent bonus allotment and stock split, resulting in 50,000 shares which were subsequently sold on the Bombay Stock Exchange through a SEBI-registered broker after payment of Securities Transaction Tax (STT). The assessee produced documents including share certificates, demat statements, contract notes, bank statements and other records to substantiate the transactions.
The Assessing Officer was not satisfied with the explanation and relied upon information received from the Investigation Wing, Kolkata regarding alleged penny stock transactions. Holding the transactions to be non-genuine, the Assessing Officer treated the sale proceeds of ₹31,22,986 as unexplained cash credit under Section 68 and further estimated commission expenditure of ₹93,690 under Section 69C. The assessment was completed determining total income at ₹35,76,600. The CIT(A) confirmed the assessment.
