Abhimanyu Soin Vs ACIT (ITAT Chandigarh)
The Income Tax Appellate Tribunal (ITAT), Chandigarh, dismissed the appeal of the assessee and upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] confirming the addition of ₹83,57,578 under Section 68 of the Income-tax Act, 1961. The dispute related to the assessee’s claim of exemption under Section 10(38) on Long-Term Capital Gains (LTCG) amounting to ₹80,25,291 arising from the sale of shares. The Tribunal held that the assessee had failed to establish the genuineness of the purchase and sale transactions involving the shares in question.
The assessee claimed to have purchased 800 shares of Sharp Transport Limited, a Kolkata-based company, in December 2008. Following the merger of Sharp Transport Limited and Sakshi Vyapar Limited into Oasis Cine Communication Ltd., the assessee was allotted 27,200 shares of Oasis Cine Communication Ltd. in October 2009 at a ratio of 1:34. These shares were subsequently sold through the Calcutta Stock Exchange in May 2010 for approximately ₹83 lakh. The assessee contended that Securities Transaction Tax (STT) had been paid and, therefore, the resultant LTCG qualified for exemption under Section 10(38).
The Assessing Officer (AO), however, questioned the genuineness of the transactions. The AO observed that it was improbable for an investment of ₹2,72,000 in a relatively unknown company to generate LTCG exceeding ₹80 lakh within approximately seventeen months. During inquiries conducted under Section 133(6), the AO examined the details relating to both the purchase and sale of shares. It was noted that the sale transactions were executed under the assessee’s client code and that circular transactions among brokers had occurred in the scrip.
