Chandan Gupta Vs Commissioner of Income Tax (Panjab Haryana high court)
Punjab and Haryana High Court dismissed the appeals filed by Chandan Gupta against the order of the Income Tax Appellate Tribunal (ITAT), Chandigarh. The core issue was the addition of ₹51,87,680 under Section 68 of the Income Tax Act, 1961, which the Assessing Officer (AO) and subsequently the ITAT deemed to be unexplained cash credit, despite the assessee claiming it as long-term capital gains from share trading. The AO concluded that the sale transaction of shares of M/s Citigold Credit Capital Limited was bogus and a sham, designed to introduce the assessee’s own unexplained money while avoiding taxes.
The AO’s assessment was based on inquiries and available material, leading to the finding that no actual share transactions took place. The assessee could not satisfactorily explain the receipt of the alleged share profits credited to his bank accounts. The AO determined that the purported share sale was a fabricated transaction. The Commissioner of Income Tax (Appeals) upheld the AO’s findings, noting sufficient material evidence to demonstrate the sham nature of the share transactions, distinguishing it from cases where such evidence was lacking. The Tribunal also rejected the assessee’s contentions, concluding that the assessee had manipulated accounts, with mere entries of capital gains made upon receipt of cash, without any actual sale or purchase of shares. The assessee’s inability to produce the broker for verification further supported the AO’s independent inquiries. The Tribunal held that once the purchase and sale transactions were deemed bogus, the sale proceeds, credited in the assessee’s books, remained unexplained income under Section 68.
The High Court upheld the concurrent findings of fact by the lower authorities, as the assessee failed to demonstrate any error or perversity in their conclusions. The court distinguished the case relied upon by the assessee, where the genuineness of the share sale was established as a finding of fact by the Tribunal. Finding no merit in the appeals, the High Court affirmed the ITAT’s order, effectively treating the claimed capital gains as unexplained cash credit under Section 68 of the Income Tax Act.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
