Ruby Jain Vs ITO (ITAT Agra)
ITAT Agra Deletes Section 68 Addition on Share Sale Proceeds; Bank Statement Not ‘Books of Account’
The Agra Bench of the ITAT allowed the assessee’s appeal and deleted the addition of ₹16,88,061 made under section 68 on account of sale proceeds of listed shares, along with the consequential addition of ₹50,645 under section 69C towards alleged commission for accommodation entries. The assessee, an individual not maintaining books of account and having no business income, had claimed exemption under section 10(38) on long-term capital gains arising from sale of shares of HPC Biosciences Ltd., a BSE-listed company.
The Assessing Officer, relying solely on the Kolkata Investigation Wing report on alleged penny stock manipulation, treated the sale proceeds credited in the assessee’s bank account as unexplained cash credits under section 68 and further estimated commission expenditure under section 69C. The Tribunal held that section 68 presupposes the existence of “books of account” maintained by the assessee and that a bank statement or passbook cannot be treated as books of account. Reliance was placed on the binding Bombay High Court decision in CIT v. Bhaichand N. Gandhi (141 ITR 67).
Since the assessee was not required to maintain books and the impugned credits were only reflected in the bank account, the very invocation of section 68 was held to be legally untenable. Consequently, the estimated commission addition under section 69C also could not survive. The Tribunal allowed the appeal on this technical ground, leaving all other issues on merits open
FULL TEXT OF THE ORDER OF ITAT AGRA
