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| The Tax Publishers2019 TaxPub(DT) 6382 (Mum-Trib) INCOME TAX ACT, 1961
Section 68
Since assessee had offered the speculation profit for income-tax purposes in the immediately preceding year and had shown the purchase of shares as investment in the Balance Sheet and AO had not brought any material on record to show that the assessee was part of fraudulent price rigging, therefore, capital gains declared by assessee could not be doubted with.
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Income from undisclosed source - Addition under section 68 - Bogus LTCG -
Assessee had declared long-term capital gain and claimed the same as exempt under section 10(38). It had purchased 2200 shares in April 2012. AO received information from investigation wing that trading in shares fell under the category of suspicious long-term capital gains on shares. AO, after discussing the modus operandi adopted for booking long-term capital gain by rigging the prices, came to conclusion that transactions of purchase and sale made by assessee were not genuine. Therefore, AO treated the LTCG as bogus and made addition under section 68. Held: Assessee had purchased shares through a broker and sold shares through a different broker. Thus, purchase and sale of shares have been carried out through two different brokers. Assessee had offered the speculation profit for income tax purposes in the immediately preceding year and had shown the purchase of shares as investment in Balance Sheet. AO had not brought any material on record to show that the assessee was part of fraudulent price rigging. Accordingly, in the absence of any evidence to prove that transactions were bogus, the capital gains declared by assessee could not be doubted with.
REFERRED : CIT v. Pooja Agarwal (D.B. Income Tax Appeal No. 385/2011 dt. 11-9-2017)- Rajasthan High Court : 2018 TaxPub(DT) 0144 (Raj-HC)
FAVOUR : In assessee's favour
A.Y. :
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