| The Tax Publishers2020 TaxPub(DT) 3189 (Mum-Trib) : (2020) 208 TTJ 0318 INCOME TAX ACT, 1961
Section 68
Since shares in question had been purchased by assessee through banking channels and investments were duly reflected by assessee in financial statements of respective years and transactions were duly evidenced by contract notes, demat statements, bank statements and other documentary evidences, therefore, adverse conclusion drawn by AO merely on the basis of fact that buyer of shares were group entites of entry operators, could not be sustained merely on the basis of suspicious, conjectures or surmises especially when there was nothing on record to establish vital link between assessee and the entry operator.
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Income from undisclosed sources - Addition under section 68 - Long-term capital gain on sale of shares through online mode - AO doubted genuineness on the reasoning that buyer of shares were group entities of Vipul engaged in price rigging
Assessee declared long-term capital gain on sale of certain shares as exempt under section 10(38). AO treated LTCG claimed by assessee as bogus and made addition of sale proceeds under section 68 on the reasoning that buyer of shares were group entites of Vipul Bhatt engaged in rigging share price. Held: Shares in question had been purchased by assessee through banking channels and investments were duly reflected by assessee in financial statements of respective years. The shares reflected healthy trading volume and price range reflected therein was in the range of Rs. 360 to Rs. 600 per share. Price range was stated to be in the same range for 15 months, after sale of shares by the assessee. Further, assessee sold these shares through its stock broker, namely, M/s. Unique Stockbro (P) Ltd. in online platform of recognised stock exchange. The transactions took place through online mechanism after complying with all the formalities and procedure including payment of STT. Delivery of shares was through clearing mechanism of stock exchange and sale consideration was received through banking channels. The transactions were duly evidenced by contract notes, demat statements, bank statements and other documentary evidences. In share sale transactions through online mode, identity of buyer of shares would not be known to assessee. Therefore, adverse conclusion drawn by AO merely on the basis of fact that buyer of shares were group entites of Vipul Bhatt could not be sustained merely on the basis of suspicious, conjectures or surmises, especially when there was nothing on record to establish vital link between assessee group and Vipul Bhatt or any of his group entities.
Relied:Omar Salay Mohamed SAit v. CIT (1959) 37 ITR 151 (SC) : 1959 TaxPub(DT) 148 (SC), Umacharan Shaw & Bros v. CIT (1959) 37 ITR 271 (SC) : 1959 TaxPub(DT) 184 (SC), CIT v. Shyam S. Pawar (2015) 54 Taxmann.com 108 (Bom) : 2018 TaxPub(DT) 1056 (Bom-HC) 10-12-2014], Anraj Hiralal Shah (HUF) v. ITO [ITA No. 4514/Mum/2018 dated 16-7-2019] : 2019 TaxPub(DT) 6382 (Mum-Trib)
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, MUMBAI 'D' BENCH
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