The Tax Publishers2021 TaxPub(DT) 6115 (Ahd-Trib)

INCOME TAX ACT, 1961

Section 68

In absence of any specific finding against assessee in the investigation wing report, assessee could not be held to be guilty or linked to the wrong acts of the persons investigated as far as long-term capital gain earned on sale of shares of both the companies involved was concerned. Therefore, addition was not sustainable.

Income from undisclosed sources - Addition under section 68 - LTCG on sale of shares treated as bogus, based on investigation report - No specific finding against assessee in the investigation report

Assessee declared long-term capital gain on sale of shares of two companies, namely, M/s. Life Line Drugs & Pharma Ltd. (LLDP) and M/s. Mahavir Advance Remedies Ltd. (MARL). AO based on report of investigation wing of directorate of Kolkata, found that scripts of aforesaid companies were used for providing bogus long-term capital gains to beneficiaries. Accordingly, AO treated LTCG declared by assessee as bogus and made addition under section 68. Held: In absence of any specific finding against assessee in the investigation wing report, assessee could not be held to be guilty or linked to the wrong acts of the persons investigated as far as long-term capital gain earned on sale of shares of both the companies involved was concerned. Therefore, addition was not sustainable.

Relied:Pr. CIT v. Prempal Gandhi (2018) 94 Taxmann.com 156 (P&H) : 2018 TaxPub(DT) 451 (P&H-HC) and Dy. CIT v. Jiana Investments [ITA No. 4286 to 4474/Mumbai/2019 : 2021 TaxPub(DT) 1214 (Mum-Trib)]. Followed:Pr. CIT v. Smt. Krishna Devi reported in (2021) 126 taxmann. com 80 (Del) : 2021 TaxPub(DT) 0544 (Del-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16



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