INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Alleged bogus LTCG -

The undisputed fact is that the assessee is a habitual investor. During the financial year 2014-15, the assessee had earned short-term capital gain of Rs. 2.50 crores and long-term capital gain of Rs. 8.12 crores. However, the AO chose only one scrip out of several, and came to the conclusion that the long-term capital gain of Rs. 5.70 crores was bogus. However, the AO accepted the transactions in respect of short term capital gain and balance long-term capital gain. A perusal of the assessment order clearly shows that nowhere the AO has made any adverse comment in respect of habitual investments made by the assessee. On the contrary, he has accepted all the transactions other than those of LDPL. Additions made by the AO was confirmed by the CIT(A). In the instant case, in justification of his return of income, the assessee furnished all the necessary documentary evidences to discharge the initial burden cast upon him. The AO simply rubbished all the documentary evidences by referring to the general observations and modus operandi of the entry operators and further supporting his observations by report of the Investigation Wing.Held: In all those cases, relied on by DR either the assessee entered into solitary transaction resulting into long term capital gain or prior to the solitary transaction, the assessee was neither engaged in the purchase and sale of shares nor subsequent to earning of long term capital gain, the assessee was found to be engaged in the purchase and sale of shares. These facts are clearly distinguishable from the facts of the present case. The assessee was a habitual investor having portfolio of investment in shares in crores and is still holding investment in shares in several crores and is constantly engaged in investing in shares of various companies. Considering the vortex of evidences, the assessee has successfully discharged the onus cast upon him by provisions of section 68 and such discharge was purely a question of fact. Accordingly, the AO was directed to accept the long-term capital gain of Rs. 5,70,91,750 declared as such.

Relied:Adamine Construction (P) Ltd. (2018) 99 Taxmann 45 (SC) : 2018 TaxPub(DT) 7167 (SC), Odeon Builders (P) ltd. (2019) 110 Taxmann.com 64 (SC) : 2019 TaxPub(DT) 6298 (SC), Deepak Nagar (2019) 73 ITR (Trib) 74 (Del) : 2019 TaxPub(DT) 5141 (Del-Trib) and Fair Invest Ltd (2013) 357 ITR 146 (Del) : 2013 TaxPub(DT) 912 (Del-HC). Distinguished:Suman Poddar ITA No. 841/2019 : 2019 TaxPub(DT) 6695 (Del-HC and Udit Kalra ITA No. 220/2019 : 2019 TaxPub(DT) 3068 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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