INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Share transaction in shell companies treated as sham -

Assessee had done transaction of sale of shares for earning huge long-term capital gains. Revenue alleged that the claim of assessee was not reliable because the information provided by the statements recorded of certain person under section 131 to the effect that the transactions in the share of the company, in respect of which the long term capital gain was claimed by the assessee, as exempt, appeared in the data base of the Income Tax Department as Penny Stocks, in tax evasion racket and the said company was found to be a sham and shell company. Therefore, disbelieving the claim of assessee, revenue held that the said income was liable to be taxed as undisclosed income under section 68 and was not exempted under section 10(38) as claimed by the assessee. Held: While it was for assessee to appear and adduce the relevant evidence for the genuineness of the transaction of sale of the shares, assessee was not vigilant and co-operative enough and did not produce the relevant evidence before revenue and did not even appear before appellate authorities to contradict the case against her. It resulted in the said findings of facts against assessee about the nature of the transactions of sale of shares of a shell company as sham and the same being taxed as 'undisclosed income' under section 68. Thus, the said findings of facts could not be said to be perverse in any manner.

REFERRED :

FAVOUR : Against the assessee

A.Y. :

INCOME TAX ACT, 1961

Section 68

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