| The Tax Publishers2021 TaxPub(DT) 3208 (Ind-Trib) INCOME TAX ACT, 1961
Section 68
Assessee purchased shares of 'TEL' from registered share broker, namely, Pragati Shares and Stock at cost of Rs. 2,75,964. The source of investment is not in dispute as assessee was having regular source of income from salary and income of Rs. 20,35,020 was disclosed in the return for assessment year 2012-13. These shares were held in the pool account of broker which were subsequently transferred to the DEMAT Account in name of assessee maintained with Arihant Capital Markets Limited. After holding shares for more than 12 months, the assessee sold these equity shares through the broker Arihant Capital Markets Limited having SEBI No. INB/INF230783938. The shares of 'TEL' were listed on Bombay Stock Exchange. During the financial year 2013-14, 22,000 shares were sold in parts and contract notes were placed on record. AO had not disputed any of the documents , i.e., a contract note at the time of purchase and sale, DEMAT account, financial ledger, share prices appearing on the portal of Bombay Stock Exchange as on the date of purchase/sale. Further, assessee was regularly dealing in equity shares as an investor and as its main source of income salary and other from other sources and frequency of transactions in purchase and sale of shares was less. Accordingly, no addition was called for under section 68.
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Income from undisclosed sources - Addition under section 68 - Long-term capital gain on sale of shares alleged as bogus -
Assessee declared long-term capital gain CIT(G) on sale of shares of TEL as exempt under section 10(38). AO held that assessee had no knowledge about TEL and purchased it on advice of a person whose name was not known. Share prices of 'TEL' increased abnormally which were not supported by gross sales/net profit/financial strength of the company. He, therefore, concluded that 'TEL' was a penny stock' company and assessee has managed bogus LTCG to evade tax. Accordingly, AO made addition under section 68 for unexplained cash credit. Held: Assessee purchased shares of 'TEL' from registered share broker, namely, Pragati Shares and Stock at cost of Rs. 2,75,964. The source of investment is not in dispute as assessee was having regular source of income from salary and income of Rs. 20,35,020 was disclosed in the return for assessment year 2012-13. These shares were held in the pool account of broker which were subsequently transferred to the DEMAT Account in name of assessee maintained with Arihant Capital Markets Limited. After holding shares for more than 12 months, the assessee sold these equity shares through the broker Arihant Capital Markets Limited having SEBI No. INB/INF230783938. The shares of 'TEL' were listed on Bombay Stock Exchange. During the financial year 2013-14, 22,000 shares were sold in parts and contract notes were placed on record. AO had not disputed any of the documents , i.e., a contract note at the time of purchase and sale, DEMAT account, financial ledger, share prices appearing on the portal of Bombay Stock Exchange as on the date of purchase/sale. Further, assessee was regularly dealing in equity shares as an investor and as its main source of income salary and other from other sources and frequency of transactions in purchase and sale of shares was less. Accordingly, no addition was called for under section 68.
Followed:Swati Luthra (2020) 115 taxmann.com 167 (Delhi) : 2019 TaxPub(DT) 4904 (Del-Trib), dated 28-6-2019 and Krishna Devi [ITA No. 125 of 2020, dated 15-1-2021] (Del-HC) : 2021 TaxPub(DT) 544 (Del-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, INDORE BENCH
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