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| The Tax Publishers2022 TaxPub(DT) 0546 (Mum-Trib) INCOME TAX ACT, 1961
Section 68
Transaction of purchase and sale of shares were duly evidenced by contract notes, broker's ledger, demat account statement and bank statements etc. The sale proceeds were received through banking channels and shares were delivered by assessee from demat account. These transactions were subjected to applicable Securities Transaction Tax (STT). Prima-facie assessee had fulfilled all the requisite conditions to claim exemption under section 10(38). The whole basis of making additions was third-party statement and no opportunity of cross-examination was provided to assessee to confront these parties. Therefore, additions made under section 68 purely on the basis of suspicious, conjectures or surmises could not be sustained.
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Income from undisclosed sources - Addition under section 68 - Long-term capital gain on sale of shares -
AO based on information emanated from investigation wing treated long-term capital gain (LTCG) on sale of shares declared by assessee under section 10(38) as bogus and subjected sale proceeds of shares to addition under section 68. Held: Transaction of purchase and sale of shares were duly evidenced by contract notes, broker's ledger, demat account statement and bank statements etc. The sale proceeds were received through banking channels and shares were delivered by assessee from demat account. These transactions were subjected to applicable Securities Transaction Tax (STT). Prima-facie assessee had fulfilled all the requisite conditions to claim exemption under section 10(38). Assessee discharged primary onus of establishing genuineness of the transactions whereas onus as casted upon revenue to corroborate impugned additions by controverting the documentary evidences furnished by assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by AO. The whole basis of making additions was third-party statement and no opportunity of cross-examination was provided to assessee to confront these parties. Therefore, additions made under section 68 purely on the basis of suspicious, conjectures or surmises could not be sustained.
Relied:Omar Salay Mohamed Sait v. CIT (1959) 37 ITR 151 (SC) : 1959 TaxPub(DT) 148 (SC) and Umacharan Shaw & Bros. v. CIT (1959) 37 ITR 271 (SC) : 1959 TaxPub(DT) 184 (SC), CIT v. Mukesh Ratilal Marolia ITA No.456 of 2007; 7-9-2011) : 2016 TaxPub(DT) 3526 (Bom-HC), CIT v. Maheshchandra G.Vakil ((2012) 40 Taxmann.com 326 (Guj-HC) : 2019 TaxPub(DT) 276 (Guj-HC); 25-9-2012), CIT v. Smt. Sumitra Devi ((2014) 49 Tax mann.com 37 (Raj-HC) : 2014 TaxPub(DT) 1749 (Raj-HC), CIT v. Pooja Agarwal (ITA No.385/2011 dated 11-9-2017) : 2018 TaxPub(DT) 144 (Raj-HC) and Pr. CIT v. Smt. Krishna Devi & Ors. [ITA No.125/2020 & ors. Dated 15-1-2021] : 2021 TaxPub(DT) 544 (Del-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13 & 2013-14
IN THE ITAT, MUMBAI BENCH
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