INCOME TAX ACT, 1961

Section 68 Section 10(38) Section 69

Income from undisclosed sources - Addition under section 68 - Alleged bogus long-term capital gains (LTCG) - Sufficient evidences furnished by assessee

Assessee sold high number shares of a particular company and earned long term capital gain. The AO referred to statement of S who had confirmed in his statement on oath that he had provided accommodation entries of long term capital gains including M/s. Lifeline Drug and Pharma Ltd. The assessee explained that she had purchased shares of the company from her source which were sold through broker M/s. SMC Global Services Ltd. Sale consideration had been received in the bank account of assessee on which brokerage and STT had been paid. The shares had been sold electronically on recognized Stock Exchange i.e., Bombay Stock Exchange in accordance with SEBI guidelines. AO, however, rejecting all evidences treated the same as bogus long-term capital gain. He did not accept the contention of assessee and referred to the rule of preponderance of probabilities and noted the financials of the company in the assessment order and held that it was a sham transaction' which was aimed only to bring unaccountd money in the guise of exempted long-term capital gains. The AO accordingly made the addition. Held: The documentary evidences furnished by assessee clearly supported the claim of assessee that assessee entered into genuine transaction of sale of shares through recognized exchange upon which STT had also been paid. The AO relied upon statement of Broker to prove that he had provided accommodation entries of M/s. LD and P Ltd., in question. However, it was an admitted fact that his statement was not subjected to cross-examination on behalf of the assessee. Therefore, such statement cannot be read in evidence against the assessee. There was no other evidence available on record against the assessee so as to make the impugned addition. The broker who had sold the shares have not made any statement against the assessee. The AO had not brought any other material on record to justify the addition. Thus, addition was deleted and LTCG declared by assessee was allowed.

Followed:Shri Amar Nath Goenka, Delhi v. ACIT, Circle-20(1), New Delhi in ITA No. 5882, 5883, 6457 to 6459/Del./2018 vide Order, dt. 12-12-2018. Relied:Order of ITAT, Delhi SMC-Bench in the case of Smt. Shikha Dhawan, Gurgaon v. ITO, Ward 4(2), Gurgaon ITA No. 3035/Del./2018, dt. 27-6-2018, Order of ITAT, Delhi SMC-Bench in the case of Mr. Arun Kumar, Delhi v. ACIT, Circle-1, Noida & Others in ITA No. 457/Del./2018 etc., dated 5-11-2018, 3. Mr. Anubhav Jain v. ITO (2018) 54 CCH 273 (Del.) (Trib), Kishan Chand Chelaram (1980) 125 ITR 713 (SC) : 1980 TaxPub(DT) 1130 (SC) and Pr. CIT v. Jatin Investment (P) Ltd. ITA No. 43 & 44 of 2016, dt. 18-1-2017.

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