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| The Tax Publishers2020 TaxPub(DT) 0744 (Pune-Trib) INCOME TAX ACT, 1961
Section 69
Where assessee obtained accommodation entries in the garb of LTCG from transfer of shares, the AO was justified in concluding that such LTCG as declared by the assessee was non-genuine or bogus.
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Income from undisclosed sources - Addition under section 69 - Assessee obtained accommodation entries in garb of LTCG - Treatment as bogus LTCG
Assessee purchased shares of a company 'P' at Rs. 6.25 per share. Thereafter, 'P' declared shares split up in ratio of 1:10 and the assessee sold such shares after a year and few months of purchase during year under consideration at a price of more than Rs. 90 per share. He declared long-term capital gain (LTCG) on the said transaction. AO extracted the summary of financials of 'P' for the relevant years, which fairly indicated that there was no foundation for such a magical increase in the price of its shares. Further, the AO also referred to the statements of various persons, all of whom admitted to be providing accommodation entries with the help of various companies including 'P'. Further, the AO also observed that the SEBI suspended share-trading activity of 'P' for various violations. Accordingly, the AO concluded that the LTCG declared by the assessee was non-genuine or bogus. Held: There was negligible profit earned by P during relevant years, which did not justify such huge increase in share price as declared by assessee. Further, the scrip of P listed on BSE was also suspended from trading and the 'P' was also found to be engaged in process of providing accommodation entries. Thus, it was crystal clear that 'P' was a penny stock company and the assessee obtained accommodation entries in the garb of LTCG from transfer of its shares, for which an appropriate addition was rightly made by AO. Hence, the AO was justified in concluding that the LTCG declared by the assessee was non-genuine or bogus.
REFERRED : Sumati Dayal v. CIT (1995) 214 ITR 801 (SC): 1995 TaxPub(DT) 1173 (SC) CIT v. Durga Prasad More (1971) 82 ITR 540 (SC): 1971 TaxPub(DT) 0375 (SC) Suman Poddar v. ITO [ITA 841/2019 vide its Judgment dt. 17-9-2019]: 2019 TaxPub(DT) 6695 (Del-HC) Sanjay Bimalchand Jain L/H Shantidevi Bimalchand Jain v. Pr. CIT & Anr. [in ITA 18/2017]: 2017 TaxPub(DT) 5257 (Bom-HC)
FAVOUR : Against the assessee
A.Y. : 2015-16
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