Assessee declared long-term capital gains on sale of shares as exempt under section 10(38). AO taking note of huge rise in price of concerned shares within a short span treated LTCG as bogus and made addition under section 68. Held: Assessee could not satisfactorily explain as to how investments in shares in the absence of any evidence as to financials, growth and operations of investee company could earn profit of 491% over a short period of 5 months from the date of allotment of shares [21-2-2013-date of allotment and 18-7-2013 to 12-9-2013 -- date of sale]. Most importantly, in spite of earning so much of profit assessee had never embarked upon any transactions for investments with the broker or in any other dealing of shares. The revenue from operations of investee company for the year March 2012 was Rs. 0.09 and, for the year March 2013 is Rs. 0.99 Crore and financials of the company proved that entity was a penny stock company. Accordingly, LTCG earned by assessee was a part of major scheme of accommodation entries and, therefore, AO was justified in making addition under section 68.
IN THE ITAT, DELHI BENCH
H.S. SIDHU, J.M. & B.R.R. KUMAR, A.M.
Suman Poddar v. ITO
ITA No. 1006/Del/2019
A.Y. 2014-15
25 July, 2019
Assessee Dismissed.
Assessee by: Raj Kumar Gupta, CA
Revenue by: Ashima Neb, Sr. Departmental Representative
B.R.R. Kumar, A.M.
The present appeal has been filed by the assessee against the order of the learned Commissioner (Appeals)-13, New Delhi dated 31-12-2018.
2. The assessee has raised following grounds of appeal :--
'1. That under the facts and circumstances, both the lower authorities erred in law as well as on merits in disbelieving the genuineness of LTCG of Rs. 73,77,806 on sale of shares, consequently erred in not allowing the exemption claimed under section 10(38) of the Income Tax Act, thus erred in making addition of Rs. 73,77,806 under section 68 of the Income Tax Act.
1.1 That under the facts and circumstances, the impugned findings for addition of Rs. 73,77,806 under section 68 are un sustainable in law as well as on merits for not confronting with all materials used adversely and also for not providing cross examination of persons whose statements have been recorded on the back of the assessee and has been used adversely, more so, when specific request was also made for the same.
1.2 That the findings of addition of Rs. 73,77,806 under section 68 are based on no cogent material whatsoever and is a result of assumptions, presumptions, surmises and conjectures.'
3. Brief facts of the case are that during the year, the assessee has declared income of Rs. 4,96,650 by filing the ITR online on 20-3-2015. She has shown income from house property, business and other sources. She has also shown long term capital gains of Rs. 73,77,806 and claimed it as exempt under section 10(38). The assessing officer made addition of the Long Term Capital Gain under section 68 of the Act after taking into consideration the affairs of the assessee which was supported by the findings of investigations done by the Revenue department at Kolkata. The learned Commissioner (Appeals) confirmed the addition made by the assessing officer for which the assessee is in appeal before us.