The Tax Publishers2021 TaxPub(DT) 0517 (Mum-Trib)


Section 68

Share purchase as well as sale transactions undertaken by assessee were duly backed by sufficient documentary evidences and, therefore, LTCG on sale of shares could not be treated as unexplained credit under section 68 merely based on third party statement recorded by investigation wing.

Income from undisclosed sources - Addition under section 68 - Long-term capital gain (LTCG) on sale of shares -

AO, based on statement recorded by investigation wing in case of provider of bogus long-term capital gains (LTCG), treated LTCG declared by assessee on sale of shares as bogus and made addition under section 68. Held: Share purchase as well as sale transactions undertaken by assessee were duly backed by sufficient documentary evidences in the shape of purchase bills, bank statements, demats statements and sale contract notes. The sales transactions had taken place in online mechanism through recognized stock exchange wherein identity of buyer would not be known and there would be no privity of contract between assessee and prospective buyers of shares. The funds had moved in and out through banking channels. Similarly shares had moved in and out of assessee's demat statement. All these evidences remain uncontroverted and no defect was found in the same. Also, assessee was a habitual investor of shares for past several years. The purchase of shares in earlier year was duly reflected in its Balance Sheet which was accepted by the revenue. Apparently, all the conditions as prescribed under section 10(38) fulfilled by assessee. On the other hand, the whole basis of disregarding these transactions was the findings rendered by investigation wing merely on the basis of third party. The statement was made under section 133A during survey operations which had no evidentiary value as same was not backed by cogent corroborative material on record. Secondly, opportunity to cross-examine the persons making adverse statement was never provided to assessee despite specific request of assessee. Also, there was no admission or finding that any cash got exchanged between assessee and any of the alleged bogus entities. Accordingly, additions made merely on the basis of suspicion, conjectures or surmises could not be sustained.


FAVOUR : In assessee's favour.

A.Y. : 2013-14 & 2014-15



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