The Tax Publishers2022 TaxPub(DT) 5174 (Chd-Trib) : (2022) 097 ITR (Trib) 0403

INCOME TAX ACT, 1961

Section 68

Assessee demonstrated with substantial evidences before AO that the actual purchase and sale of the shares took place, such shares had distinctive numbers, the transactions were routed through normal banking channels and the shares had been allotted to the assessee subsequently under an order of amalgamation/merger by the judgment of High Court and, therefore, mere reliance on the report of investigation wing and statement of Harshvardhan Kayan which did not even mention the name of assessee, could not be upheld. Therefore, addition was deleted.

Income from undisclosed sources - Addition under section 68 - LTCG on sale of shares alleged as bogus -

AO received information from the investigation wing that assessee had allegedly earned bogus long-term capital gain (LTCG) to the tune of Rs. 2 crores on sale of shares of Access Global Ltd. through another allegedly bogus client company of Ashok Kumar Kayan with Kolkata Stock Exchange and on the basis of such report of Investigation Wing, along with the statements of certain other persons including statement of Harshvardhan Kayan, AO held that Ashok Kumar Kayan had provided bogus LTCG entry to assessee as well as to some other beneficiaries. Thus, AO taxed sale proceeds of shares under section 68. Held: Assessee furnished evidences such as letter addressed to assessee by Maple Goods Ltd., carrying the distinctive numbers, Certificate number and Share Folio number of the shares allotted to assessee. Letter as issued by Access Global Ltd. specifying the details of the amalgamation by way of order of the Kolkata High Court along with the copy of Option Form. Demat Account Statement of assessee maintained with Ludhiana Stock Exchange and indicating the holding of shares of Access Global Ltd., Contract Notes issued by Ashok Kumar Kayan for sale of shares, Details of share transactions pertaining to sale through Ashok Kumar Kayan and bank account statement of assessee showing details of purchase and sale of shares. Thus, assessee demonstrated with substantial evidences before AO that the actual purchase and sale of the shares took place, such shares had distinctive numbers, the transactions were routed through normal banking channels and the shares had been allotted to the assessee subsequently under an order of amalgamation/merger by the judgment of High Court and, therefore, mere reliance on the report of investigation wing and statement of Harshvardhan Kayan which did not even mention the name of assessee, could not be upheld. Therefore, addition was deleted.

Relied:Sumati Dayal (1995) 214 ITR 801 (SC) : 1995 TaxPub(DT) 1173 (SC) and Durga Prasad More (1971) 82 ITR 540 (SC) : 1971 TaxPub(DT) 0375 (SC) andUdit Kalra ITA No. 220/2019 : 2019 TaxPub(DT) 3068 (Del-HC). Distinguished:S. Kadhar Khan (2012) 352 ITR 480 (SC) : 2012 TaxPub(DT) 3088 (SC), Hitesh Gandhi ITA No. 18/2017 & Anr., Daulat Ram Rawatmull (1973) 87 ITR 349 (SC) : 1973 TaxPub(DT) 323 (SC) andCIT v. Finvest Ltd. (2013) 357 ITR 146 (Del-HC) : 2013 TaxPub(DT) 912 (Del-HC).

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