THE ACIT, CIRCLE-5(3), AHMEDABAD vs. SHRI JAGAT PRAVINBHAI SARABHAI, AHMEDABAD

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ITA 1505/AHD/2019Status: DisposedITAT Ahmedabad01 December 2021AY 2011-123 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s deletion of the addition, finding that the shares were purchased long back and held for over 10 years. There was no evidence to treat the investment as bogus.

What were the facts?

The assessee claimed exemption for Long Term Capital Gain (LTCG) from the sale of shares. The Assessing Officer treated the transaction as a penny stock and made an addition under Section 68.

What were the issues?

Whether the LTCG from the sale of shares, claimed as exempt, could be treated as bogus and added under Section 68 as a penny stock transaction.

Which sections of the Income-tax Act were involved?

Section 68,Section 10(38)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED

Hearing: 10/11/2021Pronounced: 01/12/2021

आदेश आदेश आदेश PER RAJPAL YADAV, VICE PRESIDENT :

The Revenue is in appeal before the Tribunal against the order of learned Commissioner of Income-tax (Appeals)-5, Ahmedabad [“CIT(A) in short] dated 17.07.2019 passed for Assessment Year 2011-12. Though the Revenue has taken 6 grounds of appeal, but its grievances revolve around a single issue viz. the learned CIT(A) has erred in deleting the addition of Rs.2,10,474/- made by the Assessing Officer under Section 68 of the Income- Tax Act, 1961 (“the Act” in short).

2.

The brief facts of the case are that the assessee has filed his return of income on 29.03.2012 declaring total income of Rs.3,11,490/-. The assessee has claimed exemption under Section 10(38) of the Act of Rs.2,10,474/- which was a Long Term Capital Gain arose from the sale of shares of M/s. AY : 2011-12 2

penny stock and a bogus claim. He accordingly made addition under Section 68 of the Act.

3.

On appeal, the learned CIT(A) deleted this addition by recording the following findings:-

“5.2 I have carefully considered the facts of the case and submission made by the appellant. In the assessment order, it is noticed by the AO that the assessee has earned long term capital gain income on sale of shares of M/s. Devika Proteins Limited to the tune of Rs.2,10,474/- and the same was claimed as exempt u/s. 10(38) of the Act. The AO treated the entire transaction as Penny Stock transaction and thereby made addition Rs.2,10,474/- u/s.68 of the Act.

5.

3 The appellant has given the evidence that the shares were bought for genuine investment long back in the year 2000-2001 and at that time these shares by any stretch of imagination cannot be treated as penny stock. To substantiate the above contention, the appellant filed copy of transaction statement for the period 01/06/2001 to 01/10/2010 which substantiates the claim made by the appellant. The appellant further submitted that the above Retails were also filed before the AO. In view of the above facts, the contention of appellant is found tenable and accordingly addition made by the AO on account of bogus capital gain is deleted.”

4.

After due consideration of the findings of the learned CIT(A), we do not find any error in it. The shares were purchased long back in 2000-2001 and sold after retaining them for more than 10 years. There is nothing with the Assessing Officer to treat it as a bogus investment to earn profit in a short span of time. Therefore, the appeal of the Revenue is devoid of any merit and, accordingly, it is dismissed.

5.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Court on 01st December 2021 at Ahmedabad. (WASEEM AHMED) VICE-PRESIDENT Ahmedabad, Dated 01/12/2021 *Bt AY : 2011-12 3

आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

2.

""यथ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु" ( ) / The CIT(A)- अपील िवभागीय "ितिनिध अिधकरण अपीलीय आयकर 5. , , /DR,ITAT, Ahmedabad, 6. गाड" फाईल /Guard file. आदेशानुसार/ BY ORDER,सहायक पंजीकार (Asstt.

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