ARUN KUMAR SARUP,MUMBAI vs. DY. COMMISSIONER OF INCOME TAX CIRCLE 1(1)(1), MUMBAI, MUMBAI

Facts

The assessee filed an appeal challenging the CIT(A)'s order confirming additions made under section 69 of the Income Tax Act for assessment year 2015-2016. The addition was related to Long Term Capital Gains from the sale of shares of M/s Excel Castronics Ltd, which was alleged to be a penny stock company involved in providing bogus accommodation entries.

Held

The Tribunal condoned the delay in filing the appeal. Regarding the substantive grounds, the Tribunal noted that the assessee had provided documentary evidence for the purchase and sale of shares, and no independent inquiry by the AO or SEBI found the transactions to be bogus or the assessee to be part of any manipulative group. However, the assessee failed to prove the date of allotment/purchase of shares. Therefore, the appeals were set aside and restored to the AO for determining the correct capital gains after providing an opportunity to the assessee to prove the allotment/purchase date.

Key Issues

Whether the long-term capital gains from the sale of shares of M/s Excel Castronics Ltd are genuine, and if so, whether the assessee has provided sufficient evidence to prove the date of allotment/purchase of shares to determine the holding period.