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Facts
The assessee initially purchased shares which were later split, and then sold a portion of these shares claiming long-term capital gain exemption. The Assessing Officer disallowed this claim, adding back the sale price and commission as unexplained expenditure.
Held
The Tribunal held that the assessee discharged the onus under Section 68 of the Act by producing relevant documents for the share transactions, which were routed through banking channels and held for over a year. Therefore, the addition on account of sale price was unsustainable.
Key Issues
Whether the additions made by the Assessing Officer on account of sale price and commission for shares are to be sustained when the assessee has discharged the onus under Section 68 and the transactions were routed through banking channels.
Sections Cited
250, 10(38), 143(3), 69C, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 07.01.2025, impugned herein, passed by the Ld. Addl./Joint Commissioner of Income Tax (Appeals) (in short “Ld. Addl./Joint Commissioner”) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2015-16.
In this case, the Assessee had initially purchased 3125 shares of Parag Shilp Swift IT Infrastructure & Services Pvt. Ltd. (PSIT Infra and Services Ltd.) @ Rs.40 per share. Subsequently, such shares were splitted into Rs.1/- from face value of Rs.10 and therefore the same became 31250 shares. The said shares were subsequently got demoralized. Thereafter the Assessee during the AY under consideration on dated 18.12.2014 , sold 11000 shares out of 31250, on a consideration of Rs.9,98,250/- and consequently earned long term capital gain of Rs.9,54,250/- and claimed the same, as exempt u/s 10(38) of the Act.
The Assessing Officer (AO) disallowed the said claim of the Assessee vide assessment order dated 20.12.2017 u/s 143(3) of the Act and made the additions of Rs.9,98,250/- being sale price of such shares and Rs.29,947/- being commission paid @ 3% of Rs.9,98,250/- and added the same in the income of the Assessee as un-explained expenditure u/s 69C of the Act.
The Assessee, being aggrieved, challenged the said additions before the Ld. Addl./Joint Commissioner, however, of no avail, as the Ld. Addl./Joint Commissioner affirmed both the additions by dismissing the appeal of the Assessee.
The Assessee, being aggrieved, challenged the aforesaid additions by filing present appeal.
Having heard the parties and given thoughtful considerations to the peculiar facts and circumstances of the case and rival claims of the parties. It is admitted fact that the Assessee has been regularly dealing in shares and securities and in order to discharge her onus cast u/s 68 of the Act qua transaction of scrip in hand, duly filed the relevant documents, such as purchase invoice, sale invoice, Demat statement and bank statement etc. which are not in controversy. Admittedly, no role of rigging of shares, has been attributed to the Assessee and no order has ever been passed against the Assessee by the SEBI or other Investigating Agency. As the Assessee by producing the relevant documents mentioned above, has been able to discharge her onus cast u/s 68 of the Act and it is fact that the sale and purchase transactions have been routed through banking channels and the shares were held for a period of more than one year and sold through Bombay Stock Exchange platform and therefore in the considered view of this Court, the addition u/s 68 of the Act, is un-sustainable.
Consequently, the addition of Rs.9,98,250/- is deleted.
Coming to the addition of Rs. 29,947/- u/s 69C of the Act, as this Court has deleted the substantive addition, hence this addition u/s 69C of the Act, does not survive. Consequently, the same is also deleted.
Order pronounced in the open court on 28.04.2025.