Whether assessee can be incriminated on basis of general report or statements relied upon by A.O.?
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Whether assessee can be incriminated on basis of general report or statements relied upon by A.O.?
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Short note of today's case law for quick reference:
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[2024] 113 ITR (Trib) 327 (ITAT[Mum])
[BEFORE THE INCOME-TAX APPELLATE TRIBUNAL — MUMBAI "B" BENCH]
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DEPUTY COMMISSIONER OF INCOME-TAX
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NISHA SHANTARAM POKLE
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ABY T. VARKEY (Judicial Member) and S. RIFAUR RAHMAN (Accountant Member)
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March 22, 2024.
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1. For the A.Y. 2015-16, an individual, claimed exemption of LTCG earned on sale of scrips of G u/s 10(38).
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2. The A.O., based on the information received from the investigation wing, held that G’s scrips were penny stocks subject to price rigging by entry providers to facilitate bogus capital gains or loss and that the assessee’s sale represented bogus capital gains.
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3. A.O. treated the entire sale consideration as undisclosed income of the assessee and brought it to tax u/s 68 as unexplained cash credit; he also made an addition of the purported commission expenditure at 6% of the amount incurred on the sale of G’s shares.
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4. CIT(A) deleted the addition:
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5. On further appeal, Tribunal held that:
The assessee has filed primary and relevant documents to show the purchase and holding of shares for the statutory period, the dematerialization and the sale of shares through the BSE in the electronic platform through a recognized broker and the passage of consideration thereof through banking channels with remittance of securities transaction tax.
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6. It was not the case of the A.O. that there was any infirmity or deficiency in the documents filed by the assessee.
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7. There was no evidence to show the involvement of the assessee or her broker in the conversion of her unaccounted money to bogus LTCG, or anything to suggest that the assessee or her broker had any connection with unscrupulous entry providers.
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8. That an enquiry conducted by SEBI into G, its directors and some allottees, did not lead to imposition of any penalty against any of them nor bring about any allegation or penalty on the assessee or her broker.
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9. The question whether the assessee had satisfied the three ingredients set out in section 68 was essentially a fact-finding exercise.
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10. The general report or statements relied upon by the A.O. could in no way be said to incriminate the assessee.
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11. Hence order of CIT(A) upheld.