Tribunal orders deletion of LTCG addition, emphasizing need for concrete proof and rejecting reliance on circumstantial evidence.

The Tribunal allowed the assessee's appeal, directing the deletion of the addition made by the Assessing Officer regarding the claim of Long Term Capital Gain (LTCG) on the sale of shares. The Tribunal found the transactions were supported by substantial documentary evidence and criticized the reliance on circumstantial evidence without concrete proof. The decision emphasized that statements recorded during surveys lack evidentiary value and cannot be the sole basis for additions, ultimately validating the genuineness of the assessee's LTCG claim.

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Issues Involved:
1. Whether the assessee's claim of Long Term Capital Gain (LTCG) on the sale of shares was genuine.
2. Whether the addition made by the Assessing Officer (AO) to the assessee's income on the grounds of bogus LTCG was justified.

Issue-wise Detailed Analysis:

1. Genuineness of the Assessee's Claim of LTCG:
The assessee claimed LTCG of Rs. 55,00,069 on the sale of 30,000 shares of M/s. Tuni Textile Mills Ltd., which were purchased on 18.03.2011 for Rs. 7,30,138 through a registered broker and later sold on 08.09.2012 for Rs. 62,30,207. The assessee asserted that this gain was exempt under Section 10(38) of the Income Tax Act. The AO, however, deemed the LTCG claim as bogus and added the amount to the assessee's income. The CIT(A) upheld the AO's decision, prompting the assessee to appeal to the Tribunal.

2. Justification of the Addition Made by the AO:
The Tribunal examined a similar case (Kiran Kothary, HUF Vs. ITO) where the addition made by the AO on the sale of shares of M/s. Tuni Textile Mills Ltd. was deleted. The Tribunal noted that the transactions were conducted through registered brokers, backed by contract notes, demat statements, and bank statements reflecting the payments. The Tribunal emphasized that the purchase of shares through off-market transactions is not illegal, as supported by the case of Dolarrai Hemani vs ITO.

The Tribunal also considered the survey conducted by the Mumbai Investigation Wing against M/s. Tuni Textile Mills Pvt. Ltd., where the Managing Director's statement implicated certain individuals in bogus LTCG transactions. However, the Tribunal found no evidence connecting the assessee to these individuals or the entry operator. The Tribunal relied on the Supreme Court's decision in CIT vs Khader Khan Son, which held that statements recorded during surveys lack evidentiary value and cannot be the sole basis for additions.

The Tribunal further noted that the assessee's transactions were supported by substantial documentary evidence, including:
- Balance sheets reflecting the investment.
- Bills of purchase.
- Demat statements.
- Contract notes from the stock broker.
- Bank statements showing payment receipts.

The Tribunal criticized the AO and CIT(A) for relying on circumstantial evidence and preponderance of probability without concrete evidence against the assessee. The Tribunal highlighted that the AO failed to prove any stock price manipulation by the assessee and noted that regulatory authorities like SEBI had not alleged any wrongdoing.

The Tribunal referenced the Calcutta High Court's decision in Principal CIT vs Rungta Properties, which held that transactions supported by valid documents cannot be dismissed based on suspicion. The Tribunal concluded that the AO's findings were unfounded and lacked legal evidence.

Conclusion:
The Tribunal, finding the facts and circumstances of the case similar to the Kiran Kothari, HUF case, allowed the assessee's appeal. The Tribunal directed the deletion of the addition made by the AO, thereby validating the assessee's claim of LTCG as genuine.

Pronouncement:
The order was pronounced in the open court on 19th September 2018. The appeal of the assessee was allowed, and the addition made by the AO was directed to be deleted.

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