2012 (5) TMI 844 - AT - Income Tax

Capital gain claim upheld under Income Tax Act, Revenue's appeal dismissed

ACIT Circle-3 Surat Versus Shri Mahesh G. Vakil HUF

The Revenue's appeal against the order of the ld.CIT(A)-II Surat, directing acceptance of a capital gain claim under section 68 of the Income Tax Act, was ... - Issues involved: Appeal filed by Revenue against order of ld.CIT(A)-II Surat directing to accept claim of capital gain u/s 68 of the I.T. Act.The judgment pertains to an appeal filed by the Revenue challenging the order of ld.CIT(A)-II Surat directing to accept the claim of a capital gain of Rs. 9,48,447 as against the same treated by the AO as an unexplained credit u/s 68 of the I.T. Act. The Assessing Officer had held the sum credited in the books of account as an unexplained cash credit u/s 68 of the I.T. Act due to the failure of the assessee to substantiate the genuineness of the short-term capital gain claimed. However, the first appellate authority accepted the explanation of the assessee, emphasizing that the transactions were done through the online trading system of the Exchange and supported by documentary evidence and confirmations from brokers. The CIT(A) concluded that there was no basis for treating the sum as an unexplained cash credit and directed the AO to accept the capital gain as disclosed by the assessee.During the proceedings, it was noted that a favorable view had been taken by ITAT 'A' Bench Ahmedabad in a similar case of an individual assessee, where it was explained that the transactions were genuine and made through the online trading system. The absence of a broker-client agreement was addressed by providing documentary evidence such as contract notes, bank statements, and confirmations from brokers. The sharp increase in the value of the scrip was also defended as not sufficient to doubt the genuineness of the transactions. The CIT(A) upheld the capital gain declared by the assessee, emphasizing that complete details were furnished and not found false or bogus by the AO. The appeal of the Revenue was dismissed based on the detailed reasoning provided by the CIT(A) and the supporting evidence presented by the assessee.Another decision of ITAT 'A' Bench in a related case confirmed the acceptance of capital gain, leading to the confirmation of the finding of the Learned CIT(Appeals) in the present case. The judgment highlighted the consistency in the treatment of capital gains on identical facts by the Co-ordinate Bench, resulting in the dismissal of the Revenue's appeal. The judgment ultimately upheld the order of the CIT(A) and dismissed the appeal of the Revenue.