2022 (3) TMI 1437 - HC - Income Tax

Court affirms Tribunal decision on Income Tax Act section 68 deletion

Principal Commissioner of Income Tax – 3 Mumbai Versus Ziauddin A Siddique

The High Court upheld the Tribunal's decision regarding the deletion of an addition under section 68 of the Income Tax Act. The Court found the ... Addition u/s 68 - bogus LTCG - shares were bought/acquired from off market sources and thereafter the same was demated and registered in stock exchange and increase in share price of Ramkrishna Fincap Ltd. is not supported by the financials - HELD THAT:- There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd. (“RFL”) is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax (“STT”) has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. We find nothing perverse in the order of the Tribunal. Reliance on a judgment of NRA Iron & Steel (P.) Ltd.. [2019 (3) TMI 323 - SUPREME COURT] does not help the revenue in as much as the facts in that case were entirely different. No substantial question of law. - Decided against revenue. Issues:- Justification of deletion of addition under section 68 of the Income Tax Act- Validity of the Tribunal's decision regarding the shares transaction of Ramkrishna Fincap Ltd.- Allegations of unaccounted income and price rigging in the marketAnalysis:1. The main issue in this case revolves around the justification of deleting the addition of Rs.1,03,33,925/- under section 68 of the Income Tax Act. The question of law proposed was whether the Tribunal was correct in deleting this addition, considering the shares were acquired from off-market sources, demated, and registered in the stock exchange. The appellant argued that the increase in share price of Ramkrishna Fincap Ltd. was not supported by financials, leading to the claim that the Long Term Capital Gain (LTCG) was unaccounted income. However, the Tribunal found that the purchase and sale of shares were done through stock exchange and registered brokers, with payments made through banking channels and STT paid. The documentation was not criticized by the Assessing Officer, and no price rigging allegations were made against the assessee.2. The High Court, after considering the impugned order and submissions from both counsels, upheld the Tribunal's decision. The Court found no reason to interfere as there was a factual finding that the transactions were legitimate and conducted through proper channels. The absence of any criticism of documentation and lack of allegations regarding price rigging supported the Tribunal's conclusion. The Court emphasized that the Tribunal's order was not perverse, and no substantial question of law was raised based on the facts and correct application of principles.3. Additionally, the appellant relied on a judgment of the Apex Court, but the Court noted that the facts in that case were distinct. The Court affirmed that the Tribunal did not commit any errors or apply incorrect principles in this case. Ultimately, the appeal was deemed to be without merit and was dismissed with no order as to costs.