Long term capital gains on share sales: presumption of cash payments invalid without cogent evidence, so reassessment additions disallowed.

Long-term capital gains arising from sale of shares were considered; the commentary states that an assessing officer may not infer payment or purchase by cash on mere surmise or conjecture without cogent material, and therefore reopening assessment or making additions as unexplained income is impermissible where the purchase transactions were not challenged and no fresh evidence exists. The reasoning emphasizes that presumption of cash payment cannot substitute evidentiary proof and that revenue bears the burden of producing material justifying reassessment; absence of such material requires exclusion of unexplained income additions.

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Issues:
1. Disputed addition of long-term capital gain by the Assessing Officer.
2. Validity of the Commissioner of Income-tax (Appeals) order deleting the addition.
3. Consideration of evidence by the Income-tax Appellate Tribunal.
4. Comparison with a previous judgment on the genuineness of gifts.

Analysis:
1. The assessment was reopened based on information suggesting false long-term capital gain. The Assessing Officer added an amount as unexplained credit, which the Commissioner of Income-tax (Appeals) later deleted. The Commissioner held that the Assessing Officer failed to provide evidence for deeming the transaction as bogus. The Income-tax Appellate Tribunal, considering various documents, found the transaction genuine as shares were purchased and sold through a registered broker, with sale proceeds received through a cheque.

2. The Income-tax Appellate Tribunal rightly rejected the Revenue's appeal, emphasizing that the assessee was a mere shareholder without control over the company. The Tribunal cited precedents to establish that suspicion cannot substitute legal proof. The absence of concrete evidence led the Tribunal to uphold the deletion of the addition by the Commissioner and dismissed the Revenue's claim.

3. The Revenue's reliance on a previous judgment concerning gifts was deemed irrelevant as the current case pertained to share transactions where the purchase was undisputed. The court clarified that the onus to establish the genuineness of gifts differs from proving the legitimacy of share transactions. The court found no substantial legal questions for consideration and dismissed the appeal.

4. In a separate judgment, the court addressed the burden of proof in establishing the genuineness of gifts, contrasting it with the present case involving share transactions. The court highlighted the importance of evidence and upheld the decision based on the lack of challenge to the share purchase. The court concluded that no significant legal issues arose, leading to the dismissal of the appeal.

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