Appeal allowed, additions deleted for genuine share sale in 2014-15. Reliable declaration, no fraud. Precedent cited. The Tribunal allowed the appeal, directing the AO to delete both additions related to the sale of shares for the assessment year 2014-15. The Tribunal ...
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Appeal allowed, additions deleted for genuine share sale in 2014-15. Reliable declaration, no fraud. Precedent cited.
The Tribunal allowed the appeal, directing the AO to delete both additions related to the sale of shares for the assessment year 2014-15. The Tribunal found the appellant's transactions genuine, conducted through different brokers, with no evidence of fraudulent activities. The capital gains declaration was deemed reliable, and the Tribunal cited precedent where similar additions were deleted. The judgment was pronounced on 16-07-2019.
Issues: Appeal against partial confirmation of addition related to sale of shares made by AO rejecting capital gains claim for assessment year 2014-15.
Analysis: 1. The appellant declared long term capital gains from the sale of shares but the AO reopened the assessment due to suspicious trading activities in shares of the company. The AO concluded that the transactions were not genuine, leading to the rejection of the capital gains claim and treating the sale consideration as income under section 68 of the Act.
2. The CIT(A) partially confirmed the addition, noting that the speculation profit was earned from a different broker than the one through whom the shares were purchased. The appellant argued that the transactions were genuine, pointing out that the shares were received and sold through a d-mat account, and there was no link established between the appellant and the directors involved in price rigging.
3. The appellant further contended that the AO treated the gain as income under section 68, whereas it was offered as long term capital gain. Citing a precedent, the appellant argued that similar additions were deleted by the Tribunal when shares were transacted through the stock exchange, as was the case here.
4. The Tribunal found that the purchase and sale of shares were conducted through different brokers, neither of whom were identified as tainted. The appellant's use of speculation profit to purchase the shares was accepted in the previous year, and the transactions were reflected in the balance sheet. With no evidence implicating the appellant in fraudulent activities, the Tribunal held that the capital gains declaration was reliable and directed the AO to delete the additions.
5. Consequently, the Tribunal allowed the appeal, setting aside the CIT(A)'s order and instructing the AO to delete both the additions related to the sale of shares. The judgment was pronounced on 16-07-2019.
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