2020 (10) TMI 299 - HC - Income Tax

Gujarat High Court affirms Tribunal decision on legitimacy of transactions

The Principal Commissioner of Income Tax-1 Versus Parasben Kasturchand Kochar

The Gujarat High Court dismissed the appeal filed by the Revenue against the Income Tax Appellate Tribunal's decision for the assessment year 2014-15. The ... Bogus LTCG - addition on account of LTCG claimed as exempt u/s. 10(38) - transaction was pre-arranged as well as sham and was carried out through penny scripts companies / paper companies - whether the assessee earned long term capital gain through transactions with bogus companies? - ITAT deleted the addition - HELD THAT:- Tribunal has recorded the finding of fact that the assessee discharged his onus of establishing that the transactions were fair and transparent and further, all the relevant details with regard to such transactions were furnished before the Income Tax authorities and the Tribunal also took notice of the fact that some of the shares also remained in the account of the appellant. Assessee has a Demat Account maintained with the ICICI Securities Ltd. and has also furnished the details of such bank transactions with regard to the purchase of the shares. Tribunal took notice of the fact that the statements recorded by the investigation wing of the Revenue with regard to the Tax entry provided were informed to the assessee despite giving him opportunity to meet such an allegation. No substantial question of law. Issues:1. Appeal under Section 260A of the Income Tax Act, 1961 against the order passed by the Income Tax Appellate Tribunal for the A.Y. 2014-15.2. Whether the long term capital gain claimed as exempt under section 10(38) was rightly deleted by the Appellate Tribunal.3. Allegation of transactions with bogus companies and sham dealings.Analysis:1. The appeal before the Gujarat High Court was filed by the Revenue against the order of the Income Tax Appellate Tribunal concerning the assessment year 2014-15. The main issue raised was whether the Tribunal was correct in deleting the addition of Rs. 9,70,468 as long term capital gain claimed as exempt under section 10(38) of the Income Tax Act, 1961.2. The Tribunal found that the assessee had fulfilled the burden of proof regarding the legitimacy of the transactions with alleged bogus companies. The Tribunal noted that relevant details were provided, and some shares remained in the appellant's account after the long term capital gain was earned. The absence of a statement from the Investigation Wing against the assessee and the lack of opportunity for cross-examination further supported the assessee's position.3. Additionally, it was highlighted that the assessee maintained a Demat Account with ICICI Securities Ltd. and had submitted transaction details related to share purchases. The Tribunal considered the statements made by the Investigation Wing regarding tax entries, which were shared with the assessee despite the opportunity to address the allegations. Ultimately, the Court concluded that the proposed question did not qualify as a substantial question of law under Section 260A of the Act.4. Consequently, the appeal was dismissed by the High Court, affirming the Tribunal's decision that the assessee had sufficiently demonstrated the genuineness of the transactions and that the addition of long term capital gain was unjustified based on the evidence presented.