2023 (9) TMI 1491

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....TAT has erred in deleting the addition of Rs. 39,37,423/- on account of LTCG claimed as exempt u/s 10(38) of the Act without appreciating that the transaction was pre- arranged as well as sham and was carried out through penny script company/paper company?" 3 The respondent - assessee filed a return of income on 17-3-2015. During the course of assessment proceedings, it was noticed that the assessee has sold 80,000 shares of Shree Nath Commercial and Finance Ltd., for Rs. 48,31,746/- which were purchased on 8-3-2011 for Rs. 8,94,323/- and earned long term capital gain of Rs. 39,37,423/-. 3.1 A show cause notice was issued on 21-3-2016 stating that the assessee had purchased 40,000 shares of Shreenath Commercial & Finance Ltd through Net w....

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....purchase and sales of shares which includes copy of bills of purchases, copy of broker account copy of bills for sale, copy of bank statement. I find that the appellant has purchased the shares through proper recognized broker and has also paid STT at the time of purchase. The share purchased on 8-3-2011 have entered the demat a/con 11-3-2011. The payment of purchase of Rs. 894323/- have been made through cheque, therefore the purchases are genuine and verifiable. I find that the shares kept in demat a/c for more than a year and have being sold on 04-12-2012. The payment has also being received in bank and STT has also been paid on sales. All these evidences are independent, credible therefore, cannot be ignored. When the payment for purcha....

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....AO himself has allowed the cost of acquisition against the sale of shares, meaning thereby, the purchase of the shares has been admitted as genuine. The transactions of purchase and sales go hand in hand. In simple words, sales is not possible without having the purchases. Thus, once purchases has been admitted as genuine, then corresponding sales cannot be doubted until and unless some adverse materials are brought on record. As such, we note that the AO in the present case has taken contradictory stand. On one hand, the AO is treating the entire transaction as sham transaction and on the other hand he's allowing the benefit of the cost of acquisition for the shares while determining the bogus long term capital gain.... 11.2 It was a....