TaxTMI 
TaxTMI 
2026 (4) TMI 1300
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.... practicing Chartered Accountant. The case of the assessee was reopened under section 147 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') by the Assessing Officer (AO) on the basis of information received from Insight Portal of the Department that the assessee had earned Long-Term Capital Gain (LTCG) from sale of shares of PMC Fincorp Ltd., alleged bogus scrip. The ld. AR, narrating facts of the case, submitted that a search operation under section 132(1) of the Act was carried out in the case of M/s. PMC Fincorp Ltd. on 11.10.2018. The said company was stated to be engaged in the business of manufacturing ferrous and non-ferrous metals. During the course of investigation, it was found that M/s. PMC Fincorp Lt....
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.... It was also brought to the notice of the First Appellate Authority that subsequently Shri Raj Kumar Modi had filed an affidavit retracting his earlier statement. The CIT(A) has recorded this fact but still proceeded to uphold action of the AO and denied the opportunity of cross-examination. The CIT(A) further observed that the subsequent retraction of statement does not vitiate the original statement recorded during the search proceedings and that the retraction appears to be an afterthought. The ld. AR placed reliance on the following decisions to contend that denial of cross-examination results in violation of principles of natural justice. Hence, the entire proceedings are vitiated. In support of his submissions, he placed reliance on f....
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....res were traded on the recognized stock exchange. The ld. AR submits that the assessee has duly discharged the onus cast upon him to prove the genuineness of the transactions of purchase and sale of shares. Hence, no addition can be made under section 68 of the Act on account of sale proceeds of shares. The ld. AR further submitted that the Division Benches of the Tribunal, in various cases involving sale of shares of M/s. PMC Fincorp Ltd., have deleted similar additions made by the Revenue alleging the transactions to be bogus. He placed reliance on following decisions: * ITO vs. Megha Garg ITA No.3488/Del/2025 AY 2014-15 deciding on 17.10.2025; * Rama Mittal vs. ITO 26/ASR/2024 decided 03.06.2024; & * Ritu Jain ....
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....assessee on sales of shares of M/s. PMC Fincorp Ltd. 8. Undisputedly, during the period relevant to the assessment year under appeal, the assessee had sold shares of M/s. PMC Fincorp Ltd. for a total consideration of Rs. 29,88,000/-. The assessee claimed Long-Term Capital Gain of Rs. 29,10,376/- arising from sale of the said shares as exempt in accordance with the provisions of the Act. The AO denied the exemption by treating the transaction as bogus. The assessment in the case of the assessee was reopened on the basis of the statement of Shri Raj Kumar Modi dated 11.10.2018 and the report of the Investigation Wing. 9. During the course of assessment proceedings, the assessee requested the AO to provide a copy of the statement of Shri....
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....ngs, carry substantial legal weight and evidentiary value. Regarding the subsequent retraction through affidavit, this does not vitiate the original statement made during the search proceedings. The retraction appears to be an afterthought designed to escape the consequences of the original admission. The original statement was made under oath with serious legal consequences for providing false information, which enhances its credibility and evidentiary value. The appellant's reliance on various case laws dealing with statements recorded in regular proceedings is misplaced, as those cases do not address the specific evidentiary value and legal sanctity of statements recorded under section 132(4) during search and seizure operations. The....