2015 (12) TMI 1014 - ITAT KOLKATA

Eligibility to claim long term capital gains on sale of shares at a concessional rate of 10% during Asst Years 2001-02 to 2004-05 - exemption u/s 10(38) for Asst Year 2005-06 in respect of sale transactions routed through recognized stock exchange - Held that:- When purchase and sale of shares were supported by proper Contract Notes, deliveries of shares were received through demat accounts maintained with various agencies, the shares were purchased and sold through recognised broker and the sale considerations were received by Account Payee Cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG.

In the assessment orders under consideration the AO has not considered any of these facts. He has treated the transactions as bogus only on the basis of the suspicion that the difference in purchase and sale price of these shares are unusually high. It is a settled law that assessment cannot be made on the basis of suspicion or surmise. The AO has not brought any material on record to support his finding that there has been collusion/connivance between the broker and the appellant for the introduction of its unaccounted money. In view of the decisions of Sri Anil Kr. Khemka (husband of the appellant) thus hold that the AO is not justified in treating the long term capital gain as bogus. Direct the AO to treat the long term capital gain as claimed by the appellant and tax them at the rates applicable for assessment years 2001-02 to 2003-04 and for assessment year 2005-06 exemption u/s. 10(38) should be allowed - Decided in favour of assessee