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2021 (5) TMI 1013 - AT - Income TaxBogus STCG/LTCG - Treating the capital income as income from other sources - income of the assessee remained the same as was disclosed in the return of income, except the change of head of taxing the “capital gain” income as “Income from other sources” - HELD THAT:- As examining the documents placed before us are satisfied that the assessee had made genuine claim of capital gain (Long Term Capital Gain/Short Term Capital Gain) in their respective returns of income and both the purchase and sales of shares are proved to be correct and the credit of the consideration in the bank account for the years under appeal are having direct nexus with the sale of equity shares made during the year, are of the considered view that both lower authorities were not justified in treating the alleged income as income from other sources without disputing the genuineness of the evidences placed on record finding anything contrary to the claim of the assessee, and merely denying the claim of the assessee by giving general remarks. Thus, this common issue is decided in favour of the assessee(s) and the finding of the CIT(A) of confirming the action of the Ld. AO of treating STCG/LTCG as income from other sources is set aside. Capital gain from sale of equity shares as income from other sources - HELD THAT:- During course of search, copies of DEMAT accounts were seized by the search team which were having same details as were filed by the assessee in their respective income tax returns before the search took place. No other incriminating material has been referred by the Ld. AO which has been found during the course of search indicating that the assessee(s) have entered into sham transaction and the alleged transaction of purchase and sale of shares are in the nature of accommodation entries or there is any direct nexus of the assessee to have involved in managing/ arranging the accommodation entries. The facts remains undisputed that the alleged additions are neither based on an incriminating material found during the course of search nor any material gathered during the assessment proceedings and the finding of both the lower authorities are just based on the theory developed by the revenue authorities, on the basis of the result of some investigation carried out by teams of revenue department in some other cases and the reports of such so called theory have not been controverted to the assessee, thus, denying them the principles of natural justice of cross examination the information of the 3rd party on the basis of which additions were going to be made. We, therefore, are of the considered view the second common issue also deserves to be decided in favour of the assessee as we find that the Ld. AO had no material evidence on record to treat the income shown as LTCG/STCG from sale of equity shares as income from other sources.
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