2020 (4) TMI 162 - ITAT KOLKATA

Addition u/s 68 - bogus LTCG - denying the exemption claimed by the assessee u/s. 10(38) - addition u/s. 69C on the presumption that commission @ 5% was paid for arranging the aforesaid bogus long term capital gain - HELD THAT:- AO failed to expose the wrong doing if any on the part of the assessee by bringing out or unraveling any nexus of assessee/broker with the purchase of shares. Further, I note that AO has not brought any evidence/material to suggest that the appellant knows any of the so-called entry operators/broker/paper companies or they have named the appellant in particular, that they have dealt with the appellant. So, it is upon mere surmise and assumption that AO says that assessee’s own unaccounted cash have been given to purchasers in order to claim bogus LTCG.

In order to create a tax liability in a case of this nature, the AO has to prove and establish the cash trail and the allegations, particularly in respect of the appellant, which is yet to be proved in the instant case.

AO has failed to establish any link and therefore the order is based on surmises, predetermined, solely relying upon the investigation report which is general in nature and no concrete material has been brought on record proving otherwise.

The assessee has furnished all evidences in support of the claim of the assessee that it earned LTCG on transactions of his investment in shares. The purchase of shares had been accepted by the AO in the year of its acquisition and thereafter until the same were sold.

Since the purchase and sale transactions are supported and evidenced by Bills, Contract Notes, Demat statements and bank statements etc., and when the transactions of purchase of shares were accepted by the ld AO in earlier years, the same could not be treated as bogus simply on the basis of some reports of the Investigation Wing and/or the orders of SEBI and/or the statements of third parties.

Claim of the assessee in respect of Long Term Capital Gain allowed in respect of sale of shares of M/s. Cressanda Solutions Ltd and direct deletion of addition.

Since addition is hereby deleted in favour of the assessee the addition on account of commission expenses u/s. 69C of the Act for arranging LTCG is also hereby allowed in favour of the assessee.

Disallowance u/s. 14A read with Rule 8D - A.O has simply invoked Sec 14A read with Rule 8D, while the appellant has contended that only those investments which yield dividend income ought to contribute to any calculation for disallowance under Rule 8D - HELD THAT:- The details being sketchy and incomplete, I do not feed any cause to interfere with the action of the Ld. A.O in making the impugned disallowance.