2020 (11) TMI 902 - ITAT JAIPUR

Assessment u/s 153A - Bogus claim of LTCG - Addition made without reference to seized material - HELD THAT:- AO has reassessed the income of the assessee by disallowing the long term capital gains exemption claimed u/s 10(38) without making any reference to any incriminating material found during the course of search. No finding of AO or any other material brought on record that these transactions of sale of shares were concealed and not reported to the Revenue while filing the original return of income on 30.08.2015 for the impugned assessment year.

Once these transactions were reported in the return of income furnished before the date of search, the said transactions were duly disclosed to the department and thus, doesn’t represent any undisclosed transactions so as to constitute incriminating material found during the course of search in case of the assessee. Therefore, the addition made by the AO by disallowing the claim of exemption u/s 10(38) and reassessment completed u/s 153A is undisputedly not based on any incriminating material found or seized during the course of search and seizure action u/s 132 of the Act. See KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT]. - Decided in favour of assessee.

Addition u/s 68 on account of bogus LTCG - denial of claim of exemption under section 10(38) in respect of sale of shares - addition u/s 69C made by the AO on account of unexplained commission expenditure for taking bogus accommodation entry in the form of LTCG - HELD THAT:- In the instant case, we note that the assessee satisfies the necessary ingredients and conditions as so specified in section 10(38) of the Act, in terms of transfer of long term capital asset by way of sale of equity shares on which STT has been paid, he shall therefore be eligible for exemption on whole of the income so realized as the provisions talks about any income arising from transfer of such long term capital asset which shall be exempt from tax. We accordingly donot see any infirmity or illegality in the said findings of the ld CIT(A).

As relying on SHRI VIJAYRATTAN BALKRISHAN MITTAL, [2019 (10) TMI 439 - ITAT MUMBAI] we find that evidence produced by the assessee in support of his claim of purchase and sale of shares on the stock exchange have not been refuted by any adverse findings or material which could demonstrate involvement of the assessee or collusion with so called accommodation entry providers to obtain bogus LTCG as so alleged by the authorities below.

As entirety of facts and circumstances of the case, we are of the considered view that the assessee has discharged the necessary onus cast on him in terms of claim of exemption of long term capital gains u/s 10(38) of the Act by establishing the genuineness of transaction of purchase and sale of shares and satisfying the requisite conditions specified therein and the gains so arising on sale of shares therefore has been rightly claimed as exempt u/s 10(38) - Accordingly, in the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the CIT(Appeals) who has rightly allowed the said claim of the assessee - Decided against revenue.