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2015 (3) TMI 922 - AT - Income TaxFraudulent share transactions - CIT(A) confirming sale consideration of ₹ 55,54,250/- claimed as giving rise to long term capital gains, as unexplained cash credit u/s. 68 - Held that:- The transaction about purchases of shares in physical form of such companies whose share prices have been rigged by some fraudulent operators cannot have any direct evidences. An inference about such a purchase connived with such companies have to be drawn on the basis of the circumstances available on the record. As pointed out, the shares have been transferred within 4 days of the date of purchases raises ample doubt about the credibility of the company. As pointed out in all probabilities, the company must have been involved in such fraudulent transactions. Post year 2000, it is improbable that any person would transact in shares by taking physical delivery of the shares. When many instances have been surfaced relating to bad delivery or bogus scrips, the regulatory authorities have made it compulsory to transact through Demat account. Having regard to the circumstances and the conduct of the assessee as disclosed in his statement u/s. 132(4) of the Act as well as other material on record , inference could be reasonably drawn that the shares purchased by the assessee have been backdated to give it a colour of Long term capital gain by showing the period of holding for more than 12 months. Needless to say that income tax proceedings are civil proceedings and the degree of proof required is by preponderance of probabilities, therefore applying the test of preponderance of probabilities and considering the entire sequence of events, the revenue authorities have rightly concluded that the assessee’s claim about the long term capital gains from the sale of shares is not genuine.Therefore, it cannot be said that the explanation offered by the assessee in respect of the sale consideration has been rejected unreasonably and that the findings that the said amounts are income of the assessee from other sources is not based on evidence. Accordingly, findings of the Ld. CIT(A) are confirmed. - Decided against assessee. Estimation of expenditure at the rate of 5% of the sale consideration as unexplained expenditure u/s. 69C - Held that:- As we have decided ground No. 1 on preponderance of probabilities then taking leaf out of our findings, there is no doubt that such transactions involve certain money paid to the operators/arrangers of such fraudulent capital gains. The Revenue authorities have reasonably calculated 5% of the sale consideration. Therefore, no interference is called for. - Decided against assessee.
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