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2021 (12) TMI 301 - AT - Income TaxUnexplained cash credit u/s.68 - Bogus share transactions - denying the exemption claimed in respect of Long Term Capital Gains u/s.10(38) - HELD THAT:- All evidences demonstrate that assessee had sold the shares through screen based trading through SEBI registered broker and the transactions were subjected to Security Transaction Tax and proceeds of the sales, after deduction of such expenses, were credited to the bank accounts of the assessee. The authorities below has not commented on the veracity of such crucial evidence filed by the assessee and they have disallowed the claim of the assessee by holding that the broker, through whom the assessees had sold shares, was a tainted stock broker who was banned by SEBI in 2010. However, while holding so the authorities below has further observed that such ban was revoked by the SEBI and the only order remained in force was that the broker was not allowed to trade in its proprietary name. The findings of the Assessing Officer in the assessment order demonstrates that the ban was only for its proprietary trades and there was no ban on the transactions for clients, therefore, the reliance placed by Revenue on this order of SEBI is misplaced. Moreover, we find that the ban was imposed by SEBI in 2010 (which was later on revoked also) and assessees had sold the shares in the year 2016 i.e. after a gap of about six years and in the meantime the Investigation Wing of the Income Tax Department had carried out investigation and vide report dated 27/04/2015 had identified 84 companies which were engaged in the business of providing accommodation entries and name of the scrip on which the assessee had earned capital gain does not find its name in that list and neither name of broker finds place in the list of broker investigated by the Investigation Wing of the Department. Denial of claim u/s 10(38) of the Act is not justified and the orders of learned CIT(A) are reversed and Assessing Officer is directed to allow the claim of the assessee u/s. 10(38) of the Act. As we have allowed relief to the assessee on account of denial of long term capital gain the addition on account of assumed commission which the Revenue has assumed to have been paid to the brokers is also deleted - Decided in favour of assessee.
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