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2022 (9) TMI 871 - Income Tax
Addition u/s 68 - denial of exemption u/s 10(38) - Bogus LTCG - unaccounted money of the assessee under the guise of long term share transaction - HELD THAT:- The action of the assessee is nothing but pre-motivated and deliberate conduct done for converting the unaccounted money of the assessee under the guise of long term share transaction and that too without paying requisite tax on the same. This clearly amounts to tax evasion. It is also beyond preponderance of probabilities that the fantastic sale price of a little known shares i.e. Mishka without any economic or financial basis to increase from Rs. 6/- to Rs. 50.25 per share, and likewise whereby the assessee manipulated the capital gain which was bogus and was done to claim exemption u/s 10(38) therefore, we do not find any reason to interfere with the findings of the CIT(A) and the same is upheld. Therefore, the addition u/s 68 of the Act and denial of exemption u/s 10(38) of the Act is upheld.
Addition u/s 69C - commission of about 1-2% of the transaction is paid to the broker who negotiates the deal - HELD THAT:- When 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 and accordingly such addition was upheld. In the present case also, admittedly the share transactions were manipulated through entry provider, stockbrokers in order to obtain fraudulent income by rigging share prices and selling them in order to justify the unaccounted income of the assessee and for all these activities the broker is making all the negotiations and arrangements and therefore, there is no doubt that such transactions involves money, paid to entry provider for such fraudulent capital gains and hence disallowance @ 1% is held to be reasonable and we do not find any infirmity with the findings of the ld. CIT(A) on this issue also. The order of the ld. CIT(A) is accordingly upheld on this issue as well.
Addition of investment made by the assessee - AO held that the assessee has not been able to prove the source of investment - HELD THAT:- As we do not find any reason to interfere with the findings since they have been arrived at by proper examination of facts and verification.It is strange to note that the broker is based in Surat and assessee is in Nashik and in the bill the broker has not charged any commission and the bill also does not bear the mode of receipt and the bill mentions that the amount is due from the assessee. It clearly shows that the bill has not been issued in a normal manner but has been a paper work to show the offline purchase of shares through a broker. As the amount is paid in cash,, the A.O is right in holding that the investment is from unexplained sources. The ground of appeal is therefore, dismissed.