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2023 (12) TMI 877 - AT - Income TaxTreatment of LTCG as unexplained cash credit u/s. 68 - AO has made proper enquiries before concluding the transaction as a sham - as per AO the assessee has involved in manipulating the stock prices in penny stocks and has derived LTCG and has claimed exemption u/s. 10(38) by manipulating the share prices - loose sheets found and seized at the residence of the assessee wherein the sale of shares, quantity sold, date, sale price and the computation of the LTCG were found and seized - HELD THAT:- In the instant case, since the transactions were through proper banking channels, this case is of no help to the Revenue. Similarly, the decision in the case of Sanjay Bimalchand Jain [2017 (5) TMI 983 - BOMBAY HIGH COURT] it is distinguishable on the fact that the details of persons who purchased the shares were not provided. In the instant case, the details of buyers are very much available in the order of the Ld. AO and hence this decision cannot be applied. Further, in the case of Pr. CIT vs. Mehndipur Balaji [2022 (7) TMI 294 - ALLAHABAD HIGH COURT] relied on by the Ld. DR, the addition for the bogus LTCG received by the assessee were made on the basis of the incriminating material available on record. However, in the instant case, no such incriminating material along with corroborative evidence has brought on record to say that the assessee has involved in manipulation of the stock prices to earn bogus LTCG. It is also noted that the assessee has sold the shares through recognized Stock Exchange and hence he is not aware of the company of the buyers and therefore the arguments of the Ld. DR are not accepted - thus we find that the assessee has not involved in manipulation of stock prices for the purpose of earning bogus LTCG and hence we are inclined to allow the ground raised by the assessee. Treatment of commission expenditure as unexplained expenditure u/s 69C - Since the LTCG earned by the assessee are bonafide in nature, the commission expenditure shall be allowed as a deduction from the LTCG and hence this ground raised by the assessee is allowed.
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