2014 (10) TMI 174 - ITAT MUMBAI

Assessment of sale value of shares – Transaction treated as cash credits instead of LTCG – Held that:- The assessee has claimed to have purchased the impugned shares through Off market transaction – CIT(A) rightly was of the view that the transactions of the assessee in shares of Prime Capital Market were not genuine – Relying upon Sumati Dayal Versus Commissioner of Income-Tax [1995 (3) TMI 3 - SUPREME Court] - the assessee has adopted the methodology of acquiring the Long Term Capital Gains in order to convert her black money into white - The purchase price was not paid by cheque, but it was claimed to have been adjusted against the speculation profit claimed to have been made by the assessee - the assessee could not produce the copies of share certificates and copies of share transfer forms - The transaction of purchase of shares could not be cross verified - The shares of M/s Prime Capital Markets Ltd was declared as “Penny Stock” by SEBI and the broker Sanju Kabra, through whom the shares were sold by the assessee was indicted for manipulating the prices of penny stock shares - the tax authorities have rightly applied the test of human probabilities to examine the claim of purchase and sale of shares made by the assessee - The claim of making speculation gains on the reasoning that speculation transactions could not have been entered into by the assessee therein without paying margin money to the broker - the claim of purchase of shares was rejected by the Tribunal and consequently the claim of sale of shares was also rejected - CIT(A) was justified in confirming the order of the AO by applying the test of human probabilities – Decided against assessee.