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2022 (5) TMI 1227 - AT - Income TaxAddition made under section 68 - bogus long term capital gains claimed as exempt by the assessee - HELD THAT:- The sheer denial by the assessee, at the time of recording of his statement under section 131 about any of the information in respect of the transaction also does not provide any basis to allow the claim of exemption under section 10(38) of the Act, in view of the details furnished by various independent bodies about the conduct of the company in whose shares the assessee had transacted and earned long term capital gains. Further, submission of the assessee before lower authorities that the transaction was made through RTGS on the Recognised Stock Exchange also does not prove that the company, whose shares were purchased by the assessee and later on sold, was not engaged in providing bogus long term capital gains to its beneficiaries and its shares were not penny stocks. In view of the above, we find no infirmity in the order passed by the learned CIT(A), inter-alia, upholding the addition made by the Assessing Officer under section 68 of the Act in respect of the long term capital gains claimed as exempt by the assessee and also the commission paid by the assessee in respect of the said transaction. As a result, ground Nos. 3 and 4 raised in assessee’s appeal are dismissed. Deemed dividend under section 2(22)(e) - assessee claimed that advances were received as business advances, however, the assessee failed to produce any documentary evidence in support of this submission - HELD THAT:- As is evident from the fact as available on record, it is not in dispute that the assessee is holding 25.34% of shares in M/s A.R. International Private Limited from which the assessee has received advance of Rs. 28,53,251. Further, it has not been claimed that the said company is a company in which the public is substantially interested. Thus, the basic conditions of section 2(22)(e) of the Act are satisfied in the present case. Further, such a payment for the purpose of section 2(22)(e) of the Act should be to the extent to which the company possesses accumulated profits. As noted by the Assessing Officer accumulated profit of the company was Rs. 34,92,721. Thus, in view of the above, we do not find any infirmity in the order passed by the learned CIT(A) affirming the addition on account of deemed dividend. As a result, ground No. 5 raised in assessee’s appeal is dismissed.
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