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2025 Supreme(Online)(ITAT) 6427
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
YOGESH KUMAR U.S., JM, NAVEEN CHANDRA, AM
JAINMATI JAIN YOJANA VIHAR – Appellant
Versus
ITO WARD 56(2) NEW DELHI NEW DELHI – Respondent
ITA No. 4649/Del/2024 (A.Y 2015-16)
For the Appellant: Not provided
For the Respondents: Not provided
The tribunal determined that mere suspicion of share manipulation does not suffice to disallow legitimate transactions when solid evidence backs them.
Headnote:(A) Income Tax Act, 1961 - Sections 68, 69C - Addition of Long Term Capital Gain - Addition of Rs. 1,05,62,000/- disallowed without sufficient evidence by Assessing Officer - Transactions backed by solid documentation; trading of shares not banned by SEBI - No conclusive evidence of manipulation or sham transaction found. (Paras 21, 22)
(B) Principle of Preponderance of Probabilities - The burden of proof lies with the Assessing Officer to establish that transactions are sham; mere suspicion not sufficient to disregard the evidence presented. (Paras 11, 12, 13)
Facts of the case:
The Assessee challenged addition of Long Term Capital Gains amounting to Rs. 1,05,62,000/- related to sale of shares. Evidence of purchase and sale thoroughly established, including documentation and bank statements confirming transactions through registered brokers.
Findings of Court:
The Tribunal ruled in favor of the Assessee, asserting that the addition made under Section 68 of the Income Tax Act was unsubstantiated by any pertinent evidence, and thus, the addition was deleted.
Issues: Main questions included the genuineness of share transactions and whether the additions made under section 68 were substantiated by credible evidence.
Ratio Decidendi: The court emphasized that without clear evidence of wrongdoing from SEBI or any party involved, the mere rise in share prices cannot suffice to label transactions as fictitious or sham. The Assessee provided legitimate documentation of the transactions in question.
Result: Appeal of the Assessee is allowed.
| Table of Content |
|---|
| 1. appeal filed regarding addition of long term capital gains. (Para 1 , 2) |
| 2. arguments made regarding the legitimacy of share transactions. (Para 3 , 4) |
| 3. findings regarding previous case law and application to current case. (Para 5 , 6) |
| 4. court’s observations on the evidence presented. (Para 7) |
ORDER PER YOGESH KUMAR, U.S. JM:
The above captioned Appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals)/ National Faceless Appeal Centre, (Ld. CIT(A)’/’NFAC’ for short), dated 02/09/2024 for the Assessment Year 2015-16.
2. The Ld. Counsel for the Assessee vehemently submitted that the solitary issue involved in the present Appeal is regarding the addition of Rs. 1,05,62,000/- being part of sale consideration of shares u/s 68 of the Act. The Ld. Counsel further submitted that the present appeal is squarely covered by the order of the Co-ordinate Bench of the Tribunal in the case of the Assessee’s son Vipin Jain in ITA No. 909/Del/2019 (A.Y 2015-16), wherein the Tribunal vide order dated 16/03/2020,allowed the Appeal of the Assessee which has been confirmed by the Hon'ble High Court in No. 95/2021 and other connected matters, accordingly, the Ld. Assessee's Representative sought for allowing the Appeal.
3. Per contra, though the Ld. Departmental Representative relied on the orders of the lower authorities and sought for dismissal of the Appeal. However, could not controvert the submission of the Ld. Assessee's Representative or produce any contrary judicial precedent decided against the Assessee.
4. We have heard both the parties and perused the material available on record. We have also gone through the order of the Co- ordinate Bench of the Tribunal in the case of Vipin Jain in ITA No. 909/Del/2019, which was decided in favour of the Assessee vide order dated 16/03/2020, wherein the script of ALPS Motor Finance Ltd. was involved, the same script is also involved in the present case. The Co-ordinate Bench of the Tribunal in the case of Vipin Jain (supra), while allowing the Appeal held as under:-
“8. We have heard the rival submissions and also perused the relevant findings given in the impugned orders as well as material referred to before us. The main contention of the ld. counsel before us was that nowhere the evidences filed by the assessee have been doubted and neither the purchase made in the earlier years has been disbelieved. The Assessing Officer has taxed only the net Long Term Capital Gain and alleged commission of 5% for arranging such Long Term Capital Gain. He drew our attention to the documents refuting to purchase of 628O0 equity shares for sum of Rs.12,5,600/- in all market transaction to Shri Vishal Yadav in November 2012 and also the factum of dematerialization of shares on 17.1.2014 it was credited to the demat account with Vijaya Bank in the month of January, February 2014. It was in the Assessment Year 2014-15, the assessee had sold the shares i.e. 17500 shares on 30.07.2014 at the rate of Rs.430 per share and balance 45300 equity shares got split into 4,53,000 equity shares of Rs.1 each on 06.08.2014. And whole of the split shares were sold from August, 2014 to October, 2014 at a marker price in the range of Rs.61.05 to Rs.53.10 through M/s. Century Finvest Pvt. Ltd., a SEBI registered broker. As per the contract note and the transaction details it is seen that the shares were sold in different lots and the transaction of sale of shares is evidenced from contract notes appearing at pages 29-35 of the PB. And also the statement of the DEMAT Account. Apart from that, from the perusal of the abstract of cash account and confirmation from Vishal Yadav, it can be seen that, assessee has paid amount of Rs.1,25,500 in cash for purchase of shares and the sale proceeds have been received on various dates in the assessee's bank account with Vijaya Bank appearing at Pages 24-28 of the PB. Not only that, from perusal of the DEMAT account, it is seen that assessee a
