Additions disallowing LTCG exemption on documented stock exchange transactions unsustainable without direct evidence linking assessee to manipulation, despite generalized probes and weak financials.

ORDER 

PER VIMAL KUMAR, JM:

The appeal filed by the assesse is against the order dated 31.05.2019 of the Ld. Commissioner of Income Tax (Appeals)-02, Guwahati (hereinafter referred to as “Ld. CIT(A)”), u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), arising out of order dated 08.12.2017 of the of the Ld. Assessing Officer/ITO Ward-4(1), Guwahati (hereinafter referred to as “Ld. AO”), u/s 143(3) of the Act for Assessment Year 2015-16.

2. Brief facts of the case are that, assessee filed return on 30.09.2015 showing total income of Rs.41,630/- and claimed exempt income of Rs.2,61,91,482/-. The case was selected for scrutiny through CASS. Notices u/s 143(2) and 142(1) of the Act were issued on 08.08.2016. Sh. M.C. Betala, FCA, appeared and furnished various details and documents. After examining, it was found that during FY 2014-15 relevant to AY 2015-16, assessee had been dealing in shares and claimed an amount of Rs.1,52,76,467/- as Long Term Capital Gain exemption u/s 10(38) of the Act. The gain had arisen from sale of 36,100 scrips of the company HPC Bioscience for a sum of Rs. 1,49,14,984/-. Investigation made by the Income- tax Department had revealed that the scrip of HPC Biosciences Limited are used to book bogus long term capital gain.

3. On completion of proceedings, Ld. AO vide order dated 08.12.2017 made addition of Rs.1,49,62,513/- u/s 68 of the Act.

4. Against the order dated 08.12.2017 of Ld. AO, the assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 31.05.2019.

5. Being aggrieved, the appellant-assessee preferred present appeal on following grounds of appeal:-

1. That on the facts and circumstances of the case, the learned CIT(A)-2, Guwahati erred in upholding assessment concluded by Ld. Income Tax Officer, Ward 4(1), Guwahati, at Rs. 1,49,56,620/- instead of returned income of Rs. 41630/- returned by the appellant.

2. That on the facts and circumstances of the case, the order passed by the learned CIT (A) is bad both in the eye of law and on facts.

3. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the addition of an amount of Rs. 1,49,14,984/- made by AO holding the sale proceeds of the shares, to be not genuine.

4. That under the facts and circumstances, both the lower authorities erred in law as well as on merits in assessing the declared LTCG of Rs. 1,49,14,984/-on sale of shares as unaccounted income and further erred in not allowing the exemption u/s. 10 (38) as claimed.

5. That the learned Commissioner of Income Tax (Appeals) has sustained the addition on mere speculation, generalized statements, theoretical assumptions and allegations and assertions, without there being any supporting evidence and is therefore not in accordance with law.

6. That the additions made by Ld. AO and upheld by Hon'ble CIT(A), in the absence of confronting with the adverse material used against the assessee and in the absence of providing cross-examination of persons whose statements have been recorded on the back of the assessee, no cognizence of such material on statements should had been taken.

7. That the learned Commissioner of Income Tax (Appeals), Guwahati has further grossly erred both in law and, on facts in denying the claim of exemption of long term capital gain of Rs. 1,49,14,984/- on sale of shares sold on recognized stock exchange and, eligible for exemption u/s 10(38) of the Act and bringing to tax as unexplained credit u/s 68 of the Act.

8. That learned Commissioner of Income Tax (Appeals) has also erred both in law and on fa