Purchase and Sale of Shares through Stock Exchange can’t be treated as ‘Bogus’ when the Same was Evident through Broker’s Note: ITAT [Read Order]

While allowing the appeal filed by the assessee Hyderabad bench of Income Tax Appellate Tribunal (ITAT) recently held that purchase and sale through stock exchange cannot be treated as bogus when the transaction is evident through broker’s note.

In the instant case, the assessee, an individual deriving income from house property, capital gains and other sources has duly filed return of income declared a total income of Rs. 4,87,992. The Assessing Officer re-opened the assessment based on an information get from a person at Mumbai regarding the capital gain figure shown by the assessee was not genuine. Accordingly the AO initiated reassessment proceedings under section 147 of the Income Tax Act and during the period assessee was asked to give explanation about the capital gain transactions.

Assessee submitted all the details regarding the capital gain transactions which showed that he has transacted on the stock exchange and entire evidence pertaining to transactions through stock exchange were furnished to AO. Assessee also submitted that shares were passed through DMat account and the amounts were paid by way of cheques both the time of purchase and sales.

Accountant Member of the Hyderabad ITAT bench has observed that the AO has conducted a reassessment only on the basis of the information of the person at Mumbai, but in the statement the said person didn’t mentioned that the share transaction made by the assessee was bogus and the AO didn’t made any further examinations on the information about assessee’s capital gain transactions.

After perusing the recordings, the Tribunal said that the assesee has made transactions through stock exchange and submitted that the money transactions were made through cheques. There is also a strong evident exists in this case that the broker’s note. It was noted that there is no dispute that assessee had purchased shares through stock exchange as evidenced by the broker’s note and also sold through stock exchange by way of another broker’s note. Hence, the bench was of the opinion that the stock exchange transaction made by the assessee was genuine and it cannot be treated as bogus in light of the strong evidence.