The Mumbai bench of ITAT while dismissing the appeal of the revenue held that share transactions cannot be deemed as unaccounted for the purpose of section 68 of the Income Tax Act, 1961, if DMAT account and contract note show details of the transactions.
has held that share transactions cannot be deemed as unaccounted if DMAT account and contract note show details of transactions.
The bench was hearing an appeal in which the Revenue challenged the order of the first appellate authority who deleted the addition of a huge amount by the AO by treating the long term capital gains as unexplained cash credit under Section 68 of the Income Tax Act.
It was argued that the assessee has showed the sale proceeds of the shares in the scrip of a financial company as long term capital gain for claiming the exemptions. According to the department, those scrips were penny-stock and the capital gain declared was only accommodation entries and SEBI had passed an order regarding the irregularities and synchronized trades carried out in the scrip of the said financial company. Hence, it was said that the assessee should pay the additional charges as deleted by the CIT earlier.
Assessee has submitted all the necessary documents for supporting his side before the bench.
The bench observed that the AO has treated the share transaction of the assessee with the finance company as in genuine by mistake. It also found that initiation of investigation of broker is concerned, the assessee is no way concerned with the activity of the broker the investigation was done by SEBI against broker or his activity, assessee cannot be said to have entered into ingenuine transaction, insofar as assessee is not concerned with the activity of the broker and have no control over the same. While concluding the investigation, it was clear that the transaction entered by the assessee was genuine.
It was noted that the AO has failed to prove that the transaction of the assessee was in bogus. DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income u/s 68.
Read the full text of the Order below.
