Transaction can’t be treated as Bogus merely based on report of Investigation Wing: ITAT [Read Order]

The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) has held that a transaction cannot be treated as bogus only on the basis of the report of Investigation Wing.

In the instant case, the Assessing Officer made an addition under section 68 of the Income Tax Act, 1961 by finding that the same was bogus. The addition was based on the report of Investigation Wing, Kolkata.

After analyzing the facts and circumstances in deep, the Tribunal found that the Assessing Officer has not brought any material on record to controvert the fact duly established by the supporting evidence of purchase bills, payment of consideration through bank, dematerialization of shares in the DEMAT account, allotment of the shares amalgamated new entity in lieu of the earlier two companies of equal number of shares.

“Sale of shares from the DEMAT account through the stock exchange and at the prevailing price as on the date of sale and the further payment of STT on the transaction of sale has been duly established. In absence of any contrary fact, the mere reliance by the Assessing Officer on the report of Investigation Wing, Kolkata is not sufficient to establish the fact that the transaction is bogus. The finding of the Assessing Officer is based merely on the suspicion and surmises without any tangible material to show that the assessee has introduced his own unaccounted income in the share of long-term capital gain even otherwise the reliance of the statements recorded by the Investigation Wing, Kolkata wherein without giving an opportunity of cross-examination is a complete violation of principles of natural justice,” the Tribunal said.

“Therefore, in absence of any evidence, it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long-term capital gain. Accordingly, in view of the above facts and circumstances, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Hence, this ground of revenue’s appeal is dismissed,” the Tribunal said.