Failure to produce documents with respect to LTCG arising out of Purchase and Sale of Shares: ITAT upholds Addition [Read Order]

The Chennai bench of Income Tax Appellate Tribunal ( ITAT ) held that the assessee failed to produce the documents with respect to Long Term Capital Gain ( LTCG ) arising out of the purchase and sale of shares hence the bench upheld the addition made by the assessing officer.

The Assessee  R. Shobha Lodha, filed return of income for the relevant assessment year 2016-17 on 24.03.2018. The Income Tax Officer  received information from DDIT (Inv) that the assessee has traded in one penny scrip namely Rekvina Laboratories Ltd., and sold the shares at a value of Rs.9,51,795/.

On verification of ITR-1 filed by assessee, the AO noted from the investigation report of the investigation wing that this company is engaged in providing entry i.e., profit on sale of shares in the shape of Long Term Capital Gain, which is claimed to have been exempt under Section 10(38) of the Income Tax Act, hence the AO reopened the assessment by issuing notice under Section 148 of the Income Tax Act dated 06.03.2020.

Accordingly the AO abused the report of SEBI and BSE held that the assessee has routed her own money by way of sale of shares and hence entire sale consideration of Rs.9,51,795/- relating to this assessment year 2016-17 was assessed under Section 68 of the Income Tax Act under the head ‘income from other sources’.

Aggrieved by the order the assessee filed appeal before the CIT(A), who dismissed the appeal.Hence the assessee filed another appeal before the tribunal.

During the adjudication It was observed that the assessee could not produce any evidence that the transactions entered into by the assessee is a genuine transaction rather the assessee apart from bald stated that the transaction is genuine, could not produce any evidence.

Further the bench confirmed that AO has carried out enquiry and rightly reached to a conclusion that the assessee has routed here own money by way of sale of shares and hence, he has rightly considered the entire sale of Rs.9,51,795/- as ‘income from other sources’ and assessed under Section 68 of the Income Tax  Act.

After reviewing the facts the ITAT bench of  Mahavir Singh, (Vice President) and S.R. Raghunatha, (Accountant Member) held that the assessee failed to produce the documents with respect to Long TermCapital Gain ( LTCG ) arising out of the purchase and sale of shares.

D. Anand, counsel appeared for the assessee and D. Hema Bhupal, counsel appeared for the revenue.

To Read the full text of the Order CLICK HERE

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