In recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted addition under Section 68 of Income Tax Act as genuineness of purchase and sale of shares is proven by producing documentary evidence.
Brief facts is that the CIT(A) erred in confirming the action of Assessing Officer ( AO ) in addition to Rs. 13,07,250/- on account of sale value of shares of M/s. Access Global Limited, treating the same as unexplained cash credit by invoking provisions of Section 68 of the Income Tax Act, 1961, for the reasons mentioned in the impugned order otherwise.
The AO did not accept the capital gains and treated the entire sale proceeds of the shares as income from undisclosed sources under Section 68 did not justify fact that the assessees in the group have purchased and sold shares of the same companies through the same broker cannot be a ground to hold that the transactions are sham and bogus, especially when documentary evidence has been produced to establish the genuineness of the sale company has confirmed that it has handed over the shares purchased by the assessees.
Similarly, the sale of shares to the respective buyers is also established by producing documentary evidence-Purchase and sale price of the shares declared by the assessees is in conformity with the market rates prevailing on the respective dates.
The bench observed that the assessee having established the genuineness of purchase and sale of shares by producing documentary evidence and declaring the purchase and sale price of shares in conformity with the market rates prevailing on the respective dates, the finding of the Tribunal that the transactions were genuine is a finding of fact based on documentary evidence on record and, therefore, no substantial question of law arises from the order of the Tribunal deleting the addition under Section 68 of Income Tax Act.
Considering the facts, circumstances, ratio of judicial decisions, submissions, evidence, and judicial precedents, the order of the CIT (A) was set aside. The single-member bench of the tribunal, comprising Pavan Kumar Gadale ( Judicial member ) directed AO to delete the additions and allow the grounds of appeal in favor of the assessee, resulting in the allowance of the appeal filed by the assessee.
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