ITAT upholds Addition as Assessee failed to prove the Genuinity of the Transactions [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) upheld Addition as assessee failed to prove the genuinity of the transactions.

The assessee, Abhinav Agarwal is an individual. During the year under consideration, the assessee had filed a return of income declaring a total income for the financial-year 2013-14. The case was selected for scrutiny and notice u/s 143(2) of the Act was issued upon the assessee. The assessment proceedings culminated in an order of assessment framed u/s 143(3) of the Act by Deputy Commissioner of Income Tax determining the income of the assessee against the returned income of Rs. 17,26,593/- by making addition which includes a sumbeing the long term capital gain accrued to the assessee which was claimed exempt u/s 10(38) of the Act and also a sum being the alleged sum paid to provide accommodation entry.

The assessee through stock broker M/s Bonanza Portfolio Ltd. had purchased 1,00,000 shares of M/s Empower Ltd i.e. during the financial year 2010-11 relevant to assessment year 2011-12 for a total consideration. Subsequently shares were sold to M/s Anandloke Suppliers & Traders Pvt. Ltd. for a total consideration and in lieu of the aforesaid consideration, 800 shares of M/s Pinnacle Vintrade Pvt. Ltd. For a total consideration were purchased, and balance consideration of Rs. 10,000/- was paid in cash. It was said that on 23.02.2012, appellant received the share certificates issued by M/s Pinnacle Vintrade Pvt. Ltd. Further appellant was issued 72000 bonus shares of M/s Pinnacle Vintrade Pvt. Ltd. Later, M/s Pinnacle Vintrade Pvt. Ltd. and M/s Basukinath Real Estate Ltd and Baviscon Vincom Ltd got amalgamated with M/s Unno Industries Ltd. and the assessee got shares of M/s Unno Industries Ltd. The said shares of M/s Unno Industries Ltd. were sold from 17.07.2014 to 04.02.2015 through stock broker M/s Zuari Investments Ltd. at a price quoted on the stock exchange and consideration for the same was through banking channels, resulting in long term capital gain (LTCG) of Rs 1,03,46,835/- which was claimed exempt u/s 10(38) of the Act.

The coram of Judicial Member Amit Shukla and Accountant Member, Dr. B. R. R. Kumar noted that transactions entered by the assessee are not genuine on the grounds that from the sales of shares to M/s Anand Lok Suppliers and Traders Pvt. Ltd. to sale of shares of M/s Unno Industries LtdThe assessee could not discharge his onus against the overwhelming evidence that has been brought about by the revenue authorities. The price of shares has risen Rs.36.50 (average) in a short span. The company had no profit/ meager profit to demand such a price. In the entire period of 5 years, there was only highest spurt for the smallest period wherein the sale took place in the entire period between 2010 to 2015 as depicted in the graph above showing typical bell shape. No iota of due diligence viz. the advisor, the analysis of fundamentals, the profits, the assets undertaken by the Assessee. Failure of the assessee to prove the genuinity of the transactions at Akola based entities. The order of the SEBI indicated the manipulation in trading of the scrips. The undeniable proof of involvement of the broker Navneet Kumar Singhania has been proved by the revenue who has purchased the shares from the assessee in a synchronized manner.

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