In Amita Bansal v. CIT, the division bench of the Allahabad High Court held that the genuineness of share purchase cannot be suspected merely on ground of Late Entry in the Demat pass book when there are other evidences to prove the same.
The sole grievance of the assesee was that the assesses claim for long term capital gain relating to sale of shares was disallowed by the Assessing Officer by suspecting genuineness of the transaction. Accordingly,addition was made by the officer by treating the same as unexplained cash credit of the assessee under section 68 of the Income Tax Act.
On appeal, the assessee produced all the relevant evidences to prove the genuineness of the transaction including contract notes/bills receipt, payments made through banking Channel, contract notes and copies of passbook of its Demat Account. In view of the above documents, the first appellate authority deleted the addition.
On departmental appeal, the ITAT reversed the order solely on ground that the purchase of shares having been recorded late in the Demat account of the assessee. The assessee impugned the order before the High Court.
The division bench comprising of Justice Bharati Sapru and Justice Saumitra Dayal Singh observed that the matter is needs a fresh consideration since the Tribunal lost sight of several material evidences produced before it.
The bench also added that, “it cannot be denied that the fact of purchase transaction being recorded late in the Demat passbook raises a doubt as to its genuineness and it is also true that this evidence is relevant to the decision on the point in issue in this case, yet, this was not the only evidence relevant to the issue. There exists other evidence, adduced by the assessee in this case, in shape of contract notes; bank transactions pertaining to payment for purchase and sale of share and other material relied upon by the CIT(Appeals).”
Accordingly, the matter was transferred to the Tribunal with a direction to consider the other evidences also.
Read the full text of the Judgment below.
