The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that mere transaction through dematerialization account (DMAT) or sale of the shares on stock exchange could not be rebutted under Section 68 of the Income Tax Act 1961.
The AO had found that the LTCG on sales of shares of Kappac Pharma Ltd by the assessee Randhir Singh Verma was not a genuine transaction and made an addition under Section 68 of the Income Tax Act on account of unexplained cash credit.
Sanjay Tripathi, appeared on behalf of the revenue.
After examining the mode of acquisition of shares, unusual rise in the price and certain facts which showed that the transactions of share was not governed by market factors, the cash trail in the accounts of the entry providers, the fact that the purchasers did not have any financial back up, the additions made were sustained
The two-member Bench of Shamim Yahya, (Accountant Member) and Anubhav Sharma, (Judicial Member) observed that no record was there to show that assessee/ appellant was able to discharge his burden under Section 68 of the Income Tax Act by rebutting the suspicious circumstances raised by the AO.
The Bench held that mere transaction through DMAT account or sale of the shares on stock exchange could not be considered to be evidence to rebut the circumstances. The Bench dismissed the appeal filed by assessee as the modus operandi examined by the Tax Authorities remained unrebutted.
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