Money Laundering can’t be alleged by Mere Producing of Evidence of Share Transactions: ITAT [Read Order]

Black Money - Money Laundering

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the allegation of money laundering cannot be proved by merely producing the evidence of purchase and sale of shares.

The appellant, Ramprasad Agarwal, a Mumbai resident, who bought shares of Rutron International in 2014 and held them for more than a year before selling them. The assessing officer, while completing the assessment proceedings, had declined to provide long-term capital gains (LTCG) exemption for the transaction and the defendant was asked to pay up Rs 83 lakh tax. Income tax department had based its case on evidence collected from trades and also a statement was given by two witnesses who were Kolkata-based brokers.

“Officer has not brought any material on record to show that the assessee has paid over and above the purchase consideration as claimed and evident from the bank account then, in the absence of any evidence it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long-term capital gain,” the tribunal said.

The Tribunal also relied on the decision in the case of Meghraj Singh Shekhawat vs. DCIT wherein it was held that “the addition made by the AO is based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income in the shape of long-term capital gain. On the other hand, the assessee has brought all the relevant material to substantiate its claim that transactions of the purchase and sale of shares are genuine. Even otherwise the holding of the shares by the assessee at the time of allotment subsequent to the amalgamation/merger is not in doubt, therefore, the transaction cannot be held as bogus. Accordingly, we delete the addition made by the AO on this account.”

To Read the full text of the Order CLICK HERE