The Delhi Bench of Income Tax Appellate Tribunal (ITAT) while disallowing the Income Tax Exemption on bogus Long Term Capital Gains (LTCG) held that the onus to prove the genuineness of trading of shares leading to LTCG gain lies on the assessee.
The Assessee, Arihant Kumar Jain who is an individual taxpayer claimed “income from business & profession” and “income from other sources” i.e. interest income from bank, house property, capital gains & income from other sources. The assessee filed return of income declaring total income of Rs.50,36,026/-. During scrutiny proceedings, the Assessing Officer noticed that the assessee has claimed “capital gains” of Rs.2,72,85,500/- as exempt under section 10(38) of the Income-tax Act, 1961 from the sale of scrip of M/s. Kappac Pharma Limited.
Apart from the investigation conducted by the AO, he has taken note of a country-wide investigation carried out by the Directorate of Investigation, Income-tax, Kolkata to unearth the organized racket for generating bogus entries of Long Term Capital Gains (LTCG) to be claimed as exempt from tax. Numerous cases have been unearthed and individuals have been identified who were beneficiaries of such bogus entries of LTCG amounting to several crores from 2010 to 2014.
The Coram of Judicial Member, Kuldip Singh, and Accountant Member, Prashant Maharishi ruled that a genuine transaction needs to be proved to be genuine by the person who substantially asserts the same and not by the Revenue as contended by the assessee because once the assessee has been called upon to prove the genuineness of the trading of the shares leading to LTCG gain, the onus lies upon him which he fails to discharge.
“The CIT(A) has erred in deleting the disallowance made by the AO on account of exempt LTCG claimed by the assessee u/s 10(38) of the Act, hence the question framed is decided affirmatively. Resultantly, the impugned order passed by the ld. CIT (A) is set aside and an assessment order passed by the AO is upheld by way of allowing the appeal filed by the Revenue,” the ITAT ruled.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
