Receipt from Sale of Shares held in DMAT A/c through Recognized Stock Exchange which is evident through Contract Note can’t be treated as Unexplained: ITAT [Read Order]

stock in shares - Stock Exchange

The Indore bench of ITAT in the case of Omprakash Phatandas Panjwani vs. ACIT has held that the receipt from sale of shares held in DMAT account through recognized stock exchange which is verifiable from contract note cannot be treated as unexplained investment for the purpose of section 68 of the Income Tax Act.

In instant case, the sole grievance is against the order CIT (A) partly confirmed the addition made by AO  applying provisions of Section 68 of the Income Tax Act, by treating the short term capital gain as income from undisclosed sources.

The 12000 equity shares bought by the assessee @Rs.9.95 per share were transferred to Dmat account on 13.8.2007 and then these were sold on 17.8.2007 and the price per equity share on the date of sale was around Rs.63.

The AO suspected the impugned purchase because the payment was made after nine months even when there was no regular transaction between the assessee and broker and also there was extra ordinary increase in the prices of the equity shares. Accordingly, he made an addition in respect of the same by treating the same as unexplained income.

On first appeal, the CIT(A) upheld the order.

In order to confirm the genuine of the transaction assessee has submitted relevant documents before the Tribunal.

The bench found that the only reason that the payment of purchase has been made after a lapse of nine months cannot render the purchase as non-genuine unless and otherwise any material is brought on record which could negate this fact.

Finally the bench comprising Judicial Member Kul Bharat  and Accounting Member Manish Borad held that assessee has rightly shown the short term capital amounting to Rs.6, 44,816/- from sale of equity shares of IFCI Ltd and also added that source of amount of sale consideration of Rs.7,64,346/- which the assessee received through banking channel from sale of shares held in Dmat account through the recognized stock exchange which is verifiable from the contract note.

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