ITAT Holds Share Transfer as Genuine Despite ROC Discrepancies, Accepts Oral Family Arrangement and Book Entry as Valid Evidence [Read Order]
The bench held that oral arrangements among family members could be legally valid if supported by conduct and documentation.
![ITAT Holds Share Transfer as Genuine Despite ROC Discrepancies, Accepts Oral Family Arrangement and Book Entry as Valid Evidence [Read Order]](https://images.taxscan.in/h-upload/2025/07/01/2057492-share-transfer.webp "ITAT Holds Share Transfer as Genuine Despite ROC Discrepancies, Accepts Oral Family Arrangement and Book Entry as Valid Evidence [Read Order]")
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held the share transfer to be genuine despite discrepancies in the records of the Registrar of Companies (ROC), accepting the Coming to the facts of the case, the assessing officer (AO) had disallowed of a short-term capital loss of Rs. 61,13,842 claimed by the assessee, Saumya Mittal, Managing Director of Eurobearings India...
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held the share transfer to be genuine despite discrepancies in the records of the Registrar of Companies (ROC), accepting the
Coming to the facts of the case, the assessing officer (AO) had disallowed of a short-term capital loss of Rs. 61,13,842 claimed by the assessee, Saumya Mittal, Managing Director of Eurobearings India Pvt. Limited (EUBI) for the assessment year 2018-19. The assessee had sold 1,35,86,332 shares of EUBI to his father for Rs. 74,72,480, which were originally acquired for Rs. 1,35,86,332 in February-March 2017. The AO and the Commissioner of Income Tax (Appeals) [CIT(A)] rejected the claim, alleging the transaction was a "colourable device" to avoid taxes. They noted inconsistencies in ROC filings, including the absence of bank entries for the share purchase and sale, and Mittal’s name appearing as both transferor and transferee in shareholder lists.
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The tribunal noted that while the share transfer was registered by EUBI only in July 2018, the actual transaction date was 28 March 2018, supported by Form SH-4, securities transfer forms, and acknowledgments from the company. Crucially, the sale consideration was adjusted against an outstanding advance of Rs. 3,21,00,000 payable to Mittal’s father, as reflected in the books of accounts. The bench noted that the AO did not dispute the above mentioned adjustment.
The AO had not disputed this adjustment, which the ITAT deemed as valid proof of consideration.
The tribunal dismissed the tax authorities’ reliance on ROC discrepancies, such as the mismatch in shareholding details in Form MGT-7, stating that such technicalities could not invalidate a transaction otherwise substantiated by evidence.
The bench held that oral arrangements among family members could be legally valid if supported by conduct and documentation. The ITAT noted that the burden of proving a transaction as a sham lies with the Revenue, not the taxpayer.
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The bench observed that “The claim cannot be doubted unless otherwise any of the parties has disputed the same. An oral agreement between the family members reflected in the transactions should be given equal credibility. “
The ITAT, comprising AnubhavSharma (Judicial Member) and Manish Agarwal (Accountant Member), allowed the assessee’s appeal.
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