Mode of Payment for Purchase of Shares as Long Term Capital Gain Different in Lower Authorities Proceedings: ITAT Restores File for Fresh Verification [Read Order]

The Income Tax Appellate Tribunal (ITAT), Indore Bench, noted the mode of payment for the purchase of shares as long term capital gain in the proceedings in the lower authorities and the present matter were different and restored the filed back to the Assessing Officer (AO) for fresh verification.

At the forefront, the matter at hand was delayed and condoned as the email provided by the assessee was not used to serve notices. The facts state that the exempted long-term capital gains recorded from the sale of shares was alleged to be bogus by investigations of the Income Tax Department.

The authorized representative (AR) for the assessee placed references to documentary evidence filed in papers/paper-books and submitted that the AO cannot reject assesee’s transaction merely on the basis of enquiries carried by the Income-tax Department. The AR also relied on similar cases and their judgments.

The departmental representative (DR) for the revenue called into question the share certificate issued by the assessee. The DR submitted that the addition made to the income in light of the bogus exempted capital gain is correct by law.

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The tribunal observed that the AO had noted the assessee’s payment of purchase consideration in cash and the Commissioner of Income Tax (Appeals) [CIT(A)] had noted the payment was made through cheque. The assessee provided proof of payment through cheque before the ITAT, as new evidence.

The bench of Paresh M. Joshi (Judicial Member) and B.M. Biyani (Accountant Member) directed that the issues are to be verified by the AO on a fresh and factual level.

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