By K. B. Bhujle, Advocate
New Page 1
24 Cash credit : S. 68 of Income-tax Act,
1961 : Long-term capital gain : Transaction of sale of shares : Addition
treating transaction bogus : Addition not valid in the absence of cogent
material.
[CIT v. Anupam Kapoor, 299 ITR 179 (P&H)]
The assessment in this case was completed u/s. 143(3) read
with S. 147 of the Income-tax Act, 1961. The said assessment was reopened on
receipt of the intimation from the DDIT (Investigation), Gurgaon, stating that
the long-term capital gain on sale of shares declared by the assessee was false
and the transaction was not genuine. In the course of reassessment proceedings,
the assessee furnished evidence in support of the claim of long-term capital
gain. The AO made an addition of Rs.1,74,552, being the consideration on sale of
shares, as unexplained cash credit. The Commissioner (Appeals) deleted the
addition, holding that the AO had not discharged his onus and there was no
material or evidence with the AO to come to the conclusion that the transaction
shown by the assessee was a bogus transaction. The Commissioner (Appeals) took
the view that if a company was not available at the given address, it could not
conclusively prove that the company was non-existent. The Tribunal upheld the
decision of the Commissioner (Appeals) and held that the purchase contract note,
contract note for sales, distinctive numbers of shares purchased and sold, copy
of the share certificates and the quotation of shares on the date of purchase
and the sale were sufficient material to show that the transaction was not
bogus, but a genuine transaction.
On appeal by the Revenue, the Punjab and Haryana High Court
upheld the decision of the Tribunal and held as under :
“(i) There was no material before the AO, which could have
led to a conclusion that the transaction was a device to camouflage activities
to defraud the Revenue. No such presumption could be drawn by the AO merely on
surmises or conjectures.
(ii) The Tribunal took into consideration that it was only
on the basis of a presumption that the AO concluded that the assessee had paid
cash and purchased the shares. In the absence of any cogent material in this
regard, having been placed on record, the AO could not have reopened the
assessment.
(iii) The assessee had made an investment in a company,
evidence whereof was with the AO. Therefore, the AO could not have added the
income, which was rightly deleted by the Commissioner (Appeals) as well as the
Tribunal.”
