The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of 39.7 Lakhs after the proper explanation of sale proceeds of shares through documentary evidence.
The assessee filed return of income for AY 2012-13 on 21.07.2012 declaring total income of Rs.2,36,390/-. After receiving the information, it was observed that VAS Infrastructure Ltd. is a penny stock which has been used to provide accommodation entry of bogus Long Term Capital Gain (LTCG)/loss to the beneficiaries.
As per the information, the assessee is one of the beneficiaries/members of this accommodation entry syndicate. The assessee has not furnished the details of the transaction; therefore, the case was reopened under Section 147 of the Income Tax Act, 1961
Mr. Aseem L. Thakkar representing the assessee submitted that the assessee has not claimed Short Term Capital Gain or Long Term Capital Gain in respect of the sale of scrip i.e. “VAS Infrastructure Ltd. He submitted that the assessee has given all the details related to the purchase of the said scrip and further submitted that the assessee has purchased the sale stock of 37,788 equity shares through M/s. Rajvi Stock Brokers Pvt. Ltd. and sold the said scrip at Rs.39, 76,803/-, which resulted the net profit of Rs.9, 204/- and the same was duly offered to tax by the assessee
It was submitted that share difference account in the scrip “VAS Infrastructure Ltd.” determining the profit at Rs.9, 203.82 was properly reflected in the audited books of accounts the Assessing Officer at no point of time doubted the purchase of the shares as it was the genuine purchase. Further submitted that the Assessing Officer merely referred the notice issued under Section 133(6) of the Income Tax Act, but there was no details upon to whom the notices were issued
The bench noted that the Assessing Officer has made the addition on account of unaccounted business income in respect of selling of the scrip “VAS Infrastructure Ltd.”, but in fact the assessee was majorly dealing with trading activities and that was not disputed at any point of time.
A single member bench of the tribunal comprising Suchithra Kamble (Judicial member) observed that the sale proceeds of shares were properly explained by the assessee through the documentary evidence which was filed before the Assessing Officer as well as before the CIT (A). Thus, the Assessing Officer as well as the CIT (A) was not right in making/confirming the addition to that effect. Accordingly, the appeal of the assessee was allowed.
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