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Punjab & Haryana High Court in the case of Pr. CIT v. Prem Pal Gandhi in ITA No. 95 of 2017 dated 18.01.2018

·         Assessee purchased shares of a company in A.Y. 2006-07 at Rs.11/- and sold the same in A.Y. 2008-09 at Rs.400/-.

·         The AO added the appreciation to assessee’s income alleging that these were fictitious transactions and the appreciation actually represented assessee’s income from undisclosed sources.

·         CIT(A) and Tribunal deleted the impugned addition holding that the AO had not produced any evidence in support of its suspicion.

·         The High Court took note of the fact that though the appreciation was very high, the shares under consideration were traded on the NSE, and the payments and receipts were routed through bank accounts.

·         The Court further took note of the fact that there were no evidences to indicate that the company whose shares were traded was a closely held company and that the trading on NSE was manipulated in any manner.

·         Thus, the Court relied upon its earlier judgment in the case of Pr. CIT v. Hitesh Gandhi in ITA No. 18 of 2017 dated 16.02.2017, wherein the findings of the Court were as under:

(a)       The Court in this case observed that the shares were sold through a stock broker which was registered under SEBI and the payments for sale of shares were through banking channels. The Court also took note of the fact that STT was paid on sale of shares and said shares had been sold through stock exchange.

(b)       The Court was of the view that just because assessee had earned huge amount of long-term capital gain on sale of shares, the transaction could not be held to be sham transaction merely on the ground of same being unlikely.

·         Therefore, in view of the above findings in the case of Hitesh Gandhi (supra), the Court concluded that no substantial question of law arose in the present appeal.

 

For further reading, refer the attachment. 

  Further Reading
Posted on: 27-01-2018