· The AO made an addition of Rs.18,46,600/- holding that the long-term capital gain earned by the assessee on its investment in the shares of M/s Unisys Software Holding Industries Ltd. was not genuine and represented the unaccounted income of the assessee.
· The CIT(A) stated that the rise in value of the shares was abnormal over a period of 13 to 14 months, and realization of such capital gain without any past experience in trading of shares raised a very strong suspicion so as to question the authenticity of the transaction. Thus, the CIT(A) also confirmed the addition made by the AO holding the said transaction of capital gain being a mere sham transaction.
· The Tribunal took note of the fact thatthe assessee has shown LTCG from sale of 8000 shares of M/s Unisys Software Holding Industries Limited and the same has been claimed as exempt u/s 10(38) of the Act. Tribunal further observed that the assessee had submitted all documentary evidences in support of sale and purchase of shares, which included the following:
(a) Copy of purchase bill
(b) Copy of share transfer form
(c) Copy of bank statement highlighting the payment made for purchase
(d) Transaction statement of stock broker, i.e. Pace Stock Broking Services (P) Ltd.
(e) Copy of bank statement in which sale proceeds were received
(f) Copy of calculation of long-term capital gain
· The ITAT also took note of the fact that the AO had not faulted any of the above documents and has merely relied upon the report of the Investigation Wing.
· ITAT further noted that the addition was made by the AO and upheld by the CIT(A) u/s 68 as unexplained credit, however, the source, identity and genuineness of the transaction was duly established by the assessee by providing documentary evidences.
· Therefore, relying upon the recent judgment of Hon’ble High Court of Punjab & Haryana in the case of Pr. CIT v. Prem Pal Gandhi in ITA No. 95 of 2017 dated 18.01.2018, the Tribunal concluded that considering the facts and circumstances in the case of assessee and the ratio laid down by the said judgment, the addition made by the AO and sustained by the CIT(A) was to be deleted.
For further reading, refer the attachment.
Further Reading