LTCG Not Eligible For Exemption U/s 10(38) If Claimed On Bogus Scrips: Ahmedabad ITAT

On finding the scrips as non-genuine and bogus, the Ahmedabad ITAT confirms the Assessing Officer's and CIT(A)'s decision for denying the LTCG exemption under Section 10(38) of the Income Tax Act, 1961.

The Member of the ITAT comprising Suchitra Kamble (Judicial Member) observed that “The assessee's claim for LTCG cannot be simply proved on the Demat statement but the very effect of the price purchased and price sold of the said scrip determined the same. In fact, the brokers' credibility was also doubted by the Assessing Officer and for which the assessee has not given any explanation before any of the Authorities. Thus, the Assessing Officer and the CIT(A) has rightly denied the LTCG exemption under Section 10(38) of the Act to the assessee.” (Para 8)

As per the brief facts of the case, consequent to filing of return by Assessee, the AO observed the assessee claimed LTCG being exempt under Section 10(38) on sale of shares. The assessee was called for details of production of sale of the said shares as well as mode of payment of demat account etc. The AO observed that the assessee's transaction with the said scrip was analysed and the assessee is also one of the beneficiaries of accommodation entry provider and showing income under the head LTCG which is exempt u/s 10(38). The AO observed that the assessee's transaction with the said scrip was analysed and the assessee is also one of the beneficiaries of accommodation entry and showing income under the head LTCG which is exempt u/s 10(38). The AO further observed that the assessee has chosen a dubious broker for sale of such shares which indicate the assessee's intention to avail the accommodation entry. The AO therefore made addition u/s 68.

The Bench noted that there was exorbitant scrip increase and prior to the suspension to the BSE Stock of the said scrip, the assessee has sold these shares on exorbitant market price.

The Bench stated that the AO has doubted the genuineness of the purchase as well, therefore, the impact on market price while selling the said shares was doubted throughout by the Revenue.

Therefore, on finding the said scrip as non-genuine and bogus, the ITAT dismissed the Assessee's appeal.

Counsel for Appellant/ Taxpayer: Vipul Khandhar

Counsel for Respondent/ Department: Yogesh Mishra

Case Title: Atmiben Aliptkumar Doshi verses The Income Tax Officer

Case Number: ITA No.520/Ahd/2023

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