Asst.Commissioner of Income Tax vs. Keshavji Nongha Shah

Parties Involved

Facts Summary

During the year under consideration, the assessee had declared long term capital gains of Rs.6.92 crores on sale of shares of M/s Global Infratech and Fin Ltd (earlier known as Asianlak Capital and Finance Ltd) and claimed the same as exempt u/s 10(38) of the Act. The assessee had purchased 2,00,000 shares of above said company on preferential basis in June, 2012 @ Rs.15/- per share (Face value Rs.10/- and premium Rs.5/-). The face value of the shares was split from Rs.10/- per share to Re1.00 per share. Consequently, the assessee received 20,00,000 shares of Re1.00 each in lieu of 2,00,000 shares of Rs.10/- each. The Investigation Wing had carried out investigation with regard to the price manipulations and generation of bogus long term capital gains in number of stocks, classified as penny stocks. The AO noticed that the shares of the above said company was also identified as one of the penny stocks. The AO noticed that the assessee has sold 7,88,000 shares for a consideration of Rs.7.04 crores and declared Long term capital gains of Rs.6.92 crores. Relying fully upon the report given by the Investigation wing, the AO took the view that the long term capital gain declared by the assessee on sale of shares of above mentioned company was pre-arranged method employed by the assessee with the connivance of the operators in order to generate bogus long term capital gains.…

Legal Issues

• 1. Whether the long term capital gains declared by the assessee on sale of shares of M/s Global Infratech and Fin Ltd can be assessed as unexplained cash credit u/s 68 of the Act?

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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