Section 68 of the Act — Long term capital gain treated by AO as unexplained cash credit.

18. Principal Commissioner of Income Tax – 31 vs. Indravadan Jain, HUF

[Income Tax Appeal No. 454 OF 2018; Dated: 12th July, 2023; A.Y.: 2005-06; (Bom.) (HC)]

Section 68 of the Act — Long term capital gain treated by AO as unexplained cash credit.

Assessee had shown sale proceeds of shares in scrip RamkrishnaFincap Ltd (RFL) as long-term capital gain and claimed exemption under the Act. The Respondent had claimed to have purchased this scrip at ₹3.12 per share in the year 2003 and sold the same in the year 2005 for ₹155.04 per share. It was AO’s case that investigation revealed that the scrip was a penny stock and the capital gain declared was held to be accommodation entries. A broker BasantPeriwal & Co. (the said broker) through whom these transactions have been effected had appeared and it was evident that the broker had indulged in the price manipulation through a synchronised and cross-deal in the scrip of RFL. SEBI had also passed an order regarding irregularities and synchronised trades carried out in the scrip of RFL by the said broker. In view thereof, the Assessee’s case was reopened under Section 148 of the Act.

The AO did not accept the Respondent’s claim of long-term capital gain and added the same to the Assessee’s