Onus to prove the genuineness of capital gains arising out of transactions in shares lies on the assessee: ITAT

ACIT vs Arihant Kumar Jain (ITA 5342/DEL/2018 | ITAT- Delhi)

Facts:

1. During scrutiny proceedings, the Assessing Officer noticed that the assessee has claimed “capital gains” of Rs.2,72,85,500/- as exempt under section 10(38) of the Income Tax Act from the sale of scrip of M/s. Kappac Pharma Limited.
2. The AO has taken note of a country-wide investigation carried out by the Directorate of Investigation, Income-tax, Kolkata to unearth the organized racket for generating bogus entries of Long Term Capital Gains (LTCG) to be claimed as exempt from tax.
3. Numerous cases have been unearthed and individuals have been identified who were beneficiaries of such bogus entries of LTCG amounting to several crores from 2010 to 2014.

The ITAT ruled as below:

1. A genuine transaction needs to be proved to be genuine by the person who substantially asserts the same and not by the Revenue as contended by the assessee because once the assessee has been called upon to prove the genuineness of the trading of the shares leading to LTCG gain, the onus lies upon him which he fails to discharge.
2. The assessment order passed by the AO is upheld by way of allowing the appeal filed by the Revenue

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