This review delves into the ITAT Delhi’s ruling in the case of Shri Bhim Sain Jain vs ITO, Ward 1(1), Faridabad, regarding a capital gains tax dispute for the assessment year 2014-15. The primary contention revolves around an addition of Rs. 23,70,761, deemed as unexplained cash credit under Section 68 of the Income-Tax Act, 1961.
Shri Bhim Sain Jain, proprietor of M/s. Gomti Food Products, faced an addition to his income as unexplained cash credit during the assessment proceedings. The addition was based on the alleged non-verification of the authenticity of a long-term capital gain from the sale of shares in M/s. Pawansut Holdings Ltd., which Jain claimed was exempt under Section 10(38) of the Act.
During the tribunal proceedings, the authenticity of the long-term capital gains claimed by Jain was questioned. The tribunal directed the assessing officer to verify the period of holding of shares to determine if the gains qualify as long-term capital gains. The case highlighted issues regarding the adequacy of documentation provided by Jain and the procedural adherence by the assessing officer.
The tribunal’s decision to restore the issue to the assessing officer underscores the need for clarity in documentation and compliance with procedural norms in capital gains taxation. This case serves as a crucial reference for similar disputes involving the verification of capital assets and the application of tax exemptions under the Income-Tax Act.
Order pronounced in the open court on October 14, 2022.
Bhim Sain Jain vs ITO, Ward 1(1), Faridabad: Capital Gains Tax Dispute for AY 2014-2015
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