Income Tax Appeal of Babita Goyal vs ITO, Rohtak on Alleged Bogus LTCG for AY 2011-12

Introduction

Income Tax appeals serve as a crucial mechanism for taxpayers to challenge decisions made by the Income Tax Department. This case, ITA No.1211/Del/2022, involving Babita Goyal and the Income Tax Officer (ITO), Ward-1, Rohtak, Haryana, highlights the complexities surrounding long-term capital gains (LTCG) in shares and the criteria used by authorities to deem them as ‘bogus’.

Background

Babita Goyal, a resident of Rohtak, Haryana, filed an appeal for the Assessment Year 2011-12 against the order dated 09.05.2022 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The appeal challenged the addition of Rs. 87,270 to her income, categorized as alleged long-term capital gains from shares, which the authorities treated as ‘bogus’.

The Appeal Grounds

The appellant raised several grounds, contesting both the legal and factual bases for the CIT(A)’s decision. Primary amongst these was the assertion that the CIT(A) erred in upholding the addition despite the appellant’s claims and evidence suggesting the gains were legitimate and not a result of any willful attempt to evade tax.

Assessment and Reassessment

The case was reopened under section 147 of the Income Tax Act, 1961, with the original assessment made under section 143(3) read with section 147. The Assessing Officer (AO) treated the transaction as not genuine, leading to an addition of Rs. 1,60,655 to the assessed income. The appeal to the CIT(A) resulted in a partial relief, sustaining the addition to the extent of Rs. 87,270.

Arguments and Proceedings

Detailed presentations were made by both the appellant’s and respondent’s representatives during the hearing before the Judicial Member, Shri Kul Bharat, at the Income Tax Appellate Tribunal’s Delhi Bench. The appellant’s argument centered on a history of regular and genuine investments in shares, which, in this instance, were wrongly categorized as bogus by the assessing officer.

Judgment and Rationale

The tribunal’s decision to affirm the findings of the authorities below was grounded in the absence of any contrary material evidence that could rebut the AO’s findings. Despite the appellant’s arguments and submissions, the tribunal saw no reason to interfere with the decision of the lower authorities, leading to the dismissal of the appeal.

Conclusion

This judgment underscores the challenges taxpayers face in proving the genuineness of their transactions in the face of the Income Tax Department’s scrutiny. It also highlights the importance of maintaining thorough records and evidence to substantiate claims of legitimate financial activities, especially in matters of capital gains taxation.

Income Tax Appeal of Babita Goyal vs ITO, Rohtak on Alleged Bogus LTCG for AY 2011-12