INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “G”: NEW DELHI

ITA No. 747/Del/2022
Assessment Year: 2015-16

BEFORE:
DR. BRR KUMAR, ACCOUNTANT MEMBER
AND
MS. ASTHA CHANDRA, JUDICIAL MEMBER

O R D E R
PER ASTHA CHANDRA, JM:
The appeal filed by the assessee, Sangeeta Devi Jhunjhunwala, is directed against the order of the Ld. Commissioner of Income Tax (Appeals) – 28, New Delhi (“CIT(A)”) dated 22.03.2022, pertaining to the Assessment Year (“AY”) 2015-16. The appellant seeks relief on two counts:

1. Disallowance on claim of exemption under section 10(38) of the Income-tax Act, 1961 on Long Term Capital Gain of Rs. 1,17,34,753/-.
2. Addition of Rs. 2,11,226/- under section 69C of the Income-tax Act, 1961 for alleged unexplained expenditure.

The facts of the case are centered around the appellant’s transactions in shares of M/s. HPC Biosciences Limited, which the Assessing Officer (“AO”) found suspicious. Despite the appellant’s contention, both disallowances were confirmed by the CIT(A), leading to the present appeal before this Tribunal.

The Tribunal, after considering the submissions, evidence, and the relevant provisions of the law, partly allowed the appeal. The key findings and decisions of the Tribunal span several aspects of the transactions and claims:

Genuineness of Long Term Capital Gain

The appellant contended that the gains from share transactions were genuine and should be exempt under section 10(38) of the Act. However, extensive examination by both the AO and CIT(A), backed by investigations and reports, indicated that the transactions were not genuine and appeared to be a planned activity for evading taxes through capital gains in penny stocks. The Tribunal upheld the AO and CIT(A)’s findings, affirming the disallowance of the claim of exemption on long-term capital gains.

Unexplained Expenditure under Section 69C

Regarding the addition of Rs. 2,11,226/- for alleged unexplained expenditure under section 69C, the appellant argued that the transaction was through banking channels without any outlay of expenditure warranting such addition. The Tribunal, however, noted a critical procedural aspect – the expenditure pertaining to AY 2013-14 and not AY 2015-16. Thus, the addition under section 69C was not sustainable for AY 2015-16 and was consequently deleted.

In conclusion, while the Tribunal dismissed the appellant’s claim regarding the genuineness of the long-term capital gains, it provided relief by deleting the addition made under section 69C for the AY 2015-16. The appeal was, therefore, partly allowed.

Date of Judgment: 18th May, 2023