Merely Producing Evidence Of Sale Of Shares Insufficient To Prove Money Laundering: ITAT

Mumbai, December 7: The Mumbai bench of the Income Tax Appellate Tribunal (ITAT), quashing one of the first order issued by the Tax Department, held that merely producing evidence of purchase and sale of shares was insufficient to prove the allegations of Money Laundering.

In a twenty-page verdict, the tribunal t in the favor of Ramprasad Agarwal, who purchased shares of Rutron International Ltd in 2014 and sold them a year later. The assessing officer had declined to provide long-term capital gains (LTCG) exemption for the transaction and the defendant was asked to pay up Rs 83 lakh tax. The case was based on the evidence collected from trades and also a statement was given by two brokers.

“The Officer has not brought any material on record to show that the assessee has paid over and above the purchase consideration as claimed and evident from the bank account then, in the absence of any evidence it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long-term capital gain”, the tribunal held.

Taking into consideration the decision made in the case of Meghraj Singh Shekhawat Vs. DCIT, the tribunal held that “the addition made by the AO is based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income in the shape of long-term capital gain. On the other hand, the assessee has brought all the relevant material to substantiate its claim that transactions of the purchase and sale of shares are genuine. Even otherwise the holding of the shares by the assessee at the time of allotment subsequent to the amalgamation/merger is not in doubt, therefore, the transaction cannot be held as bogus. Accordingly, we delete the addition made by the AO on this account.”

As many as 200 entities are being probed for money laundering by multiple regulators including the Income Tax Department, Security Exchange Board of India and the Ministry of Corporate Affairs.


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