Short Overview: Since transactions of purchase and sale of shares were supported and evidenced by bills, contract notes, demat statements and bank statements, etc., and when transactions of purchase of shares were accepted by AO in earlier years, the same could not be treated as bogus simply on the basis of some reports of investigation wing, etc. therefore, AO was directed to allow the claim of assessee in respect of long-term capital gain on sale of shares of M/s. KAFL and delete addition under section 68.

Assessee claimed exemption under section 10(38) in respect of long-term capital gains (LTCG) on sale of shares of M/s. K. AO taking note of information received from investigation wing and price movement of the script held LTCG to be bogus and accordingly, made addition under section 68.

It is held that as transactions of purchase and sale of shares were supported and evidenced by bills, contract notes, demat statements and bank statements, etc., and when transactions of purchase of shares were accepted by AO in earlier years, the same could not be treated as bogus simply on the basis of some reports of investigation wing, etc. Therefore, AO was directed to allow the claim of assessee in respect of long-term capital gain on sale of shares of M/s. KAFL and delete addition under section 68.

Decision: In assessee’s favour.