Sale was found genuine when enquiries from stock exchange directly –Denial of exemption on the ground that purchaser was engaged in the fraudulent billing activities was not justified .

Assessee-HUF derived long-term capital gain from sale of shares of two companies and such capital

gains was claimed as exempt under section 10(38). During the assessment proceedings the assessee

filed all the details. The AO being highly suspicious, enquired from BSE regarding genuineness of

purchases of these shares through M/s Vijay Bhagwan Das and BSE vide letter dt. 16

th April, 2010

informed that no such transaction of purchases as mentioned in the said bill was made through BSE.

Accordingly, the AO finally held that transactions made through Mukesh Choksi via his concern

namely, M/s Alliance Intermediatories were accommodating entry in lieu of bogus long term capital

gain. The AO proceeded to reject the claim of exemption made under s. 10(38) of the Act, and added

the income as income from other sources. The Tribunal held that since entire proof of purchase and

sale of these shares were found in books of account of assessee and sale of shares was found

genuine when Assessing Officer made enquiries from stock exchange directly, addition on account of

undisclosed income and denial of exemption under section 10(38) could not be sustained.

(A.Y.2008–09)

Ramesh Kumar Jain (HUF) v. DCIT [2013] 36 taxmann.com 524 / 144 ITD 383 (Jodh.)(Trib.)