TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 881
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....d not be made". In our opinion, it cannot be a ground to seek adjournment every time. We, therefore, reject the application for adjournment and proceed to decide the cases on merit after hearing the learned D.R. and the material available on record, exparte qua the assessee. 3. First we will deal with the appeal in ITA No. 198/Jodh/2013. The following grounds have been raised in this appeal:- "On the facts and in the present circumstances of the case, the ld CIT(A) has erred in:- "1. Deleting the addition of Rs. 15,69,818/- made by the AO by holding the claimed long term capital gain as non-genuine and ignoring the finding given by the AO in the Assessment Order. 2. Rejecting the alternative finding of the AO of treating it as short term capital gain. 3. Deleting the addition of Rs. 60,651/- made by the AO being undisclosed commission paid for arranging the accommodation entries. That the appellant craves to add, amend, alter, delete or modify any or all the above grounds of appeal before or at the time of hearing." 4. Grounds No. 1 & 2 relates to the deletion of addition made by the Assessing Officer on account of non-genuineness of long term capital gain while ground No.3 ....
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.... M/s. M.V. Associates and the transactions were carried out through National Stock Exchange Ltd., New Delhi. In order to verify the genuineness of the transactions, the Assessing Officer conducted the enquiries under sections 133(6) and 131 of the Act. On enquiry, it was found that the broker M/s. Krishana Stock Broking Co. Ltd. was not traceable as the notice issued under section 133(6) of the Act returned by the postal authorities unserved with the remarks "no such firm exits". The Assessing Officer also conducted an enquiry from the National Stock Exchange Ltd., Delhi and it was informed that M/s. Krishna Stock Broking Co. Ltd. was neither a registered trading member nor a sub-broking affiliated to any registered trading member of the exchange and as per record of the exchange, M/s. Mahadev Stock Broking Co. Ltd. was registered trading member of the exchange and the member was expelled w.e.f. 24/01/2001. The Assessing Officer concluded that M/s. Krishna Stock Broking Co. Ltd. was using the registration number of debarred share broker firm and hence, the bills issued by it for purchase of sale were not genuine at all. As regards to the position of M/s. M.V. Associates, through wh....
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....contention of the assessee that the assessee was not aware of the broker was not registered with NSEL or company was not listed, the Assessing Officer observed that the assessee was in a business and without having whereabout of broker and company, why did she invest huge money that too for the first time. As regards to this contention of the assessee that she had received payments in time, which was only requirement for entering into genuineness of the transaction, the Assessing Officer mentioned that as the receipts of payments did not prove the genuineness of the transaction, the contention of the assessee was not proved. Accordingly, he held that the assessee failed to fulfil the primary procedure of purchase and sale of shares and made the addition of Rs. 15,69,818/- under section 68 of the Act. Reliance was placed on the judgment of Hon'ble Supreme Court in the case of Mc. Dowell & Co. Ltd. Vs. Commercial Tax Officer reported in 154 ITR 148. 7. Being aggrieved, the assessee carried the matter to the learned CIT(A) and the following submissions were made as incorporated in para 3.2 of the impugned order, which are reproduced verbatim as under:- "4.1. During the year under a....
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....rmed to the appellant vide its letter dated 30-04-2003 that share certificates of 17500 shares bearing numbers 12578 to 12752 of Rs. 10/- each of the company have been transferred in her name. The copy of the confirmation letter dated 30-04-2003 of the aforesaid company is enclosed herewith. 4.11. The company has also sent the original share certificates duly transferred in the name of the appellant along with its letter dated 30-04- 2003. 4.12. Thereafter the company has consolidated equity share certificates bearing numbers 12578 to 12752 into one share certificate of 17500 shares at the request of the appellant. The copies of consolidated share certificate and the letter dated 25-07-2003 are enclosed herewith. 4.13. The appellant maintains the regular books of accounts. She has recorded the above investment in shares in her regular of books of account and shown the above investment in 17,500 shares amounting to Rs.70,919/- in her balance sheet as on 31-03-2004 under the head investment "Suma Finance and Investment Ltd". The copy of balance sheet is enclosed. 4.14. Thereafter the appellant has dematerialized the above equity shares with J&K Bank depository Services of Jammu &....
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....resent case, the appellant has furnished all the concrete evidences for purchase of shares, transfer and consolidation of share certificate, evidences for dematerialization of shares, sale of shares, receipt of sales consideration through banking channel, filing of return of income for the above, assessment year, showing the shares in the Balance sheet as on 31-03-2004 as investment in shares and confirmation of account of the appellant received from the broker etc clearly proves the genuineness of share transactions made by the appellant. our reliance has been placed on the following judicial decisions for this purpose. Dalpat Singh Choudhary Vs ACIT (2012) 143 TTJ 500 (Jd) DCIT Vs Smt Hansa Choudhary (2012) 143 TTJ 76 (Jd) (UO) ACIT Vs Chandresh Kumar Maheshwari (2009) 120 TTJ 132 (Jd) Barynath Agarwal Vs ACIT (2010) 133 TTJ 129 (Agra) (TM) CIT Vs Smt. Pushpa Malpani (2011) 49 DTR 312 CIT Vs Ashok Kumar Kakkar HUF (2008) l7l Taxmann 354 (del) 13 ACIT Vs J.R. Solvent Industries P Ltd. (2009) 24 DTR 387 (Chd)(Trib) Acchyalal Shaw Vs Income Tax Officer (2009) 121 TTJ 695 (Kol) ITO Vs Smt. Bibi Rani Bansal (2010) 133 TTJ 394 (Agra) (TM) Smt. Sunita Oberoi Vs Income Tax Officer (2009....
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....crediting the same to the bank account of the appellant and other evidences produced by the appellant clearly establish that the long term capital gain claimed by the appellant on transaction of shares is perfectly genuine and realization of sale proceeds of shares cannot be treated as cash credit under section 68 of the Act. 4.30. Thus it is proved that the amount of capital gain of Rs. 15,69,818/- received by the appellant against the sale of shares can not be treated as unexplained cash credit, the addition of cash credit of Rs. 15,69,818/-made by the assessing officer is not justified and is liable to be deleted. 4.31. The appellant very humbly further states that he has shown the above investment in shares in her balance sheet under the head "Suma Finance and Investment Ltd" and the realization of sale proceeds of shares received by the appellant through banking channel by account payee cheques/demand drafts clearly proves that the genuineness of the share transactions and the long term capital gain claimed by the appellant. 4.32. Thus the appellant had satisfactorily explained the nature and source of the amount of sale consideration received by her from sale of shares furn....
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.... to make the proper enquiry about the existence of the broker. 4.39. The assessing officer has not made the proper enquiry about the existence of the broker and therefore the findings of the assessing officer that the broker is not in existence are totally incorrect and patently erroneous. 4.40 The appellant very humbly states that the various documents relating to the shares issued by the broker and sent to the appellant clearly proves the existence of the broker. 4.41. The assessing officer has observed that National stock Exchange of India Limited, Delhi informed him that broker is neither a registered broker nor a sub-broker affiliated to any registered trading member of the exchange and the securities of Suma Finance and Investment Ltd. are not listed on the exchange. 4.42 The appellant very respectfully further submits that there may off- market valid share transactions. Any enquiry from stock exchange will not yield any result in favour of the department in the case of off market transaction. 4.43. The assessing officer has to see, whether the sale has been affected or not as per the documents and as per the acceptance and admission of the respective brokers. Our relian....
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.... he can not possibly perform ( Lex non cogit ad impossibilia). Our reliance has been placed on the following judicial decision for this purpose : Cochin State Power and Light Co-op. Ltd Vs. State of Kerala (1965) AIR 1688 (SC) 4.55. The assessing officer observed that the assessee has actually routed his unaccounted money in the form of so called long term capital gain in order to avoid the payment of taxes and it is a clear cut case of sham transactions subject to be taxed under section 68 of the Act as unexplained cash credits. 4.56. The appellant very respectfully submits that the assessing officer has not brought on record any worthwhile material, concrete and tangible evidence to establish that the appellant has introduced her own unaccounted money in the shape of the sale proceeds of shares and for proving sham transactions of capital gain as claimed by the appellant. 4.57. The assessing officer has further not placed any concrete and positive evidence on record that by which mode the unaccounted money has traveled from the appellant to the other agencies. 4.58. In the absence of any concrete and tangible evidence of definite legal character to substantiate his above alle....
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....submits that the facts of this case are squarely covered with the facts contained in the appeals cases of Shri Shankey Gujar (Appeal N0.9S/IT/UDR/2010-11 dated 15-12-2011), Shri Shambhu Singh Solanki (Appeal No. 560/IT/UDR/ 2006-07 dated 14-10- 2008), Shri Prakash Ranka (Appeal No. 96/IT/UDR/ 2006-07 dated 19-02- 2007) and Nirupam Pathan (Appeal No. 91/IT/UDR/ 2006-07 dated 19-02- 2007) Shri Ramzan Khan Pathan (Appeal No.92/IT/UDR/ 2006-07 dated 19/02/2007) decided by your predecessors wherein the addition of long- term and short term capital gain as cash credit made by the assessing officer on the similar set of facts has been deleted by them . The copies of the above decisions are paced on record for your ready reference please. 4.66. For the various reasons stated above, the appellant very humbly request that the appellant has made the genuine transactions and correctly claimed the long term capital gain on shares and, therefore, the disallowance of capital gain and addition of cash credit of Rs. 15,69,818/- made by the assessing officer is unwarranted and unsustainable in law as well as on the facts and circumstances of the case. 4.67. In view of the foregoing grounds of defe....
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....SEL. The additional evidences furnished by the A/R of the assessee has no mean. It is humbly requested that contention of the assessee may kindly be considered on merit keeping in view above facts and discussion." 9. The above said report of the Assessing Officer was confronted to the assessee, who made the following submissions on the remand report:- 1. The assessing officer has observed that the share transactions carried out by the appellant are bogus and nothing but accommodation entries in the form of long term capital gain. 2. The assessing Officer simply reiterated the observations and /or findings of assessment order without submitting the specific comments on admissibility of additional evidences filed by the appellant during the course of appeal. 3. The appellant very humbly submits that he has made the detailed submissions with concrete evidences during appeal proceedings that the transactions for purchase and sale of shares carried out by the appellant are genuine and real transactions generating the actual long term capital gain in the hands of the appellant. 4. For the sake of brevity, all these detailed submissions are not being reiterated here but they should ....
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....n our application filed before your good self 15. The appellant very humbly further submits that the assessing officer has not objected the admissibility of additional evidences filed by the appellant anywhere in the remand report. 16. The appellant submits that he was prevented by reasonable and sufficient cause in filing the new/additional evidences, which has significant bearing on the subject matter of appeal for rendering justice. 17. It is, therefore, very humbly requested that your good self should consider the additional evidences exercising your power under sub-section 4 and 5 of section 250 of the Act for imparting the real and substantive justice to the appellant and oblige. 18. The other observations and /or findings made by the assessing officer in his remand report are having no privity or nexus with the issue of admissibility of additional evidences and they are beyond the scope of Rule 46A of the Rules and therefore, requires no comments of the appellant." 10. Learned CIT(A) after considering the submissions of the assessee and the remand report of the Assessing Officer observed that the assessee sold 17500 equity shares of M/s. Suma Finance & Investment Ltd. a....
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....er was not justified in treating the sale proceeds of shares as unexplained credit under section 68 of the Act and in making an addition of Rs. 15,69,818/-. Accordingly, the said addition was deleted. 12. As regards to the issue relating to long term capital gain claimed by the assessee, the observation of the Assessing Officer was that the assessee claimed the shares of M/s. Suma Finance & Investment Ltd. were purchased on 10/04/2002, 04/04/2003 and sold on 12/06/2004, however, as per copy of shares certificate, the shares were issued on 25/07/2003 and the said shares were sold on 10/06/2004 i.e. after 11 months, therefore, the same was required to be assessed as short term capital gain. 13. Being aggrieved, the assessee carried the matter to the learned CIT(A) and the submissions made as incorporated in para 4.2 of the impugned order were as under:- "4.35. The assessing officer has observed that the copy of share certificate filed by the appellant revealed that the shares were issued on dated 25/07/2003 which clearly proves that shares were held by the appellant less than 12 months, hence the same does not fall under the purview of the long term capital gain and required to be....
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....he capital gain on account of sale of such share as short term capital gain. 15. Another issue agitated by the department in this appeal relates to the deletion of addition of Rs. 60,651/- made by the Assessing Officer on account of alleged payment as commission from undisclosed source. 16. The said addition was made by the Assessing Officer by observing that the assessee made the payment to obtain the accommodation entries in the long term capital gain from undisclosed sources. The submissions of the assessee before the learned CIT(A) on this issue as incorporated in para 5.2 of the impugned order are as under:- "5.1. "The assessing officer has made the addition/ disallowances of alleged commission/brokerage of Rs.60,651/- on the presumption that he has made the payment of such alleged commission/brokerage to the broker out of his undisclosed income for getting the alleged accommodation entry of long term capital gain derived from sale of shares. 5.2. For this purpose, the assessing officer has relied on the loose papers page 43 of annexure B-21 impounded during the course of survey. 5.3. The assessing officer has presumed that the appellant might have paid the estimated comm....
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.... obtained the accommodation entry in the form of long term capital gain and made the payment of Dalali or commission on share, the addition and/or disallowance made by the assessing officer of commission/brokerage of Rs. 60,651/- is liable to be deleted. 5.13. The appellant further very respectfully submits that he has never paid any brokerage/commission in cash out of her books of accounts. 5.14. The broker has rendered the services for purchase and sale of genuine shares for the appellant and the broker has already deducted the amount of brokerage from the sale consideration of the shares in his bill and sent the net amount of sale consideration to the appellant through the banking channel by account payee cheques /drafts. 5.15. The observations, findings and/or allegations made by the assessing officer and inferences and conclusions drawn by him that the assessee has received the accommodation entry of long term capital gain of Rs.15,69,818/- from his broker on payment of commission/brokerage of Rs Rs.60,651/- in cash out of undisclosed income are totally incorrect, arbitrary, fictitious and based on mere assumptions and presumptions, surmises and conjectures, pure guess, dou....
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....ter considering the submissions of the assessee observed that the brokerage from the sale consideration had already been deducted by the broker and the balance amount had been received by the assessee through demand draft/cheques and that the Assessing Officer had not brought any material on record to suggest that the assessee had paid the commission separately. Accordingly, the said addition was deleted. Now, the department is in appeal. 18. Learned D.R. strongly supported the order of the Assessing Officer and reiterated the observations made in the assessment order dated 29/12/2009. 19. We have considered the submissions of learned D.R. and perused the material available on record. In the present case, it is an admitted fact that the assessee furnished certain additional evidences under Rule 46A of the I.T. Rules, those evidences could not be furnished before the Assessing Officer, but those were relevant to decide the controversy. Therefore, learned CIT(A) forwarded those additional evidences to the Assessing Officer for his comment. Additional evidences furnished by the assessee were examined by the learned CIT(A), who also considered the remand report of the Assessing Offic....