TaxTMI 
TaxTMI 
2014 (10) TMI 428
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....tificates in physical form were submitted to the said AIC for transfer and received back on 27.04.2002. These shares subsequently, dematerialized through the depository service of HDFC Bank on 25.07.2003. This was subsequently sold through M/s. Ahilya Commercials P. Ltd., Kolkata on 20.02.2004 for a sum of Rs. 25,87,400/-. 2.3. Assessing Officer was of the opinion that SEBI has suspended trading in the shares of AIC vide their letter dated 29.09.2005 for unfair trade practices by some of the brokers and M/s. Ahilya Commercials P. Ltd., was also one such broker. A.O. was also of the opinion that while the shares were purchased on 12.04.2002 the said broker M/s. V.K. Singhania & Co., Kolkata raised a bill on 18.04.2002 and the payments were made between 27.04.2002 to 05.05.2002 in cash. A.O. was also further noted that assessee has not invested anywhere earlier in shares and there is no proper reason for investing in this company at Kolkata through unknown brokers. On further enquiry, A.O. noted that assessee had claimed that the purchase and payments were done at Kolkata through the supplier of raw materials but neither the name and address of the supplier has been furnished nor an....
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.... Form much earlier than the price increase. It was also further submitted that from the time it was dematerialized with the HDFC Bank till it is sold the shares are in Demat Form to assessee's credit and as per the annual report of the company for the year ending March, 2003, the share value is even less than the investment value. It was further submitted that assessee did transact genuinely in purchase and sale and A.O. was not correct in treating it as income from other sources. Ld. Counsel relied on the decision of the Coordinate Bench in the case of DCIT vs. Ashok Bhatt (HUF) vide ITA.No.6909/Mum/2008 dated 31.10.2011 and also the decision of the Coordinate Bench at Hyderabad in the case of ITO, Ward 2, Nizamabad vs. Smt. Aarti Mittal, Adilabad in ITA.No.165/Hyd/2011 to 169/Hyd/2011, ITA.No.877/Hyd/ 2011 to ITA.No.885/Hyd/ 2011 in support of the contentions. 4. Ld. D.R. however, reiterated the contention of the A.O. and Ld. CIT(A) to submit that the transaction is not a genuine transaction, hence receipt was assessed as income from other sources. 5. We have considered the issue and examined the facts on record. As far as the facts of purchase and sale are concerned, asses....
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....ars As at 31.3.2003 Rs. As At 31.03.2002 Rs. SCHEDULE INVESTMENTS Shares of Amluckies Investment Company Ltd., (The value of 20,000 shares have been taken at cost Price and the Market value of the same is Rs. 72,000 @ Rs. 3.60 per share). 1,00,400.00 Total Investments 1,00,400.00 6.1. The value of 20,000 shares have been taken at cost price but market value of the same was Rs. 72,000 at Rs. 3.60 per share. This indicates that the shares invested in April, 2002 at 1,00,400 has in fact reduced to Rs. 72,000 as on 31.03.2003. If assessee wanted to gain by dubious mean, at best, he could have shown the investment in March, 2003 at Rs. 72,000 only when the share price was further reduced. This itself indicates assessee's contention that shares are purchased in April, 2002 cannot be doubted. Since there is no dispute with reference to subsequent sale thereof in the stock exchange, the transaction certainly results in capital gain only. 6.2. The contention that subsequently SEBI has banned the transaction in the said company and the broker through which assessee transacted was also suspended does not take a way the genuineness of the transactio....
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....rticular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. Fact of tinted broker may be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted. In such circumstances, further enquiry is needed and that is for individual case. Such further enquiry was not conducted in that case. 11. At this juncture, it would be relevant to mention here that it is not disputed by the Revenue before us that the shares of these assessees were already shown in the earlier Balance Sheet submitted by the assessees, and therefore, in that situation, how the revenue condemned the transaction even on the ground of steep rise in the shares. If within a period of one year, the share price has risen from Rs. 5 to 55 and from 9 to 160 and one person was holding the shares much prior to that start of rise of the share, then ho....
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....sessee. According to us, even in the absence of the confirmation by those share brokers one has to examine that whether the shares have been purchased and after retaining them for a certain period those shares have actually been sold by the assessee. In the present case, facts have revealed that the shares of Sarang Chemicals were duly demated and thereupon the sales were made through banking transactions. The Demat account maintained with ICICI bank has revealed the shares numbers, etc. From the side of the assessee, it is vehemently contested that there was a reason of denial of transaction by those share-brokers because they have not intimated the transaction to the SEBI and that one of them has also made the purchase transaction in cash which was against the SEBI guidelines. Apartment from these evidences, our attention has also been drawn on a certificate issued by "share transfer agent" that the transfer of those shares in the name of the assessee was duly approved. The assessee has expressed to hold those shares in "dematerialized form" therefore the assessee was asked to fill up the "dematerialization request form". This information is very vital and proves the fact that th....