TaxTMI 
TaxTMI 
2015 (3) TMI 922
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....e fradulent transaction have taken place in connivance with some brokers . It is the say of the Revenue authorities that such transactions are nothing but colourable device used by a certain section of the society to introduce their black money in their books by taking shelter behind long term capital gains. 4. Facts of the present case show that the premises of the assessee and the Kariya group were searched u/s. 132 of the Act on 18.1.2007 and therefore present assessment has been framed u/s. 153A r.w.s. 143(3) of the Act. The assessee filed his return on 29.2.2008 declaring total income at Rs. 25,18,609/-. While scrutinizing the return of income filed by the assessee, the Assessing Officer observed that the assessee has shown long term capital gains from two scrips namely M/s. Shalimar Agro Products & M/s. G.Tech Info Training Ltd. to the tune of Rs. 55,54,250/-. The assessee was asked to justify the bonafide of these transactions. The assessee explained that he has purchased 1,06,500 shares of Shalimar Agro Products on 24.4.2002 at a cost of Rs. 1,09,500/- as per contract note exhibited at page-11 of the Paper Book. The said transaction was done through broker M/s. Shreenidhi ....
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.... response to which the broker vide letter dt. 27.11.2008 filed the copies of the ledger account and copies of the computerized purchase bills of M/s. Shalimar Agro Products Ltd. The said broker explained that the purchase consideration of 1,06,500 shares was adjusted against the old credit balance lying to the credit of the assessee's account as on 31.3.2002. The said broker showed his inability to give further evidence/documents stating that the transaction pertains to the period prior to 31.3.2002 for which period the broking firm has destroyed all the physical record. The AO observed that the said broker could not furnish the name of the persons from whom he has purchased shares for the assessee. It would be pertinent to note that the assessee himself is a partner in M/s. Shreenidhi Stock & Broking having 50% of share holding. 6. After considering all these details brought on record in the light of the manner in which the transactions have been done, the AO gave an opportunity to the assessee to explain as to why should the aforesaid long term capital gain not be treated as bogus and the entire sales realization be treated as unexplained money. The assessee was further told tha....
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....ring the course of the assessment proceedings, he has retracted his statement conveniently. The Ld. CIT(A) further observed that the assessee has lodged no complaints with the CCIT or to the Director General of Income Tax or to the CBDT regarding any kind of coercion, pressure, threat or undue influence , if any, used by the authorized officers during the search & seizure operations on 18.1.2007. The assessee on the basis of the statement given by the brokers had realized his mistake and admitted that the shares were not purchased by the assessee from the said broker. Therefore, during the course of search in his statement u/s 132[4] offered the capital gains as his income and the authorized officer believed him and left his premises concluding the search and seizure operation. The Ld. CIT(A) categorically stated that the assessee cannot be allowed to deny the truth of his statement at this stage of assessment. The Ld. CIT(A) drew support from Section 115 of the Evidence Act. Thereafter, the Ld. CIT(A) relied upon the various judicial pronouncements and finally held as under: "Having regard to the facts and circumstances of the case and in law, it is held that the appellant has no....
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....ssee or his family members. The Ld. Counsel further pointed out that the entire sale transaction of shares of these two companies have been done through BSE, therefore, there should not be any doubt in relation to the sale consideration resulted from the sale of shares of these two companies. The Ld. Counsel concluded that as the entire purchase and sale of shares are fully supported by necessary documents/evidences, the action of the revenue authorities is not according to the facts of the case and therefore the orders of the lower authorities deserve to be vacated. 12. Per contra, the Ld. Departmental Representative strongly supported the findings of the lower authorities. 13. We have considered the rival submissions, perused the orders of the lower authorities and have also the benefit of going through the various details/documents filed by the assessee in the form of paper book containing 284 pages. 14. It is a settled law that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it fal....
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....hich means that the depository took 23 days to get the shares demated of a company which transferred the shares within 4 days of purchase. Similarly, in the scrips of M/s. G.Tech Info Training, the assessee has claimed to have paid purchase consideration out of speculation profit from a transaction done through the broker Shri Sanjay R. Shah, when the assessee has never done speculation in the stock market prior to or after this transaction. However, the same broker has categorically denied to have entered into any such transaction with the assessee or his family members. 16. It is the say of the assessee that the denial of Shri Sanjay R. Shah was never confronted to the assessee. However, on Page 5 of the assessment order while issuing a showcase letter for completion of assessment of giving an opportunity to explain the transaction, the AO issued a letter dt. 18.11.2008 in which he has mentioned as under: "In case of share of M/s. G-Tech Info, Shri Sanjay R. Shah through whom you have purchased the share of M/s. G.Tech have filed his reply stating that he has not made any share transaction either with you or any of your family member. Copy of his reply is enclosed herewith for ....
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....ion after considering the surrounding circumstances and applying the test of human probabilities had rightly concluded that the appellant's claim about the amount being her winnings from races was not genuine." Therefore, the present case has to be considered in the light of human probability. The transaction about purchases of shares in physical form of such companies whose share prices have been rigged by some fraudulent operators cannot have any direct evidences. An inference about such a purchase connived with such companies have to be drawn on the basis of the circumstances available on the record. As pointed out, the shares have been transferred within 4 days of the date of purchases raises ample doubt about the credibility of the company. As pointed out in all probabilities, the company must have been involved in such fraudulent transactions. Post year 2000, it is improbable that any person would transact in shares by taking physical delivery of the shares. When many instances have been surfaced relating to bad delivery or bogus scrips, the regulatory authorities have made it compulsory to transact through Demat account. 19. Having regard to the circumstances and the c....