TaxTMI 
TaxTMI 
2015 (6) TMI 289
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....service charges payable to the broker." 2. The assessee in the present case is part of Kariya Group. A search was conducted at Kariya Group and persons connected with the said group on 18/1/2007. As per para-3 of the assessment order the search was conducted on the main allegation that the assessees of the above group had obtained artificial capital gain by manipulating share transactions by obtaining bogus back dated purchases of shares and received shares in physical format. Those shares have been sold at stock exchanges either in open market or through engineered transaction and, thus, these assessees are availing artificial/bogus capital gain and, thus, are gaining the entailing benefit of taxation either at lower rate or exemption. In such process, the capital gain shown by the present assessee from the sale of shares of three companies has been treated as unexplained money in possession of the assessee attributable to bogus long time capital gain and an amount of Rs. 81,02,761/- was added to the income of the assessee. 2.1 Further, the AO added a sum ....
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....ining Ltd., which were issued without any actual purchases having been made by DPS and these were accommodation bills. For the supposed purchases made by DPS of these scrips, DPS has issued speculation bills out of which speculation gain was shown to be earned by those indenting third parties and, therefore, there was no transaction at all from where those speculation gain could have arisen. Those speculation gain did not form part of DPS's books. The speculation gain bills issued to the third parties were bogus without any basis or without any transaction. 2.3 In respect of shares of G Tech Info Training Ltd., the AO also summoned Shri Sanjay R. Shah and he was asked to produce the details of transactions relating to sale of shares of G Tech Info Trading Ltd. to the assessee. The said Shri Sanjay R. Shah vide his letter dated 27/11/2008 and 2/12/2008 had denied to have made any transaction with assessee or Kariya Group. It is in these facts, AO considered the sale price of shares to M/s. Robinson Worldwide Ltd. and M/s. G Tech Info Training Ltd. as nongenuine transaction ....
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....e sum of Rs.l,12,500/-. (Page 47). (ii) The assessee had to receive a sum of Rs. 1,19,432.10 from M/s. Shreenidhi Stock & Broking on 1.4.2002 and therefore, against the said amount, a sum of Rs. 1,12,500/- payable by the assessee was adjusted. (iii) M/s. Shalimar Agro Products Ltd. transferred 15,000 shares in the name of the assessee and delivered the share certificates to the assessee on 30-4- 2002 (Pages 49 to 51). (iv) M/s. Shalimar Agro Products Ltd. forwarded an extract of Share Transfer Register and Member Register of the company on 20-06-2007 (pages 52 to 68). Further, the share certificates for 15,000 shares were duly transferred in the name of the assessee. (v) The assessee filed his return of income for the year ended 31.3.2003 relevant to the A.Y. 2003-04 on 22nd September, 2003 enclosing the Balance Sheet wherein the purchase of shares of M/s.Shalimar Agro Products Ltd. for Rs. 1,12,500/- are reflected (Pages 24 and 25). (vi) The assessee had sent the said Share Certificates to M/s. Action Financial S....
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....The assessee purchased 36,000 shares M/s. G- Tech Info Training Ltd. through Mr. Sanjay R. Shah on 13th May, 2002 for the aggregate consideration of Rs. 45,360/- which was off market transaction (Pages 26 & 27). (b) The aforesaid purchase consideration of Rs. 45,360/- was adjusted against the speculation profit of Rs. 1,49,600/- earned by the assessee and taxed in the hands of the assessee for A.Y. 2003-04. (Pages 28 and 21 & 23) (c) The said shares were delivered to the assessee in physical form with the duly executed Transfer Form (Page 29). (d) The said shares were duly transferred in the name of the assessee by M/s. G- Tech Info Training Ltd. and delivered to the assessee on 3rd July, 2002. (Page 30). (e) M/s. G- Tech Info Training Ltd. issued to the assessee a Jumbo Certificate for 36,000 shares on 22nd April, 2003. (Page 31 & 32). (f) The assessee filed his return of income for the year ended 31.3.2003 relevant to the A.Y. 2003-04 on 22nd September, 2003 enclosing the Balance Sheet wherein the purchase of th....
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..... Therefore, it was submitted that addition in this regard is also required to be deleted. 5.4 It was further submitted that for shares of M/s. Robinson Worldwide Ltd. were treated by the AO in the same manner, as were shares of the aforementioned two companies were treated. However, Ld. CIT(A) found that sale of shares of the company pertain to financial year 2004-05, relevant to A.Y.2005-06 and AO had made unintentional duplicate addition of the receipt to the extent of Rs. 25,04,275/- and consequent brokerage of 5% calculated at Rs. 1,25,214/- and in A.Y.2005-06 the said addition has already been confirmed by his order dated 16/11/2009. Thus, the addition in the present year is duplicate addition and in this manner Ld. CIT(A) had deleted the sale consideration of shares of Robinson Worldwide Ltd., amounting to Rs. 25,04,275/- and brokerage of 5% of Rs. 1,25,215/-. Such addition upheld by Ld. CIT(A) in respect of assessment year 2005-06 was challenged in the appeal filed before Tribunal and Tribunal vide its order dated 30/12/2011 passed in ITA No.790/Mum/2010 has deleted the&....
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....hich entailed sizable amounts varying generally between Rs. 2,000 and Rs. 3,000. The drawings recorded in the books cannot be co-related to the various racing events at which the appellant made the alleged winnings. (iv) While the appellant's capital account was credited with the gross amounts of race winnings, there were no debits either for expenses and purchase of tickets or for losses. (v) In view of the exceptional luck claimed to have been enjoyed by the appellant, her loss of interest in races from 1972 assumes significance. Winnings in racing became liable to income-tax from April 1, 1972, but one would not give up an activity yielding or likely to yield a large income merely because the income would suffer tax. The position would be different, however, if the claim of winnings in races was false and what were passed off as such winnings really represented the appellant's taxable income from some undisclosed sources. On the above facts it was held as under: "Held, dismissing the appeal, the Settlement Commission after considering the surrounding circumstances and applying the test of....
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..... (2) M/s Robinson Worldwide Trade Ltd Sun And Shine Worldwide Ltd. This clearly shows that Robinson Impex (India) Ltd. as well as M/s Robinson Worldwide Trade Ltd were merged and the new name of the company is Sun And Shine Worldwide Ltd. The above extract has been taken on 12-12-2011 which shows that the company is very much in existence even as on today. This is further supported by another extract from M/s. DPS Shares & Securities Pvt. Ltd taken from www.bseindia.com. This extract shows the following information: "Outcome of EGM 02-05-2011 18:36 M/s Robinson Worldwide Trade Ltd has informed that the shareholders at the Extra Ordinary General Meeting (EGM) of the company held on May 02,2011, inter alia, have taken the following decisions: 1) To chance to the name of the company from "M/s RPBINSON WORLDWIDE TRADE LTD." TO "SUN AND SHINE WORLDWIDE LTD." This confirms that the name of the company was changed in the Extra Ordinary General Meeting held on 2-5-2011. Perhaps because of the change of name, the AO has not been able to confirm the existence of the company. The third document is....
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....he AO nor the ld. CIT(A) has brought any material on record to show that Shri Naresh Saboo has some connection with the assessee. Even ld. CIT DR has not placed any evidence to show that Shri Naresh Saboo was acting on behalf of the assessee. Secondly, Shri Pratik Shah in answer to both question Nos.22 & 34 has clearly admitted that physical delivery of the shares was given to the assessee. Now the question is how assessee is going to find out whether this transaction was bogus when physical delivery has been handed over to the assessee. The authorities below have also doubted the source for purchases. As pointed out by the Ld. Counsel assessee has earned speculation profit amounting to Rs. 28,941/- which has been included in the return of income under the head 'income from other sources' for A.Y 2004-05, a copy of the computation is on pages 22 & 23 of the paper book and this has been accepted by the department. The assessee has also filed the balance sheet in which investment in shares has been shown at Rs. 1,45,06,054/- and in the annexure showing the details of investment in M/s Robinson Worldwide Trade Ltd....
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....p; 29926007 0002407 10:22:45 15500 ROBINSON IMP PHY 1.45 0.02 1.47 22785.00 TOTAL: 22785.00 The above particulars would not indicate that it was a bogus transaction. In any case, assessee has no need to know whether the transaction was bogus or not because even invoice has been issued by M/s. DPS Shares & Securities Pvt. Ltd for purchase of these shares, copy of which is placed at page 39 of the paper book and delivery was also given which is at page 40 of the paper book. Later on assessee filed an application for transfer of these shares and we have already discussed the particulars of transfer form. Ultimately, a jumbo share certificate showing 15500 shares was issued by the company, copy of which is at page 45 of the paper book. Later on assessee lodged a demat request with Action Financial Services (India) Ltd. for demat of 15500 shares of M/s Robinson Worldwide Trade Ltd and copy of that request is available at page 46. The demat account statement of the assessee with Action Financial Services (India) Ltd. shows that 15500 shares have been demateriali....
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....sssessee's own case for A.Y 2005-06 by the aforementioned order. 5.6 It was further submitted that according to the decision of Tribunal in the case of Mukesh R. Marolia vs. Addl. CIT, 6 SOT 247 (Mum), it was held that purchase and sale of shares outside floor of stock exchange is not an unlawfull activity. Off market transaction, are not illegal. It is always possible for the parties to enter into transactions even without the help of brokers. When the transactions are off market transactions, there is no relevance in seeking details of share transactions from stock exchange as such attempt would be futile. Stock exchange cannot give details of transactions entered into between parties outside their floors. Therefore, reliance placed by AO on the communications received from the stock exchanges that the particular share transactions entered into by the assessee were not available in their record will be out of place. 5.6 Ld. AR also placed reliance on the decision in the case of Pushpa R. Shah vs. ITO in ITA No.2669/Mum/2006 for assessment year 2002-03 and ....
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.... Agro Products Ltd. dated 30/4/2002 are placed, accordingly, 8000,4200 and 2800 shares were transferred in the name of the assessee on 30/4/2002. In these letters distinctive numbers of share certificates have been given. Later on, assessee obtained certificate from Shalimar Agro Products Ltd., which is dated 20/06/2007 vide which extract of Share Transfer Register and Member Register of the company was granted, copy of which has been filed at page 53 to 68 of the paper book. At page 69 to 70, copy of form of Demat is filed which is dated 5/5/2003 vide which assessee had submitted Demat of the shares of Shalimar Agro Products Ltd.and at pages 71 to 140, the details of sales of these shares are filed. At page 24 the balance sheet of the assessee as on 31/3/2003 is filed, wherein total investment is shown at Rs. 8,32,213.24. The schedule of which is filed at page 25 of the paper book. The details is as under: Name of the Company No. of Shares Amount Investment in Shares 360,540.00 ICICI Safety Bonds-2000 10,000.00 ICICI Safety Bond 2001 20,000.00 I....
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.... the assessee in the balance sheet filed with the Department in respect of A.Y 2003-04. There is no material on record to show that the return filed by the assessee showing purchases of these shares in A.Y 2003-04 has ever been disturbed by the Revenue. The Revenue has also not contradicted any of the aforementioned evidence submitted by the assessee to support the impugned transactions. Moreover, under similar facts and circumstances, one of the transactions which was added by the AO in respect of shares of M/s. Robinson Worldwide Ltd., was deleted by Ld. CIT(A) on the ground that it pertains to A.Y 2005-06 has been already deleted by the Tribunal in the case of assessee itself. The relevant portion of the Tribunal's order has already been reproduced in para 5.4 of this order. The facts of that transaction and the impugned transactions are not materially different. Therefore, the impugned transactions in the facts and circumstances of the case are covered by the aforementioned decision of the Tribunal in assessee's own case in respect of assessment year 2005-06. Respectfully following the sai....