AI Drafter 
TaxTMI 
TaxTMI 
2015 (10) TMI 317
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....he information received from Intelligence Authorities and also that the assessee failed to furnish evidence in support of purchase date of shares." 4. As could be seen, the only issue raised by the department is with regard to assessee's claim of exemption u/s 10(38) on long term capital gain from sale of shares amounting to Rs. 16,03,050. 5. Briefly the facts are, assessee an individual derives income from partnership business as well as trading in shares, derivatives and commodities. For the year under consideration, assessee filed his return of income on 01/10/08, declaring total income of Rs. 1,00,017. Subsequently, assessee filed revised return of income on 30/09/09 declaring income of Rs. 14,92,010. Assessment in case of assessee was originally completed u/s 143(3) of the Act on 31/12/10 accepting the income returned. Subsequently, on the basis of certain information available with regard to the genuineness of the share transactions carried on by assessee through one of the broker, assessment was reopened u/s 147 of the Act. During the reassessment proceeding, AO found that one Shri Mukesh Choksi had created certain fictitious companies for providing bogus accommodative....
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....ause notice issued. e) The entire addition proposed in the show cause letter dated 27/01/2014 is totally contrary to the facts and evidence on the records and the additions are proposed to be made merely on Investigation Report, a copy of which was not made available to the assessee. " AO after considering the submissions of assessee, however, noted that as per the details of purchase and sale of shares, it was found that only the shares of M/s Jai Corporation Ltd. were transacted through M/s Alliance Intermediateries & Network Pvt. Ltd. and assessee derived long term capital gain of Rs. 22,19,093. However, on verification of D-mat account of assessee, it was found that opening balance of shares of M/s Jai Corporation Ltd. for the year is "O" and 1000 shares were credited to D-mat account of assessee on 15/05/07 and another 250 shares were credited on 17/05/07. The said shares of M/s Jai Corporation Ltd. were sold on 16th and 17th May, 07 respectively. Thus, AO noted that as per the information revealed from the D-mat Account sale proceeds of the shares of M/s Jai Corporation Ltd. gives rise to short term capital gain. Though, assessee produced a certificate from M/s Alliance....
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....sale of shares amounting to Rs. 82,613 as short term capital gain. Further, AO observed that assessee has not declared the source of purchase of shares of M/s Jai Corporation Ltd. as on 15th and 17th May, 07, on which dates the shares were transferred to assessee's D-mat Account. He, therefore, opined that the investment made has to be treated as unexplained investment u/s 69A of the Act. By considering the market price of the shares as on 15th and 17th May, 07, as obtained from NSE Website, he treated the amount of Rs. 22,94,500 as unexplained income. Accordingly, he completed the assessment. Being aggrieved of the assessment order so passed, assessee preferred appeal before ld. CIT(A). 6. In course of hearing before ld. CIT(A), assessee reiterating the submissions made before AO contended that when documentary evidences in the form of contract notes towards purchase of shares were furnished before AO, he was completely wrong in holding the transactions as short time capital gain by considering the date of purchase of shares as 15th and 17/0507. It was submitted by assessee, purchase of shares of M/s Jai Corporation Ltd were reflected by assessee in the final accounts forming p....
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....n the basis of material evidences submitted before him, ld. CIT(A) observed, AO's conclusion that purchases of shares of M/s Jai Corporation Ltd. were made only on 15th and 17/05/07 cannot be accepted. As far as observation of AO that assessee could not explain the purchase of shares on 15th and 17/05/07 while making addition of Rs. 22,954,500, ld. CIT(A) observed that there is no evidence to show that assessee has paid cash equivalent to the amount of Rs. 22,94,500 on the date of transfer to D-mat account. Thus, ld. CIT(A) finding that assessee has shown the investment in shares of M/s Jai Corporation Ltd. in its account for AY 2007-08, which has not been disputed by AO, ultimately, held that the gain derived from transaction in shares cannot be treated as short term capital gain. Consequently, he also held that the conclusion drawn by AO that source of investment in shares on 15th nd 17/05/07 was not explained by assessee while making addition u/s 69A cannot be sustained. Accordingly, he deleted the addition made u/s 69A of the Act. 8. Ld. DR, more or less, relying upon the observations made by AO in the assessment order, submitted, AO in course of assessment proceeding has en....
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....elieve the same as shares were sold through the same broker ultimately. In this context, ld. AR referred to the contract note of purchase of shares, receipts of cash payments towards purchase value of shares, entries made in cash book of assessee as well as partnership firm showing withdrawal of cash for purchase of shares. Ld. AR submitted, when assessee has brought the entire evidence on record to show that shares in fact were purchased and held by assessee for more than a period of 12 months, AO merely on the basis that such shares were transferred to D-mat account on 15th and 17/05/07 treated the gain derived from shares as short term capital gain. In support of such contention, assessee relied on the following decisions: 1. CIT Vs. Shyam R. Pawar, [2015] 54 taxmann.com 108 (Bom.) 2. Jafferali K. Rattonsey, [2012] 23 taxmann.com 21 (Mum.) 3. Smt. Jimit R. Shah Vs. ITO, ITA No. 3643/Mum/07, dt. 05/01/10. 4. Shri Paresh M. Kariya (HUF), Vs. ACIT, ITA No. 7023/Mum/10, dt. 13/05/15. 10. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. We have also carefully gone through the decisions....
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.... Ltd. on 04/04/06 through proper procedure after payment of service tax and security transaction tax. Thus, as far as assessee's claim of purchase of shares of M/s Jai Corporation Ltd. through M/s Alliance Intermediateries & Network Pvt. Ltd. is concerned, it has been proved through documentary evidence brought on record. Though, it may be a fact that the shares of M/s Jai Corporation Ltd. were transferred to assessee's D-mat account on 15 & 17/05/07, but, that alone cannot dilute the fact that assessee did purchase shares of M/s Jai Corporation through M/s Alliance Intermediateries & Network Pvt. Ltd. in April'06. This fact has been clearly demonstrated by assessee by producing adequate and cogent documentary evidences by way of contract note and other evidences including the return of income filed for AY 2007-08, which has not been controverted by the department. It is also a fact on record that sub-broker M/s Alliance Intermediateries & Network Pvt. Ltd. issued confirmation certificates acknowledging the fact that shares were held in its pool account on behalf of assessee till it is transferred to assessee's D-mat account. When assessee has produced all documentary evidences and....