TaxTMI 
TaxTMI 
TaxTMI 
2010 (6) TMI 769
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.... term capital asset in residential house. d) Addition of Rs. 1,89,000/- u/s. 69C on account of low withdrawals be deleted." 3. During argument the assessee did not press for ground No. a) with reference to initiation of assessment proceedings under section 148. Accordingly the ground is treated as withdrawn. Ground Nos. b) and c) pertain to the claim of long term capital gain and consequent investment in residential house claimed by the assessee being treated as income from other source and any other deduction thereon. 4. Briefly stated, the assessee has shown long term capital gains on sale of 25,00,000 shares of Bolton Properties Ltd. for Rs. 31,42,150/-, which was acquired on 17.04.2000 for cost of Rs. 83,000/-. The total gains of Rs. 30,55,061/- arising there from was claimed exempt under section 54F in view of the purchase of new residential premises. The A.O., on enquiry in the A.Y. 2003-04, found that the assessee has not purchased shares of M/s. Bolton Properties Ltd. on 17.04.2000 and accordingly the sale was considered not genuine. For the reasons discussed in A.Y. 2003-04 the assessment for this year was reopened and on the same reasons as was done in A.Y. 2003-4 the ....
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....e with assessee's contention and confirmed the action of the A.O. 5. Before us the learned counsel referred to the paper book filed in this regard and submitted that the assessee has purchased 30,000 shares of M/s. Bolton Properties Ltd. through M/s. Bubna Share Broking Services Ltd., which is an off market transaction and the purchases have been adjusted with the sale of DSQ Software which the assessee was holding earlier and in support furnished necessary contract notes with share numbers, etc. It was submitted that these purchase transactions were also reported to the Stock Exchange but the assessee is not able to furnish the evidences. However, the assessee also furnished the share transfer deed in favour of the assessee and allotment of block share certificate with the seal of the company dated 25.01.2001 and further demat request dated 21.12.2001 which was accepted and shares were dematerialised. Later all these shares were sold in 3 lots, of 25,000 shares this year and 5,000 shares in the next year. The learned counsel also referred to the confirmations given by the M/s. Bubna Share Broking Services Ltd. to the ITO directly and also the necessary client registration for....
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....ideration on shares and profits was not considered as long term capital gains. He referred to the report of the paper and order of the A.O. to submit that the assessee nowhere was involved in any of the transactions which the Department relied upon and since the assessee has purchased shares and transferred them through the Stock Exchange at the relevant point of time and necessary evidences have been furnished the same is to be considered as genuine transaction. The learned DR however submitted the modus operandi and how some persons converted their black money to capital gains at nil or less tax. He supported the orders of the authorities. 6. We have considered the issue and relevant documents and orders of the authorities. As seen from the order of the A.O. it was mostly guided by the reports of hawala transactions in various newspapers during March 2006. It is to be noted that there can be hawala transactions and that too in manipulating shares towards obtaining long term capital gains. However, it is noticed that these reports have arisen in March 2006 whereas the assessee has purchased the shares in April 2000 and sold them during 2000-2001. There are evidences that the asse....
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....ding for a period of more than 12 months. Therefore the gain on the sale of shares is to be considered as long term capital gains. There is no reason as to why the above transactions should be considered as bogus. The A.O. has relied on the investigation carried on by the Investigation Wing and the newspaper reports. there is nothing in the form of evidence which relates the assessee. The A.O. has not brought any material on record to substantiate that the shares purchased or sold by the assessee were also part of the bogus capital gain deals reported by the Investigation team. The assessee however furnished all the necessary evidences to substantiate the transactions as genuine and AO's enquiries also confirm the same. 8. In these circumstances, it is to be concluded that the addition has been made by the A.O. without any basis and merely on conjectures and surmises. We also noticed that the learned CIT(A), while confirming the case of the A.O., has referred to certain details not furnished such as purchase and sale of M/s DSQ Software which was squared of against the purchase of the shares of M/s Bolton Properties Ltd. and also the fact that the ultimate buyers of the shares....
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.... living in Mumbai the A.O. estimated the expenditure at Rs. 100/- per day per person to Rs. 2,16,000/- and further education expenses at Rs. 20,000/- and another Rs. 20,000/- for rent, society maintenance, telephone expenses, etc. Considering these an addition of Rs. 1,89,000/- was made as unexplained expenses. The same was confirmed by the CIT(A). After considering the arguments of the learned counsel and the order of the A.O. we are of the opinion that this issue requires reconsideration by the A.O. It is a fact that the assessee has shown only Rs. 60,000/- expenditure of the household expenses but about the specific nature of expenditure and the standard of living, the assessee has not furnished any details. It is not on record whether the assessee was having own house prior to the purchase of the house and the amount of rent paid to that house. It is also not shown what are the expenditures incurred by the assessee and the source thereof. The capital account of the assessee seems to have not been examined by the A.O. in detail, whether there any investments in LIC etc. were also require examination. Unless, the assessee comes forward and furnishes the expenditure of personal na....
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....l gain arising to the assessee. In the instant case, total capital gain arisen to the assessee in all the three years 1995-96 to 1997-98 was less than the cost of flat. Further, from the language of section 54F it is clear that the Legislature has provided leverage to the assessee for claiming deduction under section 54F in the sense that the assessee can buy the property first and claim deduction later on, i.e., within one year or can have capital gain first and can claim deduction within two years by purchasing the residential flat. In all the assessment years, these conditions were satisfied. Therefore, in respect of residential property till cost of purchase of property is exhausted by the claim of the capital gain but remaining in the time-frame stipulated in section 54F, deduction under section cannot be denied. If the assessee falls out of the time-limit in section 54F then probably department can have a case. The Commissioner (Appeals) dismissed the appeal of the assessee by interpreting sub-section (4) by holding that the assessee had not appropriated the sale consideration towards purchase of flat, but the Commissioner (Appeals) had ignored the main provisions of section ....