TaxTMI 
TaxTMI 
2016 (1) TMI 603
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....ly issue before us is the action of the Assessing Officer of making addition of Rs. 16,15,188/- invoking provisions of section 68 of the Act. Assessing Officer has discussed the issue in pages 2 to 5 of the assessment order. The facts leading to this addition were that the total Long Term Capital Gain included an amount of Rs. 15,49,226/- earned on sale of shares of M/s. Shuti Construction. The Assessing Officer found that 150000 shares were purchased on 31.07.2003 for an amount of Rs. 65,961/-. These shares were sold on 15.12.2004 for a total consideration of Rs. 16,15,188/-. During assessment proceedings, the A.O asked appellant to furnish following details: - "It is seen from the Audit Report and the annexures flied along with the return of income with regard to Long-term Capital Gains: a) It is seen that you have purchased 150000 shares of M/s. Shukun Construction. The total purchase price claimed to be paid was Rs. 65,961.33/-. It is therefore ascertain that all such shares were allegedly sold on 15.12.2004 [Date of purchase : 31.07.2003] for an amount of Rs. 16,15,188.30 resulted into Long-term capital gains. You have claimed the net sales consideration as Long-term capit....
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....already submitted and we have not received any dividend or balance sheet and profit and loss account of the company." 5. The Assessing Officer noticed that the shares were kept with the broker before its splitting into 150000 shares of value of Rs. 1/- per share. Purchases were made in cash in support of which only cash vouchers and journal entry in the books of accounts of assessee and broker's note were submitted. The Assessing Officer noted that the shares were dematerialized and credited in demat account of assessee only in the month of November, 2004, just one month before the sale of such shares. The Assessing Officer asked the assessee to explain how the purchase price per share of Rs. 0.13 escalated upto Rs. 10.76 per share in a short period of 17 months. According to the Assessing Officer, assessee failed to furnish the Balance Sheet and Profit & Loss Account of M/s. Shukun Construction, shares of which were purchased and sold by the assessee. The Assessing Officer asked the assessee to substantiate the fact that shares were actually purchased in July, 2003. Assessing Officer also asked assessee to submit proof of physical shares allotted to him and to furnish the evidenc....
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....oker, demat statement of the assessee etc. The learned A.R. for the assessee explained in detail from purchase of shares till sale of shares. Assessee filed contract notes issued by broker from whom shares were purchased, ledger account of assessee in the books of share broker for the relevant financial year, copies of receipt issued by broker, copy of ledger account of M/s. Shukun Construction, and broker in the books of assessee, copies of computation and balance sheet filed with return of income for A.Y. 2004-05 reflecting the shares and various other details. On the basis of details/evidences filed, the learned A.R. for the assessee prayed that the addition made by the Assessing Officer has rightly been deleted by the CIT(A), same should be upheld. 7. We find that facts of the case as under: - "15000 shares purchased of "M/s. Shukum Construction" - Shukun Construction : Listed in B.S.E - Date of purchase : 31-7-2003 - Cost of purchase : Rs. 65,916/- - Mode of payment : Cash - Purchased through : M/s. T.H. Vakil Shares and Securities P. Ltd. - Copies of Bills/contract note : filed with A.O. - Payment vouchers - Split of shares (1x10) : 1,50,000- October ....
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....turn of income for A.Y. 2004-05, in which shares of M/s. Shukun Construction, were shown under the head 'investment in shares and debentures'. 9. It is not in dispute that during assessment proceedings these documents were filed by the assessee. However, Assessing Officer did not make any addition in respect of purchase of shares. During appellate proceedings assessee also filed additional evidences. These additional evidences were relating to the purchase part of the transaction. Since, Assessing Officer did not make any addition on account of purchases i.e. investment made in purchase of share, therefore, these additional evidences were not forwarded to Assessing Officer for his comments. Assessee also filed before Assessing Officer, at relevant point of time, copy of demat statement of the assessee in which 150000 shares were credited to assessee's demat account on 22nd November, 2004. This demat account establishes the fact of ownership of the assessee of 150000 shares of M/s. Shukun Construction, as on 22nd November, 2004. No addition was made by the Assessing Officer on account of purchase consideration. The only addition made by Assessing Officer was in respect ....