AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (5) TMI 865
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....-tax return declaring an income of Rs. 15,16,700/- which has included an income shown under the head long-term capital gain. The working of the capital gain was submitted before the AO as under:- "Sales consideration received Date 06.05.2003 Rs.15,93,625/- Less :- Cost of acquisition Date - 08.03.2002. Rs. 1,19,705/- LONG TERM CAPITAL GAIN Rs.14,73,919/-" 2.1. The capital gain was out of the purchase and sales of shares. Therefore, the assessee has furnished the purchase and sales bills of the share transaction. It was noted by the AO that the assessee had purchased 27500 shares of Sarang Chemicals through a share broker; viz. G.R.Pandya Share Broking Ltd. vide a Bill dated 08/03/2002. The cost of share was stated to be @ Rs. 4.35 per share. Later on, shares were sold through a share broker namely Sanjay R.Shah as bill dated 06/05/2003 @Rs.57.95. To verify the genuineness of the transaction, the AO had issued notices u/s.133(6) of the Act to the said brokers. In response, one of the broker, namely Shri G.R.Pandya vide a letter has denied the transaction. He has written to the AO that no transaction was done nor any bill was issued. Likewise, the other broker Sh....
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....n 31.3.2003. Subsequently as required by the law in force the shares were dematerialized through ICICI bank Ltd. in the name of assessee. For your verification and record purpose we are furnishing photo state copy if relevant demat account and delivery slips. 4. In view to liquidate money assessee decided to offload its holding of equity shares of Sarang chemicals Ltd. on 6.5.2003 at prevailing market price of the shares in Ahmedabad stock exchange. In view if this, conclusion arrive by you that the transactions were not genuine is not correct. 5. Entire transaction were effected through the stock broker attached with stock exchanges, Relevant bills and contract note already being furnished to your good self Proceeds were received by account payee draft from the broker through whom we have sold these shares. 6. In view of the submission made here in before, the transactions effected by the assessee were fully genuine and accordingly gains were offered for taxation. Sir, it may be possible that the share broker of the assessee might have transacted the deal off market i.e. directly party to party. 7. In view of the above, your Honour is requested not to draw any adverse ....
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....xchange Ltd., the price quotation of transaction of Sarang Chemicals Ltd. was as per the price reported in the Stock Exchange. The price as per Stock Exchange of Sarang Chemicals Ltd. as on 06/05/2003 was shown as open rate at Rs. 58 and close rate was shown at Rs. 40/-. The assessee has also gathered the information in respect of the price of the share in the month April-2003. According to ld.AR, the share broker Shri Sanjay R.Shah has duly certified the sale of shares of Sarang Chemicals Ltd. at the rate of Rs. 57.95 vide Bill dated 6/5/2003 which was also signed by the said broker. The ld.AR has vehemently placed reliance on a letter issued by share transfer agent namely suburban System Services dated 10/03/2003. The certificate was issued in respect of Unit Sarang Chemicals Ltd." which reads as under:- "UNIT : SARANG CHEMICALS LIMITED DEAR SIR(S)/MADAM YOUR RQUEST FOR TRNASFER OF THE BELOW MENTIONED SHARES HAS BEEN APPROVED. YOU WISH TO HOLD THESE SHARES IN THE DEMATERILISED FORM, YOU MAY SEND THIS LETTER ALONGWITH THE DEMATERIALISATION REQUEST FORM THROUGH YOUR DEPOSITORY PARTICIPANT WITH WHOM YOU HAVE OPENED A DEPOSITORY ACCOUNT. IF THE DEMATERIALISATION REQUEST IS N....
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....alf of the investors. In case the transactions take place directly between the parties and not through stock exchanges the date of contract of sale as declared by the parties shall be treated as the date of transfer provided it is followed up by actual delivery of shares and the transfer deeds." 3.2. Reliance has also been placed on certain decisions; namly - 1. Manojkumar Sarawagi HUF ITA Nos.3233 & 3156/Ahd/2010 - AY 2007-08 (ITAT "A" Bench Ahmedabad order dated 16.3.2012) 2. Kantadevi Sarawagi ITA Nos.3232 & 3157/Ahd/2010 - AY 2007-08 (ITAT "C" Bench Ahmedabad order dated 14.10.2011) 3. Smt.Vimalrani Biharilal Batra ITA No.7662/Ahd/2009 for A.Y. 2005-06 (ITAT "D" Bench order dated 16.9.2011) 4. Smt.Kanta Gopal ITA No.1858/Ahd/2005 for A.Y. (ITAT "C" Bench Ahmedabad order dated 23/09/2009) 5. Shri Prakashchand S.Sandh ITA No.3270/Ahd/2009 for A.Y. 2005-06 (ITAT "D" Bench Ahmedabad order dated 24/02/2009) 6. Shri Sanjay K.Agarwal ITA No.3142/Ahd/2007 (ITAT "C" Bench Ahmedabad for AY 2003-04 order dated 12/02/2010 4. From the side of the Revenue, ld.Sr.DR Mr.Rajesh Kumar has vehemently supported the view taken by the Reven....
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....st assessment year had duly disclosed in the balance-sheet the purchase of those shares. Although, it was an off market transaction but it was properly documented and duly supported by relevant evidences. We have examined few case-laws, wherein the Respected Co-ordinate Benches have also taken a view that once the purchase of shares have duly been recorded in the balance-sheet in one financial year and later on, those very shares have been sold in another financial year, then the purchase of shares should not have been doubted, if duly recognized by the said company and later on transacted through banking channel. To keep brevity in mind, we are not discussing all those case-laws or cited decision of the tribunal, wherein almost on identical facts when the purchases were doubted by the Revenue Department, but considering the totality of the facts and circumstances of the case a conscious view have been taken that once the shares were in respect of a listed company and transaction was through Demat account which was as per the recognized Stock Exchange quoted price, then there was no reason to hold such nature of transaction as non-genuine. Respectfully following these decisions and....