TaxTMI 
TaxTMI 
2016 (12) TMI 1074
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....artnership firm. The assessee filed the profit and loss account and balance sheet during the course of assessment proceedings before the ld AO. The ld AO observed that the assessee had Long Term Capital Gains (LTCG) on stocks and securities (including units of mutual funds) amounting to Rs. 13,13,482/- besides Short Term Capital Gain (STCG) of Rs. 90,349/-. The assessee claimed LTCG of Rs. 13,13,482/- as exempt. The ld AO observed that the assessee had capital gains from shares of reputed companies such as Reliance Industries Ltd, ICICI Bank, IOC, IBP etc and on units of mutual funds except from sale of shares of G.K.Consultants Ltd. The assessee claimed to have purchased 3000 shares of G.K.Consultants Ltd on 6.6.2003 @ Rs. 3.77 per share for Rs. 11,310/- in cash. He sold these shares on 23.3.2005 for Rs. 218.50 per share in the secondary market through a recognized stock broker Mr Rajendra Prasad Shah, member of Calcutta Stock Exchange Ltd. The ld AO observed that the assessee had entered into transactions with Ms. Satco Securities & Financial Services Ltd, Member Stock Exchange, Mumbai and M/s C.D.Equi Search Pvt Ltd, Member Stock Exchange , Mumbai for sale and purchase of shares....
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....d rule and SEBI guidelines. l) The assessee was asked to explain as to why the shares of G.K.Consultants Ltd were sent for dematerialization only in Feb 2005 while he had purchased the shares in June 2003. Th assessee was also asked to furnish the details as to when these shares in physical form were transferred in his name and evidences of such transfer. m) The assessee produced the contract note for sale of 3000 shares in G.K.Consultants Ltd on 23.3.2005 vide Trade No. 1586 at Rs. 218.90 per share, the net sale proceeds after brokerage was Rs. 6,56,040/-. Securities Transaction Tax (STT) of Rs. 493/- was also deducted by the broker. n) The contract note was sent by the ld AO to the Calcutta Stock Exchange for verification of the transaction. The Calcutta Stock Exchange Ltd vide its letter no. CSE/MSD/ITAX/0711/2670 dated 12.11.2007 replied that "No trade was done vide trade No. 1586". The assessee was shown the reply of CSE and show caused as to why the LTCG of Rs. 6,44,170/- claimed by him on sale of shares of G.K.Consultants Ltd should not be treated as income from undisclosed sources, since no transaction was made vide Trade No. 1586 as confirmed by CSE. 2.3. The a....
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....Ltd. It was also argued that the assessee was a regular investor and about 95% of his shareholding were in demat form. Only 5% of the shares were held in physical form. The shares of G.K.Consultants Ltd were received in physical form in the name of the assessee and was kept along with other shares in physical form and hence escaped attention of the assessee. This resulted into delay in sending those shares for demat. The Xerox copies of transfer letter of shares of G.K.Consultants Ltd along with request letter were enclosed by the assessee. Further it was stated that the assessee had three demat accounts - one in his name jointly with his wife, one in his name jointly with his son and one in his single name with Citibank Account No. 10398306. Since the shares of M/s G.K.Consultants Ltd were purchased in single name, they were dematted in Demat Account Number 10398306 with Citibank. The ld AO 's contention that this demat account was opened only for the shares of G.K.Consultants Ltd was not correct as the assessee was also holding some other shares in his single name and hence the account was opened in Sept 2003. The shares of Reliance Industries Ltd and Organo Ltd were dematerializ....
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....tock exchange with due suffering of STT and which are also duly covered by the requisite documentation, the LTCG so derived thereon could not be doubted with. It would be the responsibility of the broker to ensure that the transaction is properly routed and STT was paid as per stock exchange norms. It was also stated that in the secondary market transactions, no one knows who is the buyer and who is the seller of the shares. The assessee also placed reliance on the following decisions in support of his various contentions :- Decision of Mumbai Tribunal in the case of Mukesh R Marola vs ACIT reported in (2006) 6 SOT 247 (Mum) Decision of Hon'ble Calcutta High Court in the case of CIT vs Carbo Industrial Holdings Ltd reported in 244 ITR 422 (Cal) Decision of Hon'ble Calcuttta High Court in the case of CIT vs Emerald Commercial Ltd reported in 250 ITR 539 (Cal) 2.6. The ld CITA ignored all the contentions of the assessee together with the case laws relied upon by the assessee and upheld the action of the ld AO by reiterating the findings of the ld AO. Aggrieved, the assessee is in appeal before us on the following ground no.1 :- "1. For that on t....
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....8. In response to this, the ld DR apart from reiterating the findings of the lower authorities stated that the SEBI had blacklisted the broker and made a general statement that the subject mentioned transaction was part of a scam popularly known in Kolkata as Penny Stock scam. He sought time from the bench for production of evidence in this regard and accordingly the case was adjourned and kept as part heard. But in the subsequent hearing, he could not produce any evidence in the form of SEBI order wherein the concerned broker was suspended or the concerned scrip was suspended from trading either for artificial price rigging or for any other violations as alleged by the ld DR. 2.9. We have heard the rival submissions and perused the materials available on record including the paper book comprising of pages 1 to 32 filed by the assessee containing the relevant documents on the subject mentioned issue. At the outset, we find that the ld DR made a bald statement that the subject mentioned transaction was part of penny stock scam that cropped up in Kolkata in connivance with CSE ,wherein some brokers and certain scrip were suspended by SEBI, for which he sought time to produce evide....
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.... f) STT had been duly suffered on the sale transaction in the sum of Rs. 493/-. g) The Broker had confirmed the purchase and sale transactions before the ld AO by furnishing a letter in writing in response to summons issued to him u/s 131 of the Act. 2.9.2. We find that just because the broker does not appear before the ld AO in response to the summons u/s 131 of the Act , but had furnished the requisite details called for thereon, it cannot be automatically concluded that the transaction of the assessee with that broker as bogus and sham and assessee cannot be faulted with for the same. The statute provides unfettered powers to the ld AO for taking action for non-appearance of a person in response to summons u/s 131 of the Act which could have been exercised by the ld AO in the instant case instead of drawing an adverse inference on the transactions of the assessee. In this regard, we find that the reliance placed by the ld AR on the decision of the Hon'ble Calcutta High Court in the case of CIT vs Cargo Industrial Holdings Ltd reported in (2001) 244 ITR 422 (Cal) is very well founded wherein it was held that :- "Perusal of the details furnished revealed ....
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....ilar issue had been adjudicated by the co-ordinate bench of this tribunal in the case of DCIT vs Sunita Khemka in ITA Nos. 714 to 718/Kol/2011 dated 28.10.2015 and in the case of ITO vs Rajkumar Agarwal in ITA No. 1330 (Kol) of 2007 dated 10.8.2007 wherein it was held that when purchase and sale of shares were supported by proper contract notes , deliveries of shares were received through demat accounts maintained with various agencies, the shares were purchased and sold through recognized broker and the sale considerations were received by account payee cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG. We find that in the instant case, the addition has been made only on the basis of the suspicion that the difference in purchase and sale price of these shares is unusually high. The revenue had not brought any material on record to support its finding that there has been collusion / connivance between the broker and the assessee for the introduction of its unaccounted money. 2.9.6. In view of the aforesaid facts and findings and the judicial precedents relied upon , we have no hesitation in directing the ld AO to accept the c....
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....dings, wherein, the ld AO concluded that there was no proper explanation given by the assessee with regard to the occasion to give the gift by the donor and accordingly concluded again that it was a bogus gift. It was submitted before the ld CITA that the donor had sufficient capacity to give the gift of 10000 USD to the assessee in as much as the value of the immovable property of the donor was USD 506200 thereby proving the creditworthiness beyond doubt apart from other statutory documents as stated supra. With regard to the letter issued by the donor dated 6.1.2005, whereas the Notary Public USA had mentioned the date as 1.6.2005 and the date put on official seal was 3.3.2006, the assessee clarified that the date mentioned as 1.6.2005 represents the American date which is quite prevalent in USA and is different from the Indian system of recognizing dates and the same should be read as 6th Jan 2005 and not 1st June 2005. The date mentioned in the official seal as 3.3.2006 represents the expiry date of the licence of the Notary Public. Hence there was no discrepancy with regard to the dates warranting drawing of any adverse inference on the subject mentioned document. The assessee....