TaxTMI 
TaxTMI 
TaxTMI 
2011 (2) TMI 1527
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....- MOTLEY SECURITIES (P) LTD 2670, Hudson Line, GTB Nagar, Delhi. Broker's Bill detail - NOTC-SAMAY/15/005 dt. 16.05.1998 Date of sale - 18.06.99 Rate and amount of sale - @ 55.50 per share 942429/- Broker's Name - JRD STOCK BROKER (P) LTD. 4866/24 Sheel Tara House, Ansari Road, Daryaganj, New Delhi. Details of Billing - No. D1-A-PC/1999013/6 dt. 26.06.1999 Mode of payment of sale - Account payee drafts. 4. The assessee submitted photocopy of the Daily Amar Ujala dated 16.05.1998 showing per share rate @ ` 4.50 in support of purchase of shares. Similarly, photocopy of Hindustan Times dated 20.05.1999 showing per share rate of ` 55.50 as on date of sale by the assessee has also been filed. Copies of contract notes, sale bills and statement of accounts for purchase as well as sale of 17000 shares of Grives Hotel Limited duly maintained the assessee has also been field before the Assessing Officer. Report dated 24.09.2004 from M/s. Joylin Jain & Associates, Company Secretaries regarding holding of 17000 shares by the assessee was also submitted. Details of the broker through whom the purchases and sales of shares were made was also filed....
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.... the broker has not changed hands. It was also not established by the AO how the alleged capital gain was the unexplained money of the Appellant irrespective of the fact that complete disclosure was made in the return of Income. On the other hand appellant has submitted the contract note of brokers, sale and purchase bills of the brokers, copies of the share certificates etc which the Assessing Officer never rebutted in order to prove they are false or untrue. The Agra Bench of Hon'ble ITAT in the case of Ashok Kumar Agarwal in ITA No. 129/Ag/2004 dated 3.4.2006 in the similar circumstances have cancelled the addition of long term capital gains on similar facts. Also, Hon'ble ITAT Agra Bench Agra on similar facts in the case of Vineet Khera and Memo Devi on 14.3.2008 and other cases have accepted such long term capital gains. Further, Hon'ble P&H High Court in the case of CIT Vs Anupam Gupta reported in 166 Taxmann 178 on similar facts and circumstances treated the Long term capital gain on the sales of Shares as genuine. The AO in the "reason to believe" as well as in the order u/s 147/143(3) has compared the facts of the present case with that of one Shri. Ashok Kumar....
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....d by the decision of Shri Ashok Kumar Agarwal or the decision of the Third Member as relied by the ld. A.R. 7. We have carefully considered the rival submissions and perused the material on record along with the orders of the Tax Authorities below. We have gone through the order of the Hon'ble Third Member in the case of ITO vs. Smt. Bibi Rani Bansal in ITA No.101/Agr/2005 for the Assessment Year 2001-02. We noted, in that case the assessee has purchased the shares and sold those shares through M/s P.K. Jain & Associates, i.e. the broker. The purchase of the shares has not been doubted by the Assessing Officer. The Assessing Officer has doubted the sale consideration which was received by the assessee through Demand Draft issued from the account of M/s. P.K. Jain & Associates. The Assessing Officer has also doubted the sale price at which the shares were sold. In that case, this Tribunal, after considering all the aspects, has held as under :- "10. I have carefully considered the rival submissions alongwith the orders of the Tax Authorities below as well as the order of my ld. colleague Members. I noted that while passing the dissent order the ld. A.M. has mainly relied on its s....
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.... has no corroborative evidence to show that the cash for drafts was received from the assessee. In the absence of any corroborative evidence his statement cannot be accepted as true on his mere ipse dixit. Shri Manoj Agarwal was not produced for cross-examination. From his statement no adverse inference can be drawn against the assessee. Shri Manoj Agarwal handed over a letter to D.D.I. (Inv) in which he stated that out of the total transactions, the transactions amounting to Rs. 100 crores were only book entries. So it follows as a necessary corollary that entire transactions were not in-genuine. He has also not named this assessee. With regard to Agarwal & Company, there are no adverse comments in the Assessment Order against the assessee. The A.O. has not said anything about the transactions entered through this broker. Whereas the assessee has produced : i) copies of sales and purchase bills; ii) share certificates and transfer letters; iii) contract notes; iv) duly transferred share certificates received from the companies; and v) affidavit. (11) There is no doubt, in such cases, the brokers become the witnesses of the department. The department has got statements ....
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....esent case, the transaction was between a member and a non-member and therefore, such transactions were not reported in the stock exchange. Further, the credit in the bank account of J is by clearance. Therefore, the allegation of the A.O. that the amount was deposited in cash has no basis. The assessee has accepted having invested her funds on the advice of her father-in-law. The burden of proving a transaction is always on the person asserting it to be bogus and this burden has to be strictly discharged by adducing legal evidence of a character, which would either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect. The assessee made payment for the purchase from her own sources through banking channel. The shares were transferred in the name of the assessee and were held by her for more than one year. There is no relationship between the party from whom the assessee purchased the shares and the party to whom these were sold. The shares were delivered after its sale and the assessee did not remain in possession of those shares. From the above facts, it is established that the assessee acquired the shares to....
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....ase is equally applicable in the case of the assessee. In the case of the assessee, purchase of the shares has duly been proved and there is no dispute on the purchase of the shares being made by the assessee. The shares were purchased in earlier year. The shares were transferred in the name of the assessee as has been confirmed by the company when enquired by the A.O. The assessee has submitted before the A.O., copies of the contract notes, copies of the sales bills, statement of account from the broker, old address of the broker, new address of the broker. The identity of the broker is proved. Purchases were not doubted by the A.O. The demand draft for the sale consideration was issued from the account of M/s. P.K. Jain & Associates i.e. brokers. The money has not been deposited in cash in this account but has come to this account by way of transfer from the account of M/s. S.G. Fincap Limited. The ld. A.M. has distinguished the decision of Ashok Kumar Lavania. On the basis of that, in Ashok Kumar Lavania's case purchase of the shares was not in dispute. While in fact in assessee's case the purchase of shares is also not in dispute but rather the company has directly confirmed to....
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....d. In almost similar circumstances, Hon'ble Calcutta High Court in the case of Eastern Commercial Enterprises (210 ITR 103) observed as under :- "At the earlier occasion he claimed all his sales to be genuine but before the Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that S is not a trustworthy witness and little value can be attached to what he stated either in his affidavit or in his cross examination by the Assessing Officer. His conduct neutralizes his value as a witness. A man indulged in double speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful." 12. Further, as noted, the statement was recorded by the DDI, Investigation Wing, Agra and not by the Assessing Officer himself. Thus, the truthfulness of the statement remained untested by the Assessing Officer. ITAT, Delhi in the case of Rajeev Agarwal (139 Taxman 170 (Mag.)) has observed as under :- "The mere reliance on the statement of third parties who were never examined by the Assessing Officer himself cannot be held to be sufficient to come to the findi....
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....ny or of the stock exchange. Under these circumstances how he can manipulate the prices is beyond one's comprehension. It is pertinent that the issue of abnormal increase in prices of the shares has come up for consideration before the ITAT, Agra Bench in the cases of Smt. Memo Devi (ITA No.396/Ag/2004 - reported as 7 DTR 158) wherein the Co-ordinate Bench observed as under :- "The assessee has no relation with the directors of the company and was in no way in the capacity to affect the market price of shares. The increase in share prices by more than 25 times too cannot be the basis to assume that the transaction was bogus. Abnormal fluctuation in share prices is a normal phenomena - the learned counsel for the assessee filed a chart showing low and high prices of some quoted shares during the 52 weeks as per Economic Times dated 27.02.2007 from which it can be seen that some shares increased even by more than 100 times." 17. In almost similar circumstances the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Anupam Kapoor (299 ITR 179) has also observed as under :- "The Tribunal was right in rejecting the appeal of the revenue by holding that the assessee was simp....
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....ciation of evidence, I noted that Assessing Officer has failed to establish that the assessee has introduced his own unaccounted money in the shape of alleged sale proceeds of shares. Hon'ble Supreme Court in the case of Kishan Chand Chellaram vs. CIT reported in 125 ITR 713 (SC) has observed that "the amount cannot be assessed as undisclosed income of assessee in the absence of positive material brought by the Revenue to prove that the amount in fact belonged to assessee as the burden lay on the Revenue. 19. In almost similar circumstances the ITAT, Delhi 'C' Bench in the case of ITO vs. Naveen Gupta (5 SOT 94), copy of which is placed by ld. A.R., has observed as under :- "Nevertheless, it is also noteworthy that the A.O. has failed to establish that in lieu of the aforesaid sale proceeds, the assessee has surreptitiously introduced his unaccounted money in the bank account. After having perused the entire material that is available on record, there is no averment, much less any evidence, with the Revenue in this regard. While there may be enough grounds with the AO to carry out the impugned verification exercise to test the efficacy of the transactions resulting in long term....
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....ction was between a member and a non-member and therefore, such transactions were not reported in the stock exchange. Further, the credit in the bank account of Shri J.K. Jain is by clearance. Therefore, the allegation of the AO that the amount was deposited in cash has no basis. The assessee has accepted having invested her funds on the advice of her father-in-law. The burden of proving a transaction is always on the person asserting it to be bogus and this burden has to be strictly discharged by adducing legal evidence of a character which would either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect." 21. I have also gone through various other decisions on similar issue under the similar facts and I noted that this Tribunal had consistently accepted the genuineness of the share transaction. Those cases are as under :- ITO vs. Sunita Gupta - ITA No.881/Del/2004 (Delhi Bench 'SMC') Dilip Gargh vs. ITO - ITA No.470/Agr/2004 Gopal Prasad Agarwal vs. ACIT - ITA No.128/Agr/2004 22. I also noted that the case of the assessee is duly covered by the decision of the Third Member in the case of Smt. Suni....
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....e witness of the Department, the onus was therefore on the Department to produce him and make him available for cross-examination by the assessee. Similarly, the evidence that the companies were not in existence at the address available with the Department does not detract from the assessee's claim in view of the documents available on record. The discrepancy in the amounts to the expenditure of Rs. 53,356 was because of consistent statement by the assessee that the share broker made a short payment and disputed the remaining amount. The Department has thus proceeded entirely on suspicion and surmises if seen in the light of the orders of the Tribunal. The claim of the assessee in regard to the first issue is to be allowed." 23. Thus, in view of the aforesaid discussions, the decisions of the third member, the decisions of the coordinate benches, totality of the facts and circumstances and evidence on record, I am of the considered view that the action of the CIT(A) was not correct in confirming the assessment of Rs. 12,19,538/- as the income from undisclosed sources as against the sale consideration of shares declared by the assessee. The CIT(A) was not justified in rejecting th....