TaxTMI 
TaxTMI 
2011 (3) TMI 1737
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....pany. The shares were purchased through North Indian Securities Pvt. Ltd. The payment was received through demand draft. During the year under consideration, the assessee-HUF purchased 35000 shares of Suma Finance & Investment Ltd. on 07.06.2000 for a sum of Rs. 1,17,985/- through North India Securities Pvt. Ltd., a registered broker. Copy of broker's note was filed. The shares were got transferred in the name of HUF on 30.06.2000. Copy of transfer letter from the companies was also enclosed. The HUF has sold these shares in October and November, 2001. Out of total 35000 shares, 2000 shares were sold on 04.10.2001 for a sum of Rs. 12,95,800/- and 15000 shares were sold on 14.11.2001 for Rs. 12,56,850/- through Agarwal and Company. Copy of broker's note and bill were duly filed. The assessee claimed deduction u/s. 54E. The Assessing Officer was not satisfied with the explanation of the assessee and, therefore, he treated the long-term capital gains shown by the assessee to be the income from other sources by holding that the assessee could not prove the sale of shares and genuineness of the receipt of money. The assessee went in appeal before the CIT(A). The CIT(A) deleted the addit....
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.... 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 separate order passed in the case of Shri Baijnath Agarwal (ITA No.133/Agr/2005). I have gone through the order of Shri Baijnath Agarwal and noted that in his dissent order in that case the ld. A.M. has relied on the decision of Shri Ashok Kumar Lavania (ITA No.112/Agr/2004). I have gone through the decision of Shri Ashok Kumar Lavania in ITA No.112/Agr/2004 which was decided by the Bench constituting of same ld. J.M. and ld. A.M. vis-à-vis the facts of the case of the assessee. In that case also the transaction of sales has not been accepted by the A.O. as he doubted the sale prices and also relied on the statement of Shri Ashok Gupta, Director of M/s. JRD Stock Brokers Pvt. Ltd. who stated that as a matter of fact there was no actual purchase and sale of shares as was reflected in the contract notes issued by M/s. JRD Stock Brokers Pvt. Ltd. to the beneficiaries. In that case the assessee claimed Long Term Capital Gain of Rs. 25,14,770/- and claimed exemption under section 54EA of the Act. Th....
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....ificates 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 of these brokers which are used against the assessee. Irrespective of the fact that the statements were recorded at the back of the assessee and that the assessee was or was not afforded opportunity for cross-examination, when overwhelming documentary evidences are produced by the assessee, the burden shifts on the Revenue to explain away them. Every time the statements cannot help the department. How the above mentioned evidences could be ignored ? The Revenue has to give reasons for rejecting them. These are important documents, some of them arise under the provisions of the Companies Act. The brokers were never confronted with the evidences produced by the assessee. The apparent has to be treated as a real unless proved otherwise. Long ago Hon'ble Supreme Court has laid this law while rendering the celebrated decision in the case of CIT Vs. Daulat Ram Rawatmal (1964) 53 ITR 574 (SC). The assessee has countered the statements of brokers by way of his duly sworn-in affidavit. We have examined ....
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.... 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 earn profit. There is no evidence except speculation that this profit is not from the sale of shares. The A.O. has failed to establish his case and to discharge the requisite burden cast on him. The Authorised Representative has filed the requisite quotation of 18th July, 1996 along with the requisite proof of transactions of 9000 shares along with transfer of share certificate. Therefore, in the given facts and circumstances of the case, the CIT(A) has correctly come to the conclusion that the assessee has dealt in these shares and these transactions cannot be held bogus. The deletion of addition of Rs. 4,99,062/- is confirmed." (13) The above decision clearly helps the case of the assessee. (14) Credence cannot be given to the statements of the persons who themselves admit and have dubious dealings as against the documentary evidences produced by the assessee. (15) Moreover, when purchases have not been doubted or disputed by the Revenue in this case, the decision of Hon'ble Punjab & H....
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....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 the A.O. the purchase of the shares by the assessee in reply to the notice issued under section 133(6). The ld. A.M. was also the party to that decision. I noted that in this case the A.O. has doubted the sale consideration because the share price has increased tremendously. I noted that in the case of Ashok Kumar Lavania also the assessee has purchased the share @ Rs. 4/- per share and sold @ Rs. 65/- to 84/- per share. In that case also the broker has not accepted the transaction but on the basis of the evidence the Tribunal has accepted the transaction to be genuine one as there was no corroborative evidence to support the statement of the broker. In this case, I noted that the statements of the broker couldn't be given any credence as he has stated differently vide different letters. Earlier he denied the transaction being entered into. Subsequently he has accepted that he has issued the draft after receiving the cash. Again he said that the cash was routed through some bogus account but h....
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....) 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 finding that the transaction was not genuine and more so when there are other material and evidences to support the transaction." 13. Hon'ble Delhi High Court in the case of CIT Vs. SMC Share Brokers Ltd (288 ITR 345) also observed as under :- "There is no doubt that the statement of Manoj Agarwal had evidentiary value but weight could not be given to it in proceedings against the assessee without it being tested under cross-examination. In the absence of statement being tested, it cannot be said that it should be believed completely to the prejudice of assessee." 14. Under these facts, I am of the opinion that the case of the assessee is duly covered by the Division Bench of this Tribunal in the case of Ashok Kumar Lavania in ITA No.112/Agr/2004 which has been decided by the Bench constituting of the same very learned Members. Judicial discipline demands that on the similar facts the Bench is bound to follow its earlier decisions. The principles of judicial discipline require that the order o....
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....igh 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 simply a shareholder of the company. He had made the investment in a company in which he was neither a director nor was he in control of the company. The assessee had taken shares from the market, the shares were listed and the transaction took place through a registered broker of the stock exchange. There was no material before the AO, which could have lead to a conclusion that the transaction was simpliciter a device to camouflage activities to defraud the Revenue. No such presumption could be drawn by the AO, merely on surmises and conjectures." 18. In the stock Exchange when the transaction is entered into, the assessee is not aware of about the buyer of the shares. He enters into transaction only through a share broker. Therefore, the observation of the A.O. that the assessee could not identify the buyer cannot be the basis of regarding the transaction to be non-genuine one. I also noted that the A.O. has been influenced with the fact that the assessee has delivered the blank transfer shar....
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....e, 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 material gains in the hand of the assessee but there is no cogent material or evidence to indicate that the impugned sale proceeds reflected unaccounted income of the assessee." 20. It was the duty of the A.O. to bring on record sufficient evidences and material to prove that the documents filed by the assessee were bogus, false or fabricated and the long term capital gain shown by him was actually his income from undisclosed sources. The only material to support such conclusion of the lower authorities is either the findings of the DDI in general investigations or the twisting statements of M/s P.K. Jain & Associates which remain untested by the A.O. himself. None of the judicial precedent supports the case of the Revenue. While making addition as income from undisclosed sources burden on the department is very heavy to establish that the alleged receipt was actually income of the assessee from the undisclosed sources. Jodhpur Bench of the ITAT in the case of ITO Vs. Smt. Kusumlata (repor....
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....gr/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. Sunita Oberoi vs. ITO (Agra) (TM) ITA No.273/Agr/2004 A.Y. 1995-96 dated 07.08.2009, 30 DTR (Agra) (TM) (Trib.) 474 in which on difference of opinion on the question under the similar circumstances whether the assessee can be said to have discharged her burden to prove the genuineness of the transaction in shares of M/s. Prasidh Exports Limited and M/s. K.L.P. Finance Limited or that the burden had shifted on the Revenue that can be held to have not discharged by them, the decision to uphold accepting of alleged profit on alleged share of M/s. Prasidh Exports Limited and M/s. K.L.P. Finance Limited as income from other sources instead of assessee has claimed the capital gain is a correct decision or not. The Hon'ble Third Member has held as under :- "The only reason to make the addition is that confirmation from the share brokers could not be filed by the assessee and summons issued to the said persons were not served and returned unserved and the names and addresses of the buyer to whom the ultimate....