TaxTMI 
TaxTMI 
2018 (1) TMI 991
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....e of shares can be considered only on the date of dematerialization and hence, erred in holding that the purchase value of the shares sold be taken at the average price of the shares traded on the NSE and BSE on the date dematerialization viz. Rs. 7,82,400/- and treating the difference as income from unknown sources therefore the Ld. CIT is wrong in holding that the short term capital gains of Rs. 6,62,870/- (7,82,400 - 1,19,530) be taxed as unexplained credit u/s 68 of the IT Act 1961. 3. The learned CIT(Appeals), erred in confirming the finding of the Assessing Officer in not considering the gains on the sale of shares of Rs. 6,44,816/- as short term capital gains and thereby also confirming the consequent denial of Income tax rate of 10% u/s 111A of the Income-tax Act, 1961. 4. Because on facts and in circumstances of the case, both Ld. Assessing Officer and ld. CIT(A) has erred in going into undue considerations and making baseless observations. 5. Because on facts and in circumstances of the case, no attention was given to the submissions made by the assessee either by the Ld. Assesing Officer of ld. CIT(A) and both of them gone into self made storie....
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....ugh broker Angel Capital & Debt Market Ltd 5. Appellant was not related to M/s. Chandravadan Bhaichand Muchchala and in past not many transactions were done through them. These facts speak for themselves. As per prevailing practice in the share market the payment for purchase of shares is done within 24 hours. If the payment is not done within the specified time the shares are auctioned i.e. Shares are sold by auction and the difference between the contracted purchase price and the auctioned sale price is debited to the client's (purchaser) account. Under no circumstances the payment can be delayed beyond 48 hours. The appellant claims that he asked the broker M/s. Chandravadan Bhaichand Muchchala to buy 12000 shares of IFCI on 17/10/2006. IFCI on 17/10/2006. The appellant admits that he did not make any payment to the broker till 1/2007. If shares were brought on 17/10/2006 who made the payment? And why? Admittedly appellant is not related to the broker and did not have many transactions through them even the sale of these shares was not done through them, then why broker will make payment on behalf of the appellant? The appellant did not claim that the broker or....
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....sly Industrial Finance Corporation of India, is an Indian government owned development bank to cater to the long-term finance needs of the industrial sector and is a a well recognized government undertaking. Assessee got these shares of IFCI convered into D-Mat form and received the same in his D-mat account on 13.08.2007. Afterwards, the assessee sold these shares on 17.08.2007 for a sum of Rs. 7,64,346/- (average price of Rs. 63.69 approx.). Assessee disclosed these transactions in his return and offered the difference amount of Rs. 6,44,816/- (7,64,346 - 1,19,530) as short term capital gain. Date of actual purchase and date of dematerialization are not relevant since the character of gain resulting from sale of shares of IFCI remains Short Term Capital Gain, whichever date if concerned. It is not a case where benefit of long term capital gain is being claimed by the assessee. He further mentioned that iIn the present case, the Ld. CIT(A) has not brought on record any evidence to prove that the assessee has in fact purchased the shares of IFCI Ltd on 10.08.2007 at the alleged price of Rs. 7,82,400/- and on the contrary he has summarily rejected the evidences regarding the purc....
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....vidence that the amount was received by B. It would thus follow that both as regards the source as well as the destination of the amount, the material on the record gave no support to the claim of the department" Further the addition u/s 68 to the extent of Rs. 6,62,870/- has been confirmed by the Ld.CIT(A) only on the basis of assumptions and conjectures (that the assessee must have paid some amount and was not able to prove the source of the same). It is mostly respectfully submitted that the assessee cannot prove source of a payment which has been assumed to have been made, by the Ld. CIT(A). He added that it is well settled position in law that no addition can be made merely on the basis of conjectures and surmises. The addition must be based upon relevant information and evidences. An addition sustained only on the basis of conjectures and surmises is vitiated and deserves to be deleted. This view has been fortified by the Hon'ble Apex court in the case of Dhakeswari Cotton Mills Ltd. vs. CIT (26 ITR 775 (SC)] relevant paragraphs are reproduced for sake of convenience to your honours:- "As regards the second contention, although ITO is not fettered by technical ....
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....ng any transaction of purchase of IFCI td. shares by the assessee due to this reason the purchases were doubted and the transaction was treated as spam and the alleged sale receipt from sale of shares was treated as unexplained income.When the matter came up before the Ld.CIT(A), he ignored the existence of any purchase made on 17.10.2006 and calculated the short term capital gain by taking cost of equity shares on the date of dematizing of 12000 equity shares. This resulted into the short term capital gain loss totaling Rs. 18,504/-. The Ld.CIT(A) accordingly treated Rs. 6,62,870/- as income from unknown sources after giving benefit of purchase cost of Rs. 1,19,530/- against the sale consideration. 10. Before moving further we will like to reproduce the findings of Hon'ble Gujarat High Court in the case of CIT V/s Himani M Vakil [2014] 41 taxmann.com 425 (Gujarat HC) wherein similar issue and almost identical facts came up for adjudication and Hon'ble High Court dismissed the revenue's appeal observing as follows; "Whether on facts and circumstances of the case and in law, the Hon'ble ITAT is right in deleting the addition of Rs. 36,72,631/- made u/s 68 by the Assessin....
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....bsence of broker-client agreement, the Tribunal accepted the submission of the assessee that the genuineness of the transactions was already proved by the contract notes for sale and purchase, the bank statement of the broker, the Demat Account showing transfer in and out of shares, as also abstract of transactions furnished by the CSE. The Tribunal, after appreciating the evidence on record, concurred with the findings recorded by the Commissioner (Appeals) that the assessee had furnished complete details which were not found false or bogus by the Assessing Officer and that it was only on suspicion that the Assessing Officer had treated the capital gain declared by the assessee as unexplained cash credit under section 68 of the Act. In the light of the aforesaid findings of fact recorded by it, the Tribunal dismissed the appeal of the revenue. 5. In the light of the above findings of fact recorded by the Tribunal, it is not possible to state that the view adopted by the Tribunal is, in any manner, unreasonable or perverse. Besides, the learned counsel for the appellant is not in a position to show that the Tribunal has placed reliance upon any irrelevant material or that ....