AI Drafter 
TaxTMI 
TaxTMI 
2016 (2) TMI 1210
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....es as not genuine without appreciating that said shares were sold through registered broker and sale of said shares is confirmed by BSE, said shares were endorsed in favour of assessee in physical format by the company & the said shares were dematted and such sale transaction is not treated as not genuine by A.O. & CIT(A). 2) The learned CIT(A) erred in treating purchase transaction of shares of M/s. Robinson Worldwide Trade Ltd. as not genuine without appreciating that A.O was unable to afford cross examination of Mr. Rajkumar Masalia to assessee, Mr Rajkumar Masalia had retracted his statement and assessee had produced affidavit of Mr Pratik C Shah Director of Broking Company who had executed purchase transaction for assessee. 3) The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal". 2. The brief facts of the case are that the assessee is an individual and derives income from salary, business, capital gains and income from other sources. The learned assessing officer (hereinafter called "the AO") enquired the details of profit earned on sale of shares. The assessee furnished the details of such profit and filed copi....
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....repancies were observed in the client codes and the quantity of shares traded etc. Hence, please find enclosed herewith trade log in respect of the trades executed by the said member in the scrip Mastek Ltd. on the dates mentioned in the contract notes. Also, no trades were found to be executed by the member DSP Shares & Securities (151) in the scrip Robinson Worldwide Ltd., formerly known as Robinson Impex (532154) on the dates mentioned in the contract notes." The Bombay Stock Exchange enclosed the copies of the trades carried out by the DPS Shares & Securities Ltd as under, whereby there was discrepancies in the transactions of shares of Mastek Ltd. as per the brokers notes and the trade log of the broker as per Bombay Stock Exchange of 04/04/2003 as detailed below:- As per the brokers' note As per the trade log of the BSE Sale of shares of Mastek Time of sale 15:11:45 15:11:45 Trade No. 0022525 22525 No. of shares 95 184 Rate in Rs. 556.70 556.70 Client code AA/NG59 P125 Purchase of share of Mastek Time of purchase 10:27:47 10:27:47 Trade No. 000....
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....ysical form was that the broker of the assessee had advised him to do so. The assessee was given to understand that if the share were physically purchased then it would cost him a little less than the market price. The information or tip of the above mentioned scrip i.e. Robinson Impex Ltd. was given to the assessee by his common friends who specializes in trading of shares. Since in the past many of the assessee's friends had benefited from the advice of their common friend the assessee took an opportunity to follow the advice of his friend so as to make profit in the transactions of shares. During the relevant assessment year 2005-06, the assessee sold the above shares. Before selling the shares, the assessee got them demated. After demating the shares they were sold through recognized stock brokers who are registered members of the Bombay Stock Exchange. The transactions of purchase and sale of shares cannot be treated as bogus since all the shares were purchased and sold through brokers who were registered with Bombay Stock Exchange. Also the company under consideration was listed in the stock exchange with both BSE and NSE. The share transactions are genuine transactions; the ....
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....e contrary to this is by mistake and not relevant to all. Thanking you, Yours faithfully For DPS Shares And Securities Pvt. Ltd. Sd/- Director" The assessee asked for cross examination of representative of M/s DPS Shares and Securities to verify the correctness and validity of their statement. The AO observed that Mr. Rajkumar Masalia was authorized by Directors of DPS Shares and Securities Private Limited vide letter dated 05/12/2007 to discuss and give statement before the Revenue which will be binding on DPS Shares and Securities Private Limited .In response , Mr Rajkumar Masalia appeared before the AO and stated on oath that contracts bills in respect of speculation profit and purchase of shares of Robinson Impex Limited are only accommodating entries and no actual transaction has taken place and now the Director of the DPS Shares and Securities Private Limited has stated that transaction for purchase of shares of Robinson Impex Limited was made off market in physical form which was not reported to BSE. The AO held that no proof of genuineness of the transaction was submitted by the assessee. The Director of DPS Shares and Securit....
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....tatement appear to be an after-thought and statement of Mr. Raj Kumar Masalia recorded u/s 131 of the Act has evidentiary value. The CIT(A) also held that even there is no compliance of BSE/SEBI reporting mechanism with respect to off market purchase of 10000 shares of Robinson Impex Limited and the assessee has merely termed it as mistake of broker which is an after-thought. Thus, the CIT(A) vide orders dated 16.08.2011 upheld the action of the AO by treating the income of Rs. 9,19,015/- as income from undisclosed income and to be taxed under the head 'Income from other sources'. 4. Aggrieved by the orders dated 16.08.2011 of the CIT(A), the assessee filed appeal with the Tribunal. The Ld. Counsel for the assessee reiterated the submissions as made before the authorities below which are not repeated for sake of brevity. The Ld. Counsel for the assessee stated before us that the 10000 shares of Robinson Impex (India) Limited was purchased on 04-04-2003 vide physical delivery from DPS Shares and Securities Private Limited who are SEBI approved registered broker with BSE which are duly evidenced by contract notes issued by the said broker which is placed at page 29-30 paper book f....
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....) Limited which was sold by the assessee on 10-06-2004. The ld. Counsel relied upon the decision of Mumbai Tribunal in the case of Mr. Jagdish H.Shah in ITA No. 6557/Mum/2011 vide orders dated 05/09/2012 for the assessment year 2005-06, whereby on the identical facts , income earned on sale of shares of Robinson Impex (India) Limited has been accepted to be income assessable under the head 'long term capital gain' . The Ld. Counsel has also filed a tabulation showing similarity of facts between the case of the assessee and that of Jagdish H Shah(supra). The tabulation furnished by the assessee depicts the similarity in scrip involved, assessment year involved,the broker involved , enquiries by the AO from BSE , etc. . Apart there-from ,it has also been pointed out that the same AO as well as the same CIT(A) have rendered the decisions on the same dates in the case of Jagdish H Shah(supra) as well as the assessee. Under these circumstances, it has been pointed out that the impugned orders of the lower authorities are unsustainable and that income from sale of the shares of Robinson Impex (India) Limited be accepted as long term capital gain as returned by the assessee. The reliance ....
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....de Ltd. as an income from undisclosed sources. Identical decision was also rendered in the case of Mr Nikunj J. Shah(supra) by Mumbai Tribunal in ITA No. 6545/Mum/2011 for assessment year 2005-06 vide orders dated 31-07-2015 , relevant extracts are reproduced below: "6. Having perused the orders of the authorities below as well as the submissions put forth before us, it is evident that similar controversy has been considered by our Co-ordinate Bench in the case of Jagdish H. Shah (supra).The Ld. Representative of the assessee has also placed on record copies of the assessment order as well as order of CIT(A) in the case of Jagdish H. Shah(supra) which reveal that the discussion contained therein is almost similar to the discussion in the impugned orders before us. The enquiries made by the AO in case of Jadish H. Shah (supra) are on similar lines to those made in the case before us. In the case of the assessee as well as in the case of Jagdish H. Shah(supra) the shares were purchased from the same broker namely DPS Shares and Securities Pvt. Ltd. It is also emerging that the AO carried out a verification exercise which involved recording of statement of one Shri Raj Kumar ....
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....of 11500 shares of M/s. Robinson Worldwide Trade Ltd., (formerly known as robinson Impex (India) Ltd.]. We have perused the Remand Report of ITO 10(3)(2) Mumbai dt. 11.4.2011. In his Remand Report, the AO states that an opportunity of cross examination of Shri Rajkumar Masalia was given to the assessee on 18-02-2009, 29-04-2009 and 09-11-2009. However, despite of giving aforesaid opportunities, Shri Rajkumar Masalia did not attend though assessee's representative attended on all of above dates and whose attendance was duly recorded on the attendance Sheet. In his Remand Report, the AO further states that the said shares of M/s. Robinson Worldwise Trade Ltd. (formerly known as Robinson Impex (India) Ltd.] were purchased on 05-04-2003 for a consideration of Rs. 15191.99 from M/s. DPS Shares and Securities Pvt. Ltd. As per record of the said company, the shares were endorsed in favour of the assessee on 30-04- 2003 in physical format only. The AO further states that as per investigation made, these shares were sent for dematerialization to HDFC Bank on 03-05-2004 and were converted into De-mat form on 22-05-2004. In his Remand Report, the AO has further confirmed the sale transaction ....