AI Drafter 
TaxTMI 
TaxTMI 
2015 (3) TMI 1338
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....peal before or during the course of hearing. 3. The only issue raised in the present appeal is in relation to the treatment of the cash credit of Rs. 21,96,546/-. 4. The brief facts of the case are that, during the year under consideration the assessee had declared income from salary and income from other sources. However, information was received from the Investigation Wing that there was much manipulation in the purchase and sale of shares of Robinson Worldwide Ltd., therefore, reasons were recorded under section 147 of the Act and notice under section 148 of the Act was issued to the assessee. The assessee in reply, stated that the return filed under section 139 of the Act be treated as return filed under section 148 of the Act. The Assessing Officer vide para 4 of the assessment order observed that during the course of search and seizure action conducted by the Income-tax Department, Mumbai in the month of January, 2007 at the office and residential premises of several stock brokers and managers of financial companies, it was found that there was much manipulations in the purchase and sale of shares, in particular of shares of Robinson Worldwide Ltd. The assessee was one ....
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.... the various reliances placed upon by the learned Authorized Representative for the assessee and in turn, relying on the ratio laid down by the Mumbai Bench of the Tribunal in Arvind M. Kariya Vs. ACIT in ITA No.7024/Mum/2010, dated 30.01.2013, held as under:- "7.6. In the present case the appellant has filed extracts of the cash book for the year ending 31.03.2004 (relevant for A.Y.2004-05) and the balance sheet for that year attached to the return of the income for the A.Y. 2004- 05 filed on 09.03.2005 to evidence the purchase of shares of Robinson Impex Ltd. To my mind, therefore, the facts become immediately distinguishable at the outset. The statement of the broker who had arranged the accommodation entries has not been rebutted. On the facts of the case, therefore, it is seen that the Assessing Officer has correctly held that the appellant has manipulated the purchase of shares in cash with the help of the broker. The delayed dematerialization of the shares is not generally the accepted practice in sharing trading and renders the entire regulatory system, put into place by SEBI and other regulatory authorities to prevent manipulation in the stock market by brokers an....
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....he test of human probabilities had rightly concluded that the appellant's claim about the amount being her winnings from races was not genuine." Therefore, the present case has to be considered in the light of human probability. The transaction about purchases of shares in physical form of sum companies whose share prices have been rigged by some fraudulent operators cannot have any direct evidences. An inference about such a purchase connived with such companies have to be drawn on the basis of the circumstances available on the record. As pointed out, the shares have been transferred within 4 days of the date of purchases raises ample doubt about the credibility of the company. As pointed out in all probabilities, the company must have been involved in such fraudulent transactions. Post year 2000, it is improbable that any person would transact in shares by taking physical delivery of the shares. When many instances have been surfaced relating to bad delivery or bogus scrips, the regulatory authorities have made it compulsory to transact through Demat account. 19. Having regard to the circumstances and the conduct of the assessee as disclosed in his statement u/s. 13....
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.... relating to penny stocks and the rejection by the appellant of the opportunity offered to cross examine the broker who admitted to providing off market accommodation entries all point to the fact that there is no genuine transaction relating to the purchase of the scrips in question. The entire transactions relating to the sale and purchase of shares have been arranged in order for the appellant to launder his unaccounted income into accounted income, Therefore, the alternative contention that the capital gains may be treated as short term capital gains cannot be accepted since it is found that there are no genuine share transactions at all. Consequently, original ground of appeal No.1 fails. 6. The assessee is in appeal against the order of CIT(A). 7. The learned Authorized Representative for the assessee pointed out that during the course of search, statement was recorded of Naresh Saboo, who was found to have given accommodation entries, but the name of the assessee was not found in the list. Our attention was drawn to the share certificate placed at page 20 of the Paper Book along with vouchers for payment of the purchase price at pages 21 and 22 of the Paper Book and ev....
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....td., Mumbai on 04.07.2003 for total consideration of Rs. 98,731/-. The copies of contract notes of G.R. Pandya Share Broking Ltd., Mumbai are placed on record, which reflects the purchase of the said shares. The said shares were transferred in the name of assessee as per the share certificate dated 17.10.2003. The copy of the said share certificate is placed at page 20 of the Paper Book. The assessee had made cash payments for the purchase of said shares and the copy of account of assessee in the books of share broking company along with cash receipts are placed at pages 21 and 22 of the Paper Book. The assessee further claims that the said cash was drawn out of his books and the relevant entries of cash in hand are also placed on record at page 23 of the Paper Book. The assessee had purchased the said shares at the varying price between Rs. 3.85p to Rs. 3.91p. In support of the rates prevalent on the date of purchase, the assessee has placed on record the list issued by Bombay Stock Exchange, which is placed on record at pages 26 onwards of the Paper Book. The assessee had sold the said shares during the period 10.02.2005 to 25.02.2005 through Renassance Securities Ltd., Mumbai fo....
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....is-à-vis the purchase of shares and the copy of shares certificate evidencing transfer of shares in the name of assessee and further sale transaction through brokers, against which the assessee received the sale amount through cheque. In the totality of the above said facts and circumstances, where the assessee has placed on record the complete evidence of purchase and sale of shares, merely because the shares were D-matted in February, 2005 and thereafter, were sold in the month of February, 2005 itself, does not establish the case of authorities below, in view of the circumstantial evidence produced by the assessee. In the totality of said evidences, we hold that the assessee had purchased the said shares and also the company had transferred the shares in the name of assessee as early as on 17.10.2003, against which the purchase price was paid in cash, which is recorded in the books of account of the share broker who is third party. Further, the said shares were purchased in the financial year 2003-04 and were shown as investment in the Balance Sheet as on 31.03.2003, copy of which is filed on record. These shares were sold in the financial year 2004-05 establish the case ....
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....t, we see no merit in this Appeal and the same is dismissed with no order as to costs." 12. The CIT(A) has given a finding in para 7.6 that the statement of broker, who had arranged the accommodation entries has not been rebutted. However, it is to be noted that the assessee had not purchased the shares from the said broker i.e. M/s. DPS Shares and Securities Ltd., but had made the purchases from another broker i.e. G.R. Pandya Share Broking Ltd., Mumbai. Further, no evidence has been brought on record to establish that the assessee had purchased the shares from M/s. DPS Shares and Securities Ltd. and in the absence of the same, we find no merit in the allegations of authorities below that the assessee had manipulated the purchase of shares in cash with the help of broker. 13. The Pune Bench of the Tribunal in Smt. Smita P. Patil & Ors. Vs. ACIT (supra) has held that merely because there was delay in converting physical shares into electronic form i.e. D-mat, that could not be the criteria to hold that the share transactions were arranged and camouflage, as in all cases the assessee had recorded their share transactions in regular books of account prior to date of search. It ....