TaxTMI 
TaxTMI 
2025 (2) TMI 185
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....the order of the Ld.Deputy Commissioner of Income-tax 6(3), Mumbai, passed under section 143(3) read with section 147 of the Act, date of order 05/12/2013. 2. The assessee has taken the following grounds of appeal:- "a. On the facts and circumstances of the case, and in Law, CIT(A), NFAC erred in confirming the addition of Rs. 5,32,900/- u/s 69 of the Act as Unexplained Investment towards the alleged bogus purchase of shares as undisclosed income based on surmises and conjectures, without any evidence. b. The CIT(A) Failed to appreciate that: - i. The all the sales and purchases were made through recognized brokers. ii. The sales and purchases were properly reflected in the Demat statements. i....
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....ration amounting to Rs. 5,33,648.52 through an HDFC Bank account (Account No. 0051000032302) on December 1, 2005. The shares were duly delivered to the demat account of the assessee. It was further stated that the shares of "Sundaram Multi Pap Ltd." underwent a stock split in the ratio of 1:10 on 01/12/2005. Consequently, the total number of shares held by the assessee increased proportionately from 13,000 to 1,30,000, without any change in the overall value. Subsequently, the assessee sold the shares in a staggered manner, totaling 1,38,000 shares, and received a sale consideration of Rs. 17,35,429/-. After deducting the purchase cost of Rs. 5,32,900/-, the assessee declared a profit of Rs. 12,02,349/-, which was offered for taxation as....
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.... 6. As mentioned above, the assessee had shown purchase of shares Maruti Infrastructure Ltd and Sundaram Multi Pap Ltd from M/s Alliance Intermediateries & network P Ltd which is a group company of Mahasagar Securities Group. The shares of Maruti Infrastructure Ltd were claimed to have been purchased on 16th May 2005 and that of Sundaram Multi Pap Ltd on 4th July 2005. 7. As per the contract note submitted by the assessee, M/s Alliance Intermediateries& network P Ltd was member of NSE stock exchange (NSE hereafter). Therefore, notice u/s 133(6) was sent to NSE who replied that this particular party was suspended from exchange from 19th February 2004. The copy of the letter of NSE has since been provided to the asse....
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....spective Registrar of Shares of the companies have also denied the relevant transactions. Therefore the payments to M/s Alliance Intermediateries & network P Ltd cannot be considered as payment for purchase of shares. 11. The above facts only prove that the assessee purchased these shares in off market in cash and obtained the fictitious bills from M/s Alliance Intermediateries & network P Ltd. Therefore the investment in shares under consideration remained unexplained. The onus was on the assessee to establish that the genuineness of the aforesaid purchases in given circumstances where the contract note was found to be bogus and there was no purchase so such shares as claimed to have been done by the assessee. Ho....
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....ned. 14. Under the circumstance, I hold that the assessee failed to explain the source of investment of Rs 10,28,199/- in the shares of Maruti Infrastructure Ltd and Sundaram Multi Pap Ltd and the same is taxed as unexplained investment u/s 69 of the Income Tax Act 1961. Since the assessee concealment his income, penalty proceedings u/s 271(1)(c) has been separately initiated." 6. We heard the rival submissions and considered the documents available in the record. The addition was made by the Ld.AO without considering the proper transactions and the addition was confirmed Rs. 10,28,199/-. The Ld.CIT(A) only restricted the addition related to payment for purchase of the shares amount to Rs. 5,32,900/-. The Ld.CIT(A) has taken a v....
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....5. Thus it is clear that the case was re-opened on the basis of concrete information and not only on the report of Investigation Wing of the department. Therefore, the ground of appeal is not tenable and is dismissed." 7. We observe that the Ld. CIT(A) restricted the addition to Rs. 5,32,900/-. The Ld. AO had accepted the sale proceeds and the short-term capital gains as declared by the assessee in the ROI. However, the Ld. AO's observation regarding the calculation of the purchase value was found to be incorrect and was duly rectified by the Ld. CIT(A), who deleted the excess addition. It is noted that no allegations were made against the sale transactions, or the profits declared by the assessee. The Ld. AO's focus was solely on the....