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TMI Blog2013 (11) TMI 1318X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the shares and in the absence of any contrary evidence brought by the Assessing Officer on record, it cannot be said that the transaction of purchase shown by the assessee is not genuine – Reliance has been placed upon the case of CIT Vs. Jamnadevi Agarwal [2010 (9) TMI 81 - Bombay High Court]. From the documents produced, which were also in the possession of the Assessing Officer, shares in question were in fact purchased by the assessees on the respective dates and the company has confirmed to have handed over the shares purchased by the assessees. Similarly, the sale of the shares to the respective buyers is also established by producing documentary evidence. It is true that some of the transactions were off-market transactions. However, the purchase and sale price of the shares declared by the assessees were in conformity with the market rates prevailing on the respective dates as is seen from the documents furnished by the assessees. Therefore, the fact that some of the transactions were off-market transactions cannot be a ground to treat the transactions as sham transactions – Decided against the Revenue. - ITA Nos.5534/Mum/2010 & 3814/Mum/2011 - - - Dated:- 13-3- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the stock exchange holding a valid membership and the transaction of purchase is supported by contract note, bill and SEBI registration. The assessee received a physical certificate of the shares as well as transfer from the company. The shares were purchased at the prevailing market price and, therefore, the transaction of purchase and sale of shares is genuine. The Assessing Officer recorded the statement of the assessee u/s. 131 and concluded that the Long term capital gains transaction was a collusive and artificially engineered transaction without any support and could not be relied upon and, hence, it was a device to convert unexplained cash as Long term capital gains. Accordingly, the Assessing Officer brought to tax the Long term capital gains of Rs.29,48,175 treating it as unexplained cash credit. Subsequent to passing the assessment order u/s. 143(3) a search and seizure action u/s. 132 of the IT Act was conducted on 8.5.2007 at the residential and business premises of the Bindra Group of cases. The assessee was, inter alia, covered in the search operations. Consequently, the Assessing Officer issued notice u/s. 153A on 19.08.2008 asking the assessee to file the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince Securities have not transacted in shares of Blue Chip India Ltd. for any other client except the transaction in question. It does not have any demat account. The assessee stated to have purchased the shares in the month of April 2002 whereas the shares were demated in August 2002 and October 2003 i.e. almost one and half years after the alleged purchase. There is no explanation in this regard as to why the assessee demated the shares just before the alleged sale of the shares. The transaction of sale of shares in Kolkata Stock Exchange without any explanation is not a normal human behaviour, when the assessee is having account with sub-broker in Mumbai. The Assessing Officer received the information from Bombay Stock Exchange that the shares of Blue Chip India Ltd., was not traded on the Stock Exchange on the dates given by the assessee. Thus, the learned DR has submitted that the facts and circumstances of the case clearly shows that the assessee has manipulated the accommodation entries of Long term capital gains against his own undisclosed income. He has relied upon the decision of the Chandigarh Bench of this Tribunal in the case of CIT v. Som Nath Maini 100 TTJ 917 (Chd.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Jamnadevi Agarwal, the Hon ble High Court has held that even the statement of stock broker s denial of transaction was proved to be wrong by producing documentary evidence to the effect that the shares sold by the assessee were in consonance with the market price. He has further submitted that the decision in the case of Som Nath Maini (supra), relied upon by the Assessing Officer is not applicable to the facts of the case in hand because in the said case the Tribunal has found that the records of the broker was not available and shares remained in the name of the assessee even long time after the sale of shares therefore, the transaction does not stand the test of probability, whereas in the case of the assessee there is no such lack of availability of record or defect in the transaction of sale. He has supported the order of the CIT(A). 5. We have considered the rival submissions as well as the relevant material on record. The assessee claimed to have purchased 70,000 shares of Blue Chip India Ltd., in the month of April 2002 as under: Purchased on 10.04.02 37,000 shares for Rs.20,350 Purchased on 12.04.02 37,000 shares for Rs.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of the transaction of purchase and sale. There is no dispute as regards the shares were demated in the demat account of the assessee and, thereafter sold to M/s. Prakash Nahata Co. The Assessing Officer has not given any finding that the prevailing price of the shares on the alleged date of purchase was more than what has been claimed by the assessee. Therefore, there is no finding or dispute on the point of prevailing price at the time of purchase or at the time of sale of shares. The Assessing Officer has doubted the modus operandi and alleged that by this transaction the assessee has converted his undisclosed income as Long term capital gains by accommodation entries. It is pertinent to note that the transaction of holding of shares has been duly shown in the balance sheet attached with the return of income for the A.Y. 2003-04 as the same is placed at page 178 of the paper-book. The CIT(A) after considering all the relevant facts and material has given his findings in para 11 of the order, which is as under: 11. I have carefully gone through the assessment order, the submissions made by the A.R and the facts of the case and various case laws relied upon. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant has himself categorically submitted that the transaction entered into by him were off market, there is no reason why it could not be believed especially in view of the fact that the necessary evidence required to support a transaction is duly submitted in the assessment proceedings and also before me. There is no law which prohibits off market transactions in respect of shares which are otherwise listed in the stock exchange. On the facts and in the circumstances the observation of the AO that the transaction is not genuine and is engineered with a sole intention to show LTCG which is liable to lower rate of income tax is because of (i) off market transaction, (ii) the payment for transaction is partly though cash (iii) physical delivery of shares has been given, (iv) Prince securities from whom the shares were purchased has not dealt with in this shares except for the appellant., (v) Prince Securities did not have any demat a/c, (vi) shares of Bluechip Ltd were demated after long time of 16 months. (vii) shares were brought in Mumbai and sold in Calcutta, (viii) shares of Bluechip were not traded on BSE on the dates on which the appellant has done the transactions, (ix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lished by producing documentary evidence. It is true that some of the transactions were off-market transactions. However, the purchase and sale price of the shares declared by the assessees were in conformity with the market rates prevailing on the respective dates as is seen from the documents furnished by the assessees. Therefore, the fact that some of the transactions were off-market transactions cannot be a ground to treat the transactions as sham transactions. The statement of Pradeep Kumar Daga that the transactions with the Haldiram group were bogus has been demonstrated to be wrong by producing documentary evidence to the effect that the shares sold by the assessees were in consonance with the market price. On a perusal of those documentary evidence, the Tribunal has arrived at a finding of fact that the transactions were genuine. Nothing is brought to our notice that the findings recorded by the Tribunal are contrary to the documentary evidence on record. The Tribunal has further recorded a finding of fact that the cash credits in the bank accounts of some of the buyers of shares cannot be linked to the assessees. Moreover, in the light of the documentary evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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