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TMI Blog2015 (11) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, it is settled proposition that date of broker notes is considered as the date of purchase and in this regard, one may refer to the Circular No.704 dated 28-04-1995. In our view, the assessee cannot be punished in respect of defaults, if any, committed by the share broker, since the factum of purchase and sale of shares have been accepted by Ld CIT(A). From the point of view of the assessee, the broker has delivered the shares purchased by her. We further notice that all the shares purchased by the assessee are that of reputed companies only. On the contrary, the Ld CIT(A), as noticed earlier, has drawn only inferences about the date of purchases and he has not brought any material on record to support the view taken by him. Hence, we are confronted with two different situations, viz., (a) the assessee has furnished materials to support the claim of purchases and both the assessee and the seller of shares have confirmed those materials and (b) the Ld CIT(A) has drawn inferences which is not supported by any materials. Under these set of facts, in our view, the case of the assessee should weigh more, since his claim is supported by certain documents. We are unable to uphold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nths of January, 2006 to March, 2006. Before the AO, the assessee filed copies of bills and contract notes in support of the purchases and sales. 4. The AO noticed that the assessee had purchased the shares through a broker named M/s Alliance Intermediateries Network Pvt Ltd. However, it was noticed that the shares have been credited in the D-mat account of the assessee only in the month of January, 2006. He further noticed that the shares have been transferred to the D-mat account of the assessee from the d-mat account of M/s Sunchan Securities Ltd and not from the d-mat account of M/s Alliance Intermediateries Network Pvt Ltd. The assessing officer issued notices u/s 133(6) of the Act to the above said two brokers in order to ascertain the genuineness of the purchases. Though M/s Sunchan Securities Ltd initially denied any transaction with the assessee, but later on clarified that it transferred the shares to the assessee on behalf of M/s Alliance Intermediateries Network Pvt Ltd. Before the AO, M/s Alliance Intermediateries filed a letter confirming the contract notes and purchase bills already furnished by the assessee. It is to be noted here that the assessee sold all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange of India Ltd and hence asked the said stock exchange to confirm the transactions entered by M/s Alliance Intermediateries. However, the above said stock exchange confirmed that there was no trading undertaken by M/s Alliance Intermediateries. The Ld CIT(A), after considering the assessment order, came to the conclusion that the date of purchase of shares claimed by the assessee may not correct and he should have purchased the shares only on the dates on which the shares were credited into the D-mat account of the assessee. The Ld CIT(A) further assumed that the assessee should have purchased the shares at the highest price prevailing on that date. It is pertinent to note that the Ld CIT(A) has accepted the genuineness of purchase and sale of shares. Accordingly he computed the aggregate purchase cost of all the shares at ₹ 1,06,56,850/-. Since the assessee had given payment for purchases from the disclosed sources to the tune of ₹ 38,67,201/-, the Ld CIT(A) presumed that the difference between the two amounts mentioned above, i.e., ₹ 67,89,649/- represents the payment made by the assessee from out of undisclosed sources. Since the assessing officer has alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to extract below the replies furnished by the assessee before Ld CIT(A). The assessee has furnished following reply in her letter dated 22.10.2010 and the same has been extracted by Ld CIT(A) in paragraph 2.3.9 of his order:- We are in receipt of your above said letter and we would like to bring to your notice that all the information required under the above letter were already submitted and same has been mentioned point wise below :- We have already submitted the confirmation statement of account from all brokers for the above said period i.e. Sunchan Securities Ltd., Alliance lntermediateries and Network Pvt. Ltd. and Sykes and Rays Equities India Ltd. vide our letter dated 12.02.2010 along with the certificate from Sunchan Securities Ltd. and Alliance Intermediateries Network Pvt, Ltd. stating that our shares were lying in their pool account. Copy of the letter dated 12.02.2010 is enclosed herewith for your ready reference. We have already submitted all bills and contract notes from all the 3 brokers and the bills and contract notes were having Client Id and all the 3 brokers had already confirmed all the sale, purchase and payment transactions which are on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment should be made within a particular period of the date of purchase of shares. It is between the appellant and broker to decide or accommodate each other. The appellant had produced all the evidence in her support are complied with all the terms and conditions of the STCG under the Income tax Act, 1961. If the AO was not satisfied with the submission of the appellant then it was his duty to bring and gather the material on record in his support but the AO was unable to bring on record any material in his support and wrongly assume the STCG as a undisclosed income which was without any basis or material in his hand. The fact is that the appellant has made the STCG and paid the tax thereon under the provisions of the I.T. Act, 1961 and fulfilled all the requirements of STCG tax as per the IT. Act. The AO has not brought any material on record which proves that the appellant had made any undisclosed income so that the AO can treat the STCG as an unexplained investment. The appellant also want to put on record that if the delivery of the shares are received and issued and shares had been sold in the BES through Skyes and Rays Equities India Ltd. then how can the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause nobody can find out the top price of the day and there is no evidence been brought by the department till date that share has been purchased in cash on the date of credit of shares in demat account as stated by you and hence there is no question to enhance unaccounted income assessed by the AO and there is no basis there the highest rate of script is applied for the purchased. Hence, your proposal for enhancement of income u/s.25(1) of the Act is bad in law, due to without any basis or without any record/evidence available on record of the department. We also come to know that highest rate taken by you is also not correct in some of the case. We also observed that there was no trading in the BSE on the date of credit of the- shares in demat account. Hence, your highest rate taken is completely wrong without basis, specially the appellant has produced all the evidence i.e. purchased bill and all payment has been made by account payee cheques and all shares has been received in demat account. Secondly, we could not come to know that how your honour has taken the cash price ₹ 67,89,649/- since from your above said letter there is no working for ₹ 67,89,649/-and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of purchases and both the assessee and the seller of shares have confirmed those materials and (b) the Ld CIT(A) has drawn inferences which is not supported by any materials. Under these set of facts, in our view, the case of the assessee should weigh more, since his claim is supported by certain documents. 14. In view of the above, we are unable to uphold the view taken by Ld CIT(A) that the shares have been purchased only on the date on which they were credited in the d-mat account. Accordingly, we set aside the order of the Ld CIT(A) on this issue and direct the assessing officer to assess the impugned income declared by the assessee as short term capital gain. 15. The next addition relates to the commission expenses estimated by the AO. Since the Ld CIT(A) has accepted the genuineness of purchase and sale of shares and since we have directed the AO to assess the gain arising on sale of shares as short term capital gain, the impugned addition made on estimated basis is liable to be dismissed. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete this addition. 16. In the result, the appeal filed by the assessee is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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