9911796707
TMI Blog2011 (12) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... pur. Price M/s. Poonam Pharmaceuticals Ltd. V.K.SInghania 5,300 35,616 M/s Gautam Resources Ltd. Renu Poddar 1,200 24,324 M/s Star LTCR Ballabh Das Daga 6,000 57,472 Sales Name of the Shares Name of the Broker Sale qty. Total sale Price Total Profit M/s. Poonam Pharmaceuticals Ltd. M.Bhiwantiwala & Co. 5,300 1,603,883 1,568,367 M/s Gautam Resources Ltd. Ahilya Commercial P. Ltd. 1,200 119,777 95,453 M/s Star LTCR - do- 6,000 2,054,185 1,996,713 As per the above details, the assessee has purchased 6000 shares of M/s Star LTCR on 19.01.2004, 5300 share of M/s. Poonam Pharmaceuticals Ltd. and 1200 shares of M/s Gautam Resources Ltd. & 5300 @ 9.58, ₹ 6.72 and ₹ 20.27 per share respectively while they were shown to have been sold between the period 80402005 and 5.8.2005 @ ₹ 342.36, ₹ 302.62 and 99.81 respectively aggregating to ₹ 36,60,435/-. The transactions were made through brokers located at Calcutta. The facts of the case are similar to the facts discussed in the assessment order for assessment year 2004-05 in the case of the assessee and discussed in the appellate order dated 21.01.2007 in appeal no.458/2006-07 for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 09.04.2003 drawn at SBBJ, Calcutta. The assessee has purchased 5300 share of M/s. Poonam Pharmaceuticals Ltd. through stock broker M/s V.K. Singhaniya & Co., Kolkatta, a member of Calcutta Stock Exchange having SEBI Registration No.INB030036312 vide broker Note No. R030408 dated 14.04.2003 (Settlement No.2004309) at ₹ 35,616/-.The payment was made out of cash in hand available with the assessee which is evident from the cash flow statement (enclosed). The assessee has purchased 1200 shares of M/s Gautam Resources Ltd. through stock broker M/s Ballabh Das Daga, Kolkatta, a member of Calcutta Stock Exchange having SEBI Registration No.INB030492218 vide broker Note No. 14 dated 19.01.2004 (settlement No.D- 2004500) at ₹ 57,472/-. The payment was made through account payee DD No.679060 dated 09.04.2003 drawn at SBBJ, Calcutta. The assessee has received consolidated share certificates of distinctive Nos. from M/s. Poonam Pharmaceuticals Ltd., Calcutta for 5300 shares and M/s Gautam Resources Ltd., Kolkatta for 1200 equity shares and M/s Star LTCR of 6000 shares, which were duly transferred in her. The assessee deposited share certificates into his D-mat account No.3020679 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards to the contention of the AO about the prices of shares in reference to perusal of profit and loss account and balance sheet of the company disclosed in the annual report of the company with minuscule P & L it is stated that price of the shares depend on demand and supply concept and balance sheet and P&L account of the company is not only a criteria. The buyer of shares takes into consideration various factors like reputation of group of the company, future scope of growth of the company etc. As regards the payment made by the relative of the assessee at Kolkatta to the broker in three installments against purchase consideration it is submitted that it was made to her as per her convenience. Cash payment made to the broker in peace meal instead of lump sum did not vitiate the share of transaction. As regards the contention of the AO that broker could not be traced out it is submitted that the address of the alleged broker might have changed now and, therefore. He could not be traced at the given point of time. Otherwise the alleged broker, as far as price fluctuation of shares is concerned it depends on market conditions. The Hon'ble Punjab and Haryana High Court held in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and sale thereof. The shares received in physical form were transferred in De-mat account of the appellant with ICICI Bank, Udaipur. Deliveries of shares were made from De-mat account of the appellant when these were sold. The fluctuations in the market rates of shares were a natural phenomena, depends upon market conditions and sentiments of customers. In the absence of any evidence regarding collusion the suspicion about market rate of shares were without any basis. The AO has failed to bring any evidence to show that the appellant has paid unaccounted cash to the broker in order to receive sale proceeds of shares by cheque. There is no cogent material or evidence to indicate that the impugned sale proceeds of shares reflected unaccounted income of the appellant. 8. The Ld. A/R further contended that the AO has neither controverted any material evidence submitted by the appellant nor proved any one fake or bogus. The genuineness of shares therefore, should not have been denied. Rather the AO has gathered few irrelevant informations and utilized on the back of the appellant without providing any opportunity of being heard to the appellant shows much eagerness of the AO to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate Nos. and distinctive Nos of shares mentioned above. Prior to their sale, these shares were dematerialized with Stock Holding Corporation of India Ltd. The dematerialized shares were held in appellants' de-mat account with ICICI Bank, Udaipur. The payment of purchase consideration were made in cash out of available cash balance with the appellant which is evident from the cash flow statement furnished before me as well as furnished before the AO also. These shares were sold by the appellant for a consideration of ₹ 37,77,847/- through stock brokers M/s M.Bhiwaniwala & Co. and M/s Abhilya Commercial P.Ltd. Kolkatta and the appellant earned long term capital gain of ₹ 36,60435/-. 11. The appellant furnished all evidences i.e. broker note, contract note relevant extract of cash book, balance sheet as on 31.03.2005 and 31.03.2006, copy of share certificate etc. which were in his possession to establish genuineness of purchase and sale of shares. The AO failed to bring any evidence to show either back dating purchases or collusion between the broker and the company. The AO also failed to bring any evidence to show that the appellant paid unaccounted cash to the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussion, it is quite evident that the AO failed to show that the transaction for purchase and sale of shares was bogus and the appellant paid cash to the brokers for availing accommodation entry in the form of sale proceeds of shares. Suspicion, strange coincidences and grave doubts, how so ever strong it may be, cannot take place of legal proof. Therefore, the AO erred in treating the entire transaction of long term capital gains as a sham transaction and bring it to tax as unexplained cash credit u/s 68 of the Income Tax Act, 1961. 14. As regards various judgments relied upon by the AO, the ratio of these transactions for purchase and sale of shares was fabricated, false and fictitious. However, the AO did not being any evidence on record to establish non-genuineness of the impugned transaction. Moreover, the Ld. A/R of the appellant elaborately distinguished these judgments. In view of the above I hold that the purchase of equity shares was not bogus and genuine and the profit from sale of shares was assessable as long term capital gain and not as unexplained cash credit u/s 68 of the Act. Therefore, the amount of ₹ 16,76,142/-(correct `37,77,847/-) cannot be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll these details established that the was in possession of respective shares. The objection of the AO was that notice issued under section 133(6) were returned back and payment to broker was delayed and there were certain discrepancies in the name of sellers as broker and as per endorsement in the share certificate. Clarification in respect of these deficiencies were filed before the Assessing Officer which were filed before ld. CIT (A) also. They were not appreciated by the Assessing Officer but were appreciated by ld. CIT (A) and then only the ld. CIT (A) found that all the transactions of purchase and sale of shares are genuine. It was also not the case of the department that assessee repaid the sale consideration in hand. There is no such evidence on record. Therefore, inference drawn by Assessing Officer, in our considered view was not correct by holding that the share transaction are bogus. The ld. CT (A) was justified in holding that share transactions were genuine. Accordingly we confirm the finding of ld. CIT (A) as they are finding of fact and remained uncontroverted. 14. Deletion of addition of ₹ 1,88,890/- is also confirmed as the Assessing Officer made this ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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