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TMI Blog2010 (6) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... of the shares. When required to produce the details, the assessee produced general voucher, zerox copies of brokers contract note and the details which were summarized by the A.O. as under:- 2.1. The A.O. carried out inquiries by issuing summons u/s. 131 to Kolkatta Stock Exchange and SEBI. The A.O. also acquired official orders u/s. 11B and 11(4) of Security and Exchange Board of India. From these orders he noted that certain share brokers were debarred from carrying out trading in shares as shares of certain small companies in which they were dealing had fluctuated sharply. One of those brokers was Mr.Prakash Nahata with whom assessee has also dealt with. The A.O. has summarized the finding on the basis of information received from Kolkatta Stock Exchange as under :- It is seen from the reply received from the Calcutta Stock Exchange that no confirmation of purchase of shares is given and that no Annexure as stated is received from Calcutta Stock Exchange. (1) The Calcutta Stock Exchange have vide letter dt.08-12-2006 informed that M/s. Prakash Nahata Co., had executed two cross deals in the Script Bolton Properties Ltd., on 0309-2003 vide trade number 2763 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased the shares on behalf of the assessee, also appeared to have purchased the same from the assessee. It has been claimed by the AR that the assessee did not carry out any direct transaction with the stock exchange and that, it only transacted through the broker. Consequently, it was not the responsibility of assessee as to how and when the shares purchased or sold, or whether it was transacted off-line or on-line. Even though the assessee may not have been concerned the way the shares were transacted yet, it will definitely the concern of the I.T. Department, and hence the A.O., to examine such transactions in order to ascertain their genuineness. According to the information furnished by the assessee, 1500+3500 shares were sold on 3.9.2003 while 5000 + 5000 shares were sold on 2.9.2003. As per the information furnished by the CSE, the alleged broker had executed two cross deals on3.9.2003 involving the scrip of Bolton Properties Ltd., for 1500 + 4000 shares. This did not match with the information furnished by the assessee and his broker. According to him 1500+3500 shares were sold on the said date. Thus while the assessee claimed to have sold 5000 shares on 3.9.2003 accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enied that anyttransaction had taken place through the exchange either in physical form or demat form on 2.9.03. 5.2. It therefore appears that all the transactions which allegedly formed the basis for the assessee to claim, LTCG of ₹ 21,06,225/- and concessional rate of tax of 10% were structured to look or appear of genuine. Unfortunately, the different parts of the puzzle do not fall in to peace to give a complete picture. The details furnished by the assessee and his broker do not tally with the details furnished by the CSE. The details furnished by the assessee also do not tally with the details of transaction contained in the demat account, which apparently is not the assessee s. The only conclusion that can be drawn from such facts is that, the transactions were bogus. Consequently, the A.O. was fully justified in treating the sum of ₹ 21,06,225/- as unexplained cash credit under the provisions of Sec. 68 of the I.T. Act. The addition is confirmed. 2.3 The gist of the decision of Ld. C.I.T.(A) is 1) Cross deals in the script of Bolton Properties Ltd., did not match with the information furnished by the assessee. 2) CSE informed that there is no de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. From the reading of the aforesaid section, it is apparently clear that this section lays down rule of evidence that when any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of such credit found in the books of the assessee, or the explanation offered by the assessee, in the opinion of the AO is not satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. Before charging the credit as the income of the assessee, the AO has to form an opinion. This opinion is subjective, but it has to be judicious and based on material on record. An opinion is an inference of facts from observed facts. It is not an impression. It is a conviction based on appraisal of evidence on record. In V.L.S. Finance Ltd. v. CIT (2000) 246 ITR-707, the Hon ble Delhi High Court observed as under : Opinion means something more than more retailing of gossip or hearsay; it means judgment or belief, that is, a belief or a conviction resulting from what one thinks on a particular question. It means: judgement or belief based on grounds sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the corresponding clause of the Bill which was introduced in Parliament, while inserting section 69 in the Income-tax Act, 1961, the word shall had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word may .This clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Income Tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the Income-tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the Income-tax Officer under section 69 of the Act to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s first enter into contracts for purchase/sale of securities and thereafter, follow it up with delivery of shares, accompanied by transfer deeds duly signed by the registered holders. The seller is entitled to receive the consideration agreed to as on the date of contract. The Board are of the opinion that it is the date of broker s note that should be treated as the date of transfer in cases of sale transactions of securities provided such transactions are followed up by delivery of shares and also the transfer deeds. Similarly, in respect of the purchases of the securities, the holding period shall be reckoned from the date of the broker s note for purchase on behalf of the investors. In case the transactions take place directly between the parties not through stock exchanges the date of contract of sale as declared by the parties shall be treated as the date of transfer provided it is followed up by actual delivery of shares and the transfer deeds. We have also gone through the judgement of the Hon ble Punjab and Haryana High Court in the case of CIT vs. Anupam Kapoor (2008) 299 ITR-179 (P H). In this case, we noted that, it was held :- The Tribunal on the basis of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion which has come through the banking channel has not come out of the proceeds of the shares. Merely that part of the shares could not be transferred out of the sales of shares during the year that will not make the genuine transaction to be non-genuine. The AO simply presumed that the transaction relating to the sale of shares is not genuine. Apparent is not real. In our opinion, if the AO was of the view that the consideration does not relate to the shares, he could have brought the material on record to prove that the assessee has not received the consideration from these parties. The cash credit has been added in respect of whole of the sale consideration received by the assessee through the banking channel during the year under consideration. The AO only doubted the genuineness of the transactions. The Hon ble Gujarat High Court in the case of DCIT v. Rohini Builders 256 ITR 360 (Guj.) has held that mere identification of the source of credits even without evidence as to the nature of the income could justify the credit whether the assessee has given the GIR / PAN Nos. of the creditors and also shows that the amounts were received by account payee cheques. The High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount received from the share broker is concerned on the sale of shares. The onus got shifted on the Revenue to prove that the assessee has not received the consideration against the shares from these brokers. We, therefore, delete the addition made amounting to ₹ 7,97,200/-, ₹ 19,34,830/- and ₹ 37,42,887/- u/s. 68 of the Act. The Ld. D.R. on the other hand submitted that evidence is not produced to show that transactions are genuine. We have considered the rival submissions and perused the material on record. Since the issue relating to genuineness of the share transaction with Calcutta Stock Exchange has been decided by the Tribunal in several judgements and we find that assessee has discharged the onus and there is no material to show that money received from the brokers is not satisfactorily explained. Respectfully following above judgements and particularly in the case of Vishal Sushilkumar (supra) we uphold the addition made by the A.O. and confirmed by the Ld. C.I.T.(A) and direct to tax the capital gain as declared by the assessee. As a result, the appeal filed by the assessee is allowed. Order pronounced in Open Court on 04 / 06 /2010. - - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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