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TMI Blog2016 (6) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... 1007 - ITAT MUMBAI ) and Harkhchand K. Gada (HUF) 32,94,982/- under section 68 of the Act made and confirmed by the authorities below to be unsustainable and therefore direct the AO to delete the said addition and accept the LTCG income of 31,96,507/- shown as exempt under section 10(38) of the Act. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee appellant was neither required under the provisions of the tax law nor has maintained any books of accounts for the assessment year under appeal hence addition made u/s.68 is bad in law. 2 - Appeal Ground No-2:- That without prejudice to appeal ground no. 1, the ld. C.I.T. (Appeals) has erred in confirming the addition made by the id. A.O. u/s. 68 at ₹ 32,94,982/- without properly appreciating the fat that source & identity of such receipt in bank account of assessee appellant and genuineness of the said transaction was established on assessment record with the support of related documentary evidences. 3 - Appeal Ground No.3:- a) That the ld. C.I.T (Appeals) has erred in confirming the disallowance of exemption claim made u/s. 10(38) at ₹ 31,96,507/- in respect of long-term capital gain earned on sale of listed equity shares sold through recognized stock exchange which has duly been subjected to security transaction tax(S.T.T.). b) That without prejudice to appeal grounds no. 3(a), if capital gain income earned at ₹ 31,96,507/- on sale of listed equity shares was not long-term capital gain due to back dated purchase allegation made by the Id. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BSE), evidencing the payment of Securities Transaction Tax (STT) thereon, price movement evidence of stock on BSE on which the said shares were listed and traded and also copy of the bank statement of the assessee evidencing the receipt of sale proceeds of the said shares through regular banking channels. The learned A.R. for the assessee submitted that all these documentary evidences were furnished before the AO in the course of assessment proceedings vide covering letters dated 26.03.2007 and 01.08.2007 and form part of Paper Book I (pages 1 to 42) placed before the Tribunal. 3.2.3 It is submitted that the first notice by the AO to the assessee to establish the genuineness of these transactions was issued by the AO on 03.12.2007 fixing the hearing on 10.12.2007, wherein the assessee, vide letter dated 11.12.2007 reiterated her position in the matter and resubmitted the aforementioned documents to the AO. It is submitted that subsequently the AO passed the order of assessment ignoring all the documentary evidence furnished by the assessee and made an addition of the entire sale proceeds of the said shares under section 68 of the Act on the presumption and suspicion that the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (pages 1 to 7) which further highlights the erroneous basis adopted by the AO to hold that purchases of the said shares were back dated. The concerned return of income having been filed by the assessee for A.Y. 2004-05, i.e. the year in which the said shares were purchased, within the extended date as per section 139(1) of the Act with duly audited accounts and having been processed and accepted by the Department, it is contended that the AO's observation in the order of assessment for A.Y. 2005-06 that the purchases of the said shares are not genuine/arranged/back dated hold no water. It is submitted that if the AO had real proof that the purchases of the said shares was backdated/ arranged, etc. then nothing prevented him from initiating proceedings for re-opening the assessment for A.Y. 2004-05 upto 31.03.2011 as provided under the Act; which has not been done. The learned A.R. for the assessee contends that the facts of the case as laid out above, clearly establish that the contention of the AO that the purchases of the said shares was back dated, arranged, etc. leading to the addition under section 68 of the Act was totally misplaced. In support of this proportion, the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions Ltd., as has been assessed by the AO. We find from the details filed by the assessee on record in pursuance of the query by the AO in the course of assessment proceedings, that the shares of Shukun Constructions Ltd. is listed on BSE and that the sale transaction of the 'said shares' by the assessee is at the rate quoted on the date of sale has been confirmed both by BSE and the concerned stock broker M/s. Khambatta Securities Ltd. It is strange that the AO has made the addition under section 68 of the Act treating the entire sale proceeds of the 'said shares' received by the assessee through regular banking channels from stock broker registered with SEBI, M/s. Khambatta Securities Ltd., which facts have been confirmed by the said stock broker. In our considered view, in these factual circumstances, the assessee has discharged the onus required under section 68 of the Act as she has established the identity of the payer, source of funds received on sale of the same shares and the genuineness of the transaction. 3.4.3 The addition under section 68 of the Act in the case on hand, it appears, has been made only because the AO presumed that the purchases of the 'said shares' of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Jatin Chhadwa in ITA No. 8573/Mum/2010 dated 24.08.2012 for A.Y. 2005-06. In this case, on similar facts, we find that the Coordinate Bench has held that the claim of the assessee cannot be denied on the basis of presumptions and surmises in respect of penny stock without conducting any inquiry and by disregarding the direct evidences on record by the assessee. 3.4.6 In the decision of the Coordinate Bench of this Tribunal in the case of Harkhchand K. Gada (HUF) & Others in ITA Nos. 1772 to 1775, 1788 & 1789/Mum/2010 dated 08.08.2012 relied on by the assessee, on similar facts, the Coordinate Bench, following the judgements of the Hon'ble Bombay High Court in the case of Mukesh R. Manolia in ITA No. 456 of 2007 dated 07.07.2011 and of the Coordinate Bench in the case of Sharda Credit Pvt. Ltd. (ITA No. 3415/Mum/2007 dated 09.02.2009) held that shares purchased/sold off market cannot be considered illegal transactions. It was also found that the AO has no basis for taking an adverse view in that case, overlooking the direct documentary evidence placed on record of the sale/purchase transaction in shares such as brokers contract notes, confirmation of receipt of sale procee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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