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TMI Blog2011 (2) TMI 1527X X X X Extracts X X X X X X X X Extracts X X X X ..... e the CIT(A). HELD THAT:- According to the CIT(A), no defect in share transactions being made by the appellant and as such no adverse inference is drawn. Appellant had done the same as would be done by any person with a prudent mind in order to sell his commodity. It is evident from the record that the AO failed to establish the nexus between the sale proceeds of the shares and so called unaccounted money of the appellant which according to him is mere a bogus entry taken from the broker. Neither the statement of the broker or any other documentary evidence is on record from which it could be established that the appellant had taken entry from the broker M/s J.R.D Stock Broker (P) Ltd. Thus in view of the facts and the law, I hold that on merit the addition is wholly unjustified and is hereby deleted. Therefore, we are of the view that the CIT(A) was right in conclusion that the assessee has dealt in these shares and these transactions cannot be held bogus. The deletion of addition is confirmed. Hence, the assessee has been successful in proving the long term capital gain earned by him in this case. He has also established that he is exempt from tax qua long term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Grives Hotel Limited duly maintained the assessee has also been field before the Assessing Officer. Report dated 24.09.2004 from M/s. Joylin Jain Associates, Company Secretaries regarding holding of 17000 shares by the assessee was also submitted. Details of the broker through whom the purchases and sales of shares were made was also filed. The Assessing Officer was not satisfied with the explanation of the assessee. He, therefore, made the addition of ` 9,40,657/- by holding that the assessee could not prove the sale of shares and genuineness of the receipts of money under section 68 of the Income-tax Act, 1961 ( the Act hereinafter). The assessee went in appeal before the CIT(A). The CIT(A) deleted the addition by observing as under :- I have considered the facts, submission of the AR, documents filed, perused the record and also gone through the various decisions referred by A.O appellant. The short question for consideration was whether the evidence produced by the assessee was sufficient to discharge the initial onus of proving the genuineness of the share transaction. The Assessing Officer has placed no material on record against the assessee from which it can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Hon'ble P H High Court in the case of CIT Vs Anupam Gupta reported in 166 Taxmann 178 on similar facts and circumstances treated the Long term capital gain on the sales of Shares as genuine. The AO in the reason to believe as well as in the order u/s 147/143(3) has compared the facts of the present case with that of one Shri. Ashok Kumar Lavania and commented on the modus operandi followed in the two case which according to him was merely a mode of adjusting unaccounted money by taking accommodation entry. Appellant vide his rejoinder which is on record provided the copy of the order of the Hon'ble ITAT Agra bench Agra in the case of Shri Ashok Kumar Lavaina ITA 112/Agra/2004 wherein Hon'ble Agra bench vide its order dated 30/05/2008 has upheld the modus operandi and also confirmed the long term capital Gain on the sale of shares as genuine. No adverse inference has been drawn by the Hon'ble Bench. Similarly in the present case I find no defect in share transactions being made by the appellant and as such no adverse inference is drawn. Appellant had done the same as would be done by any person with a prudent mind in order to sell his commodity. It is evident fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at which the shares were sold. In that case, this Tribunal, after considering all the aspects, has held as under :- 10. I have carefully considered the rival submissions alongwith the orders of the Tax Authorities below as well as the order of my ld. colleague Members. I noted that while passing the dissent order the ld. A.M. has mainly relied on its separate order passed in the case of Shri Baijnath Agarwal (ITA No.133/Agr/2005). I have gone through the order of Shri Baijnath Agarwal and noted that in his dissent order in that case the ld. A.M. has relied on the decision of Shri Ashok Kumar Lavania (ITA No.112/Agr/2004). I have gone through the decision of Shri Ashok Kumar Lavania in ITA No.112/Agr/2004 which was decided by the Bench constituting of same ld. J.M. and ld. A.M. vis- -vis the facts of the case of the assessee. In that case also the transaction of sales has not been accepted by the A.O. as he doubted the sale prices and also relied on the statement of Shri Ashok Gupta, Director of M/s. JRD Stock Brokers Pvt. Ltd. who stated that as a matter of fact there was no actual purchase and sale of shares as was reflected in the contract notes issued by M/s. JRD Stock Broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roker. Whereas the assessee has produced : i) copies of sales and purchase bills; ii) share certificates and transfer letters; iii) contract notes; iv) duly transferred share certificates received from the companies; and v) affidavit. (11) There is no doubt, in such cases, the brokers become the witnesses of the department. The department has got statements of these brokers which are used against the assessee. Irrespective of the fact that the statements were recorded at the back of the assessee and that the assessee was or was not afforded opportunity for cross-examination, when overwhelming documentary evidences are produced by the assessee, the burden shifts on the Revenue to explain away them. Every time the statements cannot help the department. How the above mentioned evidences could be ignored ? The Revenue has to give reasons for rejecting them. These are important documents, some of them arise under the provisions of the Companies Act. The brokers were never confronted with the evidences produced by the assessee. The apparent has to be treated as a real unless proved otherwise. Long ago Hon ble Supreme Court has laid this law while rendering the celebrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of the assessee and were held by her for more than one year. There is no relationship between the party from whom the assessee purchased the shares and the party to whom these were sold. The shares were delivered after its sale and the assessee did not remain in possession of those shares. From the above facts, it is established that the assessee acquired the shares to earn profit. There is no evidence except speculation that this profit is not from the sale of shares. The A.O. has failed to establish his case and to discharge the requisite burden cast on him. The Authorised Representative has filed the requisite quotation of 18th July, 1996 along with the requisite proof of transactions of 9000 shares along with transfer of share certificate. Therefore, in the given facts and circumstances of the case, the CIT(A) has correctly come to the conclusion that the assessee has dealt in these shares and these transactions cannot be held bogus. The deletion of addition of ₹ 4,99,062/- is confirmed. (13) The above decision clearly helps the case of the assessee. (14) Credence cannot be given to the statements of the persons who themselves admit and have dubious dealin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count but has come to this account by way of transfer from the account of M/s. S.G. Fincap Limited. The ld. A.M. has distinguished the decision of Ashok Kumar Lavania. On the basis of that, in Ashok Kumar Lavania s case purchase of the shares was not in dispute. While in fact in assessee s case the purchase of shares is also not in dispute but rather the company has directly confirmed to the A.O. the purchase of the shares by the assessee in reply to the notice issued under section 133(6). The ld. A.M. was also the party to that decision. I noted that in this case the A.O. has doubted the sale consideration because the share price has increased tremendously. I noted that in the case of Ashok Kumar Lavania also the assessee has purchased the share @ ₹ 4/- per share and sold @ ₹ 65/- to 84/- per share. In that case also the broker has not accepted the transaction but on the basis of the evidence the Tribunal has accepted the transaction to be genuine one as there was no corroborative evidence to support the statement of the broker. In this case, I noted that the statements of the broker couldn t be given any credence as he has stated differently vide different letters. Ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DDI, Investigation Wing, Agra and not by the Assessing Officer himself. Thus, the truthfulness of the statement remained untested by the Assessing Officer. ITAT, Delhi in the case of Rajeev Agarwal (139 Taxman 170 (Mag.)) has observed as under :- The mere reliance on the statement of third parties who were never examined by the Assessing Officer himself cannot be held to be sufficient to come to the finding that the transaction was not genuine and more so when there are other material and evidences to support the transaction. 13. Hon ble Delhi High Court in the case of CIT Vs. SMC Share Brokers Ltd (288 ITR 345) also observed as under :- There is no doubt that the statement of Manoj Agarwal had evidentiary value but weight could not be given to it in proceedings against the assessee without it being tested under cross-examination. In the absence of statement being tested, it cannot be said that it should be believed completely to the prejudice of assessee. 14. Under these facts, I am of the opinion that the case of the assessee is duly covered by the Division Bench of this Tribunal in the case of Ashok Kumar Lavania in ITA No.112/Agr/2004 which has been decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of some quoted shares during the 52 weeks as per Economic Times dated 27.02.2007 from which it can be seen that some shares increased even by more than 100 times. 17. In almost similar circumstances the Hon ble Punjab Haryana High Court in the case of CIT Vs. Anupam Kapoor (299 ITR 179) has also observed as under :- The Tribunal was right in rejecting the appeal of the revenue by holding that the assessee was simply a shareholder of the company. He had made the investment in a company in which he was neither a director nor was he in control of the company. The assessee had taken shares from the market, the shares were listed and the transaction took place through a registered broker of the stock exchange. There was no material before the AO, which could have lead to a conclusion that the transaction was simpliciter a device to camouflage activities to defraud the Revenue. No such presumption could be drawn by the AO, merely on surmises and conjectures. 18. In the stock Exchange when the transaction is entered into, the assessee is not aware of about the buyer of the shares. He enters into transaction only through a share broker. Therefore, the observation of the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieu of the aforesaid sale proceeds, the assessee has surreptitiously introduced his unaccounted money in the bank account. After having perused the entire material that is available on record, there is no averment, much less any evidence, with the Revenue in this regard. While there may be enough grounds with the AO to carry out the impugned verification exercise to test the efficacy of the transactions resulting in long term material gains in the hand of the assessee but there is no cogent material or evidence to indicate that the impugned sale proceeds reflected unaccounted income of the assessee. 20. It was the duty of the A.O. to bring on record sufficient evidences and material to prove that the documents filed by the assessee were bogus, false or fabricated and the long term capital gain shown by him was actually his income from undisclosed sources. The only material to support such conclusion of the lower authorities is either the findings of the DDI in general investigations or the twisting statements of M/s P.K. Jain Associates which remain untested by the A.O. himself. None of the judicial precedent supports the case of the Revenue. While making addition as income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar facts and I noted that this Tribunal had consistently accepted the genuineness of the share transaction. Those cases are as under :- ITO vs. Sunita Gupta - ITA No.881/Del/2004 (Delhi Bench SMC ) Dilip Gargh vs. ITO ITA No.470/Agr/2004 Gopal Prasad Agarwal vs. ACIT ITA No.128/Agr/2004 22. I also noted that the case of the assessee is duly covered by the decision of the Third Member in the case of Smt. Sunita Oberoi vs. ITO (Agra) (TM) ITA No.273/Agr/2004 A.Y. 1995-96 dated 07.08.2009, 30 DTR (Agra) (TM) (Trib.) 474 in which on difference of opinion on the question under the similar circumstances whether the assessee can be said to have discharged her burden to prove the genuineness of the transaction in shares of M/s. Prasidh Exports Limited and M/s. K.L.P. Finance Limited or that the burden had shifted on the Revenue that can be held to have not discharged by them, the decision to uphold accepting of alleged profit on alleged share of M/s. Prasidh Exports Limited and M/s. K.L.P. Finance Limited as income from other sources instead of assessee has claimed the capital gain is a correct decision or not. The Hon ble Third Member has held as under :- The onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid discussions, the decisions of the third member, the decisions of the coordinate benches, totality of the facts and circumstances and evidence on record, I am of the considered view that the action of the CIT(A) was not correct in confirming the assessment of ₹ 12,19,538/- as the income from undisclosed sources as against the sale consideration of shares declared by the assessee. The CIT(A) was not justified in rejecting the claim of Long Term Capital Gain of the assessee from sale of shares. I accordingly direct the Assessing Officer to assess the income declared from the sale of shares under the head income from Long Term Capital Gain. Thus, the grounds no.1 2 of assessee s appeal should be allowed. Ground no.3 of assessee s appeal is consequential in nature, does not require any adjudication. So far the ground no.1 of Revenue s appeal is concerned, the same should stand dismissed as infructuous in view of my decision on grounds no.1 2 of assessee s appeal. Ground no.2 in Revenue s appeal is also consequential in nature and should stand dismissed. 24. The matter will now go before the Regular Bench for deciding the appeal in accordance with the majority opi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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