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TMI Blog2018 (6) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... ted - There is no basis for treating the said transactions as not genuine. Considering the documents placed on record and the case law relied, we have no hesitation in directing the A.O. to accept the long term capital gains and short term capital gains declared - hence we dismiss the appeals filed by the Revenue and allow the cross objections filed by the assessee. - ITA No 984/Hyd/2017, 985/Hyd/2017, 986/Hyd/2017, 987/Hyd/2017, C.O No. 31/Hyd/2017, C.O No. 32/Hyd/2017, C.O No. 33/Hyd/2017 And C.O No. 34/Hyd/2017 - - - Dated:- 15-6-2018 - SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Revenue : Shri M. Naveen For The Assessee : Shri K.C. Devdas ORDER PER D. MANMOHAN, VICE PRESIDENT: All these appeals pertain to the A.Y 2008-09. There are four appeals by the Revenue, directed against the orders passed by the CIT(A)-2, Hyderabad. Assessee filed cross objections wherein the reopening of assessment was challenged. Ld. Counsel submits that this issue was considered by the ITAT in the case of Smt. Saritha Devi w/o Shri Anil Kumar (ITA No. 1228/hyd/2016, dated 05.052017), wherein the facts are identical and the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. has any tangible information so as to reopen the assessments under section 147. The returns were already f iled admitting incomes under capital gains. These were accepted under section 143(1). Assessees have furnished the necessary information of purchase bills, sale bills, ledger accounts, De-mat account copies in support of transactions. Since there is no other inf ormation so as to come to conclusion that the transactions entered by the assessee are bogus, these are to be accepted as transactions entered in normal course. The enquiry f rom the NSE that M/s. Alliance Intermediaries and Net Work P. Ltd., is not a broker or sub-broker does not establish that the transactions with that company is bogus. Moreover, as far as Smt. Sarita Devi is concerned, the purchase transactions mostly pertain to long term capital gains and have been entered in earlier year and have been recorded as on 31.03.2006. A.O. even though has reopened the assessment in that year also, much bef ore this assessment was reopened, the said proceedings were dropped without taking any adverse view. Consequently, the purchases shown in that year in the balance sheet has to be accepted as genuine and subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ati High Court decision in the case of CIT Vs Sangamitra Bharali (361 ITR 481) wherein it was held that the capital gains are sham transactions entered only to give colour of genuineness and theref ore, held that the capital gain arising out of these transactions cannot be believed as genuine and upheld taxing the said amount as unaccounted income brought into books in the guise of exempted capital gains. 8. Any other ground that may be urged at the time of hearing . 3. The following are the facts concerning Smt. Sumanlata Agarwal. The Assessee, an individual by status, has income from capital gains and income from other sources. For the year under consideration the assessee claimed exemption of long term capital gain of 49,89,478/- u/s 10(38) of the IT Act. The LTCG was stated to be arising out of sale of shares of M/s Zen shaving Ltd. 4. Though the original assessment was completed on the admitted income the same was reopened on the ground that income charged to tax has escaped assessment. In response to the notice the assessee appeared from time to time and furnished details. The assessee produced sale bills, purchase contract notes, de-mat account cash payment rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a copy of the sworn statement of Shri Mukesh Choksi but the same was not given by the A.O despite the fact that the statement of Shri Mukesh Choksi was taken as the sole basis for making the addition. It was also stated that the copies of material / information gathered by the A.O behind the back of the assessee and claimed to have been obtained from Shri Mukesh Choksi, was not provided to the assessee. 8. Ld. CIT(A) noticed that identical issue was considered by the ITAT, Hyderabad Bench in the case of Shri Vinay Kumar Agarwal (ITA No. 153/Hyd/2015 dated 04.09.2015) for the same assessment year wherein the Bench observed as under: 10. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. We have also carefully gone through the decisions relied upon by ld. AR. As could be seen f rom the assessment order, AO as such, has not disputed the share transaction conducted through M/s Alliance Intermediaries Network Pvt. Ltd. since he has ultimately accepted the gain from sale of share transaction as capital gain, though he treated it as short term capital gain as against long term capital gain cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f act that the shares of M/s Jai Corporation Ltd. were transf erred to assessee s D-mat account on 15 17/05/07, but, that alone cannot dilute the f act that assessee did purchase shares of M/s Jai Corporation through M/s Alliance Intermediaries Network Pvt. Ltd. in April 06. This fact has been clearly demonstrated by assessee by producing adequate and cogent documentary evidences by way of contract note and other evidences including the return of income f iled f or AY 2007-08, which has not been controverted by the department. It is also a f act on record that sub-broker M/s Alliance Intermediaries Network Pvt. Ltd. issued conf irmation certif icates acknowledging the f act that shares were held in its pool account on behalf of assessee till it is transferred to assessee s D-mat account. When assessee has produced all documentary evidences and has also submitted its explanation before AO as well as ld. CIT(A), there is no reason to disbelieve the same unless strong and positive evidence is brought on record to disprove the same. As it appears, AO only on extraneous considerations and presumptions surmises has concluded that assessee has purchased the shares only on 15 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ITAT, Hyderabad Bench in the case of Shri Paduchuri Jeevan Prasant (ITA No. 452/Hyd/2015 dated 19.08.2016), wherein the Tribunal observed that in the absence of giving an opportunity to the assessee to cross examine Shri Mukesh Choksi the claim of the assessee that it has purchased shares cannot be disregarded. No doubt Shri Mukesh Choksi in his statement stated that he was indulging in bogus transactions but at the same time the same person has also reconfirmed that the transactions were genuine. In fact his statement does not implicate the transaction of the assessee therein. Under the circumstances the Tribunal set aside the addition made by the A.O. 10. The contentions of the assessee before the Ld. CIT(A) can be summarized item wise. (a) The shares of listed companies were purchased and sold through the stock exchange by the share broker M/s Alliance Intermediaries Net Work (P) Ltd paying security transaction tax. (b) Share were held for a period of more than 12 months, reckoned from the date of purchase bill. (c) The A.O merely relied upon the statement of one Shri Mukesh Choksi, Director of Mahasagar Group of cases which includes a company by name M/s Alliance In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was admitted by the Ld. Counsel that the facts in all the cases are identical and, he has not seriously contested the cross objections filed before us. 13. Ld. DR more or less relied upon the observations made by the A.O and contended that during the course of assessment proceedings enquiries are made with the concerned stock exchanges and found that registration with the NSE was cancelled long before the share transaction was entered into between the assessee and M/s Alliance Intermediaries Net Work (P) Ltd. It was also submitted that the notice issued to M/s Alliance Intermediaries Net Work (P) Ltd was not responded to. Under these circumstances the onus is on the assessee to establish that the shares were actually purchased and held by him for a period exceeding 12 months for claiming it as long term capital gains. 14. We have carefully considered the rival submissions and perused the record. Identical issues come up before the ITAT A Bench Hyderabad in the case of Smt. Saritha Devi, wherein one of us (the Hon ble Accountant Member) is a party. In this case the Tribunal observed, with regard to the statement of Shri Mukesh Choksi, as under: 7.1 With ref erenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicate that the transactions are genuine and cannot be held to be sham on the basis of so called statement of Mr Mukesh Choksi on 16-01- 2013. The genuineness of statement itself cannot be accepted . 15. It is not disputed that the facts are mutatis mutandis identical in the case of Smt. Saritha Devi w/o Shri Anil Kumar and Smt. Nitika Kumari (ITA No. 1228 1229/Hyd/2016 date 05.052017), wherein the Bench observed (Wherein Ld. Accountant Member is a party) that even reopening of the assessment is bad in law apart from the fact that the declaration of capital gains cannot be doubted. We have already extracted para 10 and 10.1 of this order with regard to reopening of assessment. On merits also the Tribunal observed as under: 11. As seen from the orders, the A.O. has treated the entire sale consideration received as bogus and brought to tax the entire amount as stated to have communicated to him. The Ld. CIT(A) examined this aspect and gave f inding that the transactions in the case of Smt. Sarita Devi are not to the extent of ₹ 2.20 crores and restricted the sale amount to the extent of ₹ 90.75 lakhs correctly. She also gave correct f inding that the en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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