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TMI Blog2020 (4) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... aged as a law practitioner and declared Rs. 2,81,550/- as professional fees received and net income from business and profession at Rs. 22,394/- after some expenditure on various heads. The AO noted that the assessee has claimed exempt income u/s 10(38) of the Act on the LTCG, but received to the tune of Rs. 7,10,447/-. The AO asked for details of this claim of the assessee and the AO acknowledges that the assessee provided it and after going through the same, he notes that the "assessee has purchased 1,000 no of shares under script No. M/s. Nikkie Global which was purchased on 19.07.2012 with a purchase amount of Rs. 1,31,658/- and the said share i.e. total number of 1000 shares were sold on 13.09.2019 for a total consideration of Rs. 8,42,133/-. Therefore, capital gain of Rs. 7,10,447/- has been arisen as long term basis. Since this gain has been taken as exemption by the assessee on the basis of provision of sec. 10(38), the assessee was asked to explain as to why the exemption claimed by the assessee on long term basis will not be treated as an artificial long term capital gain vide this office letter dated 10.11.2016. The assessee was specifically asked to produce the related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed the same. Aggrieved, the assessee is before me. 6. The ld. AR assailing the decision of the Ld. CIT(A) drew our attention to the fact that similar additions were made by the AO in respect of the LTCG claims of the same shares, M/s. NGFL which action was not approved by the Tribunal and took our attention to the decision of the Tribunal in Madhu Killa vs ACIT - ITA No. 834/Kol/2018 which is placed at page 44 to 58 of the Paper Book and Aditya Vikram Sureka HUF - ITA No. 1650/Kol/2018 placed at page 59 to 75 of the Paper Book. He also drew our attention to page 3 of the assessment order wherein the AO has acknowledged that the assessee had filed the respective documents to prove the transactions i.e. contract notes, Demat account, payments made through bank accounts, the transactions having being made through SEBI registered stock broker, contract notes of sale and the fact that deliveries were received through Demat account etc. According to the ld. AR, the AO and the Ld. CIT(A) got carried away by the general report of the Investigation Wing which has got nothing to do with the assessee's case and since no wrong doing of assessee or its broker has been mentioned in the repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. NGFL is found placed at page 15 of the Paper Book and the bank statement reflecting the receipt on sale of shares of M/s. NGFL is found placed at page 16 of the Paper Book and the Demat statement reflecting sale on 17th September, 2013 has been furnished at the time of hearing which copy has been given to the ld. DR also. Thus it is noted that the assessee has purchased on-line scrips of M/s. NGFL and sold it also on-line after paying STT. Thus the assessee has discharged its onus to prove the transactions to be bonafide transactions from which it claimed the LTCG and therefore this amount is an exempt income u/s 10(38) to the tune of Rs. 7,10,447/-. We note that the AO has not found any fault with the aforesaid documents though he accepted that he has gone through the same. In such a scenario we are bound to follow the decision of this Tribunal in another case of an assessee wherein similar claim of LTCG on sale of M/s. NGFL was considered and granted. It is noted that in the case of Smt. Madhu Killa (supra) held as under while granting LTCG claim on sale of scrips of M/s NGFL:- "15. We have heard both the parties and perused the records. It was brought to our notice by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment has been made on 14.06.2012 vide cheque no. 138919 for an amount of Rs. 32,21,213.10 to the recognized stock broker of Bombay Stock Exchange M. Prasad & Co. We also note from perusal of pages 20-23 of paper book which is the extract of pass book of assessee in Punjab National Bank wherein we note that assessee had received sale consideration through bank transaction and we verified the contract note of sale placed at pages 7 to 17 and tallied the entries of sale consideration received by the assessee in her bank account and find it to be correct. We on perusal of page 24, which is the transaction cum holding statement of Stock Holding Corporation of India Ltd. find that the share of M/s. NFGL was held in De-mat account. We note from a perusal of page 26, which is the transaction statement of Demat account shows that M/s. NFGL's shares of Rs. 25,000/- by inter depositing transfer on 15.06.2012. A perusal of page 30 of paper book, which is the transactional statement of Demat account corroborate the sale of scrips of M/s. NFGL (from 07.08.2013 - 30.10.2013). A perusal of pages 34-36 of paper book, which is the ledger of assessee in the books of share broker (01.04.2014 to 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee and if it is found to be correct and valid then in all fairness the AO should accept the claim of LTCG. In case if the AO on verification finds that the documents produced by the assessee is false or fabricated, then the AO should bring his adverse findings to the notice of the assessee and confront her with the adverse material/findings. Then again the onus will shift to the assessee to prove the genuineness of the transaction. Here, in the present case is concerned, the AO after going through the documents, failed to return a finding that documents produced by assessee to substantiate the yield of LTCG was false or fabricated. The facts of the case as discussed, and the evidence adduced by the assessee, support that the transaction made by the assessee through registered stock broker through Bombay Stock Exchange, after remitting STT and all payments were transacted through bank and the shares were held in De mat account, has to be accepted in the absence of any other material to suggest an adverse view. The AO/Ld. CIT(A) erred in rejecting legally admissible evidence and wrongly took adverse view against the claim of assessee based on surmises, suspicion and conj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... floor of the stock exchange in public view which action has not been interdicted by the securities watchdog SEBI. In such a scenario, to paint the entire share transaction of M/s. NFGL which yielded high capital gain as bogus is not correct without materials to support such an adverse finding. We note in the light of the aforesaid relevant evidences, the action of the AO and CIT(A) was not justified in rejecting the claim of the assessee on the basis of theory of surrounding circumstances and human conduct and preponderance of probability against the assessee. For that we rely on the decision of the Special Bench of Mumbai Tribunal in the case of GTC Industries Ltd. Vs ACIT (supra) for this proposition. The various facets of the contention of the ld. AR(supra), to rope in the assessee and for drawing adverse inferences, which remain unproved based on the evidence available on record are not reiterated for the sake of brevity. 18. At the cost of repetitions, we find that the transactions of the sale of shares by the assessee was duly supported by relevant evidences including contract notes, demat statement, bank account reflecting the transactions, stock brokers have confirmed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The AO has also not doubted the genuineness of the documents placed by the assessee on record. The AO's observation and conclusion are merely based on information. Therefore on such basis, no disallowance can be made and accordingly we find no infirmity in the order of the ld. CT(A), who has rightly allowed the claim of the assessee. This ground no.1 of the revenue is dismissed." We agree with the reasoning of the tribunal on this point also. We do not find any reason to interfere with the impugned order. The suggested question, in our opinion do not raise any substantial question of law. 19. In the light of the documents furnished i.e. (i to v & i to iii) in Para 3(supra) we find that there is absolutely no adverse material to implicate the assessee to have entered into any illegal actions/ modus-operand prohibited by law as alleged by the AO against the assessee, which in our considered opinion has no legs to stand and therefore has to fall. We take note that the ld. DR could not controvert the facts supported with material evidences which are on record and could only rely on the orders of the AO/CIT(A). We note that in the absence of material/evidence the allegations th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 68 of the Act. We note that though the department was aware that the assessee had purchased the 25000 shares of M/s. NFGL in AY 2013-14, for Rs. 32,21,269/- has not reduced the same from the total sale consideration of Rs. 2.16 cr. It is elementary that income can be computed only after defraying the cost. So the action of AO to add the entire sale consideration of Rs. 2.16 cr. itself is arbitrary exercise of power and cannot be sustained. Therefore, the action of the Ld. CIT(A) in confirming the addition of entire sale consideration of M/s. NFGL is perverse and is directed to be deleted. Consequently, the addition of 5% as commission to the tune of Rs. 10,82,460/- cannot be also sustained and ordered to be deleted. The assessee's appeal succeeds." 9. Respectfully following the Tribunal's order in Madhu Killa and taking into consideration the documents filed by the assessee to prove the transaction which has taken place through on-line (both purchase and sale) after giving STT need to be allowed and therefore i allow the claim and direct deletion of addition of Rs. 7,10,447/-. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 7th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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