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TMI Blog2013 (6) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... the share broker Shri Ashok Kumar Kayan through whom the assessee is said to have purchased the shares was running a racket of providing accommodation entries respecting Long Term Capital Gain on shares. (d) that the assessee failed to produce the Contract Note in Form A, the vital evidence in the case of the assessee, showing the particulars of purchase of shares either before the AO during the course of assessment proceedings or before the CIT(A) during the course of appellate proceeding. (e) that the assessee failed to explain the source for the purported purchase of shares. (f) that though the assessee is stated to have purchased the shares on 26.6.2004, the same, as may be seen from assessee's letter dated 30.4.2010 addressed to the AO and copy of demat account enclosed therewith, which were formed part of AO's remand report, were first reflected only in the demat account as on 17.6.2005 That the appellant craves leave to add, amend or alter any or all the grounds of appeal on or before the date the appeal is finally heard for disposal. 2.1 From the above grounds, it is gathered that the only grievance of the Department relates to deletion of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (01-01-2004 to 23-02-2005) mentioned by SEBI. The Assessing Officer was of the view that transactions were not genuine and were fraudulently done with a view to showing Long Term Capital Gain which was exempt u/s 10(38) of the Act. He, therefore, asked the assessee to show cause as to why an amount of ₹ 14,59,240/- shown as Long Term Capital Gain on the sale of shares of M/s Shree Nidhi Trading Co. Ltd. may not be treated as assesee's income from the undisclosed sources. In response, the assessee vide letter dated 16-12-2009 stated as under:- (i) The assessee has shown Long Term Capital Gain of ₹ 14,59,240/- on account of sale of shares numbering 9500 of M/s Shree Nidhi Trading Co. Ltd. The said shares were purchased on 26-06-2004. Your goodself has already been known that the contract note of purchase of shares has been attached with the determination slip while opening and putting these shares in Demat account. The copy of Demat account has already been filed wherein these shares appears. (ii) The fact shown in para 3 of your letter seems to be correct. (iii) Kindly make available the relevant documents where from your goodself found the allegation that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of shares were subject to STT and were sold through Stock Exchange, it is seen that the reply is general in nature and any transactions in Listed Security through any recognized Stock Exchange are subject to STT and are required to be sold through recognized Stock Exchange. This fact does not give any sanctity to a particular transaction. (iii) With regards the contention that any person buying shares from market through broker cannot foresee whether the said broker is involved in any scam and manipulative activities, it is seen that the case of the assessee in showing the Long Term Capital Gain which in turn is exempt u/s 10(38) of I.T Act is not a solitary case. Apart from the assessee, some of his relatives and associates namely (i) M/s Pipalia Engg. Co. Pvt. Ltd. and (2) Sh. Abhay Raj Shah have also shown the Long Term Capital Gain of ₹ 33,75,242/- and of ₹ 26,94,325/- respectively during the same period. Besides, it is seen that in the past also, certain associates of the assessee have shown Long Term Capital Gain of substantial amount on the sales of shares of M/s Shree Nidhi Trading Co. Ltd. It is also worthwhile to mention here that in the case of one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions was one of the accused brokers in the said scam. Following the enquiries made in this regard many assessees of the Jodhpur Region have voluntarily surrendered the income which they had shown under the head Long Term Capital Gain. (vi) The above facts and circumstances of the case shows that the assessee and its associates have history of showing Long Term Capital Gain on the sale of the said M/s Shree Nidhi Trading Co. Ltd. which in turn they have been claiming as exempt u/s 10(38). The overall facts of the case lead to the finding that the transactions in the shares of M/s Shree Nidhi Trading Co. Ltd. on which the assessee has shown Long Term Capital Gain of ₹ 14,59,240/- are not genuine transactions but are managed transactions done with a view to showing and claiming Long Term Capital Gain as exempt u/s 10(38) of the I.T Act and that the assessee has brought into books of account its unaccounted money in the guise of Long Term Capital Gain which in turn is exempt u/s 10(38) of the I.T Act. 2.4 In view of the above, the Assessing Officer did not accept the claim of the assessee for the amount of ₹ 14,59,240/- as exempt u/s 10(38) of the Act. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the copy of the DEMAT account as on 17-06-2005 holding of 9500 shares of M/s Shree Nidhi Trading Co. Ltd. was reflected and 9500 shares were shown as sold. The ld. CIT(A) also pointed out that the Assessing Officer stated that the assessee was not having contract note of purchase of shares. However, the assessee had furnished the copy of contract note regarding sale of shares. The ld. CIT(A) categorically stated that the Assessing Officer with letter dated 21-05-2010 furnished the letter received from Stock Exchange where the names and addresses of the directors of M/s Shree Nidhi Trading Co. Ltd. were submitted which revealed that for purchase of shares, the assessee had submitted the DEMAT account. The ld. CIT(A) also pointed out that Assessing Officer had not given any adverse findings about the DEMAT account. The ld. CIT(A) observed that the assessee had furnished sale contract note and sales were reflected in the DEMAT account and that the Assessing Officer called for the names and addresses of the directors of M/s Shree Nidhi Trading Co. Ltd. which proved that the company was genuine. The ld. CIT(A) also pointed out that the Assessing Officer in the assessment order menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Long Term Capital Gain. It was stated that the transaction was genuine for the following reasons. (a) Because purchases were made from market on the value as it was on the date of stock market. (b) Shares were put in DEMAT account. (c) Sales were made after expiry of one year from the date of purchase or even from the date of DEMAT of shares. (d) Sale of shares were subject to STT and were sold through Stock Exchange. (e) A person purchasing shares from the market through broker how can foresee that said company or broker is involved in scam and how a layman can come to know about this fact which A.O has alleged. (f) As alleged then why SEBI allowed M/s Shree Nidhi Trading Co. Ltd. to transit on Stock Exchange. If it was not allowed to be transited then we would not have purchased the shares. It was accordingly submitted that the ld. CIT(A) was justified in deleting the addition made by the Assessing Officer 2.10 We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it appears that the assessee purchased the shares of M/s Shree Nidhi Trading Co. Ltd. from market at t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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