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TMI Blog2023 (2) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... o disprove these relevant documents which support the claim of assessee (LTCG). Therefore, the claim of LTCG on the scrip under question cannot be disallowed based on general enquiry conducted by department unless the involvement of assessee is shown in the illegal activities, without which, the impugned action to disallow the claim of assessee cannot be sustained. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... @ Rs. 12/- per share in Sep, 2012 of a non-listed company for a consideration of Rs. 18,00,000/- only and there was a huge gain made within a period of about two (2) years from purchase of shares, and the assessee had a stock of ten (10) times the shares purchased i.e. 15,00,000 shares out of which assessee sold 36,000 shares for a consideration of Rs. 24,58,602/- which is almost fifty seven (57) times higher than the purchase price, it raised high suspicion about the claim of gain claimed by assessee. 4. According to the AO, the suspicious rise in the number of shares (by splitting) made him conduct deeper investigating about the un-usual gain made by assessee. Therefore, the AO has recorded the statement of the assessee on 12.12.2017 who stated that he was a Chartered Accountant by profession and (his statement has been reproduced from page no. 9 to 15 of the assessment order) and that he has been an investor for last 10 years and keeps a watch of the companies traded in stock-exchange through media reports; and has subscribed to the preferential issue of shares of M/s Green Crest Financials, formerly known as Meri Gold Glass Industries, because he thought that there was good op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the transaction is Rs. 24,66,000/- out of the sale of 36,000 shares. The difference of Rs. 7,398/- is nothing but the transfer expenses expended by the assessee. This expense also needs to be added back in view of the modus operandi explained in herein above. Therefore a total sum of Rs. 24,66,000/- (Rs. 24,58,602/- + Rs. 7,398/-) represents the unexplained investment made by assessee in cash to obtain the equivalent amount as bogus profit on sale of shares. Alternatively, it can also be concluded that the sum of Rs. 24,66,000/ -represents income from other sources and not the income in the nature of capital gain." 5. Aggrieved by the action of AO the assessee preferred an appeal before the Ld. CIT(A) who was pleased to dismiss the appeal of the assessee and aggrieved by the action of the Ld. CIT(A), the assessee is before this Tribunal. 6. Having heard both the parties and after perusal of the records, it is noted that the assessee is a Chartered Accountant by profession and works in M/s. Shreepati Built Investment. And when summoned before the AO, he has submitted that he was a regular investor in shares like M/s. Power Grid, M/s. Adani Port, M/s. Coal India and M/s. Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n LTCG merely on the basis of suspicion. Therefore, relying on the decision of the Hon'ble Bombay High Court and Co-ordinate bench decision of the Tribunal in similar cases (especially decision of the Hon'ble Mumbai Tribunal in the case of Shyam R Pawar v DCIT in ITA No. 5585/Mum/2011 dated 04.05.2012), wherein the Tribunal in that case noted that the shares were purchased by the assesse (Shyam R. Power), which continued to be with him till the end of the year. Further the assesse had sold the shares in first lot of 7500 on 19.02.200 for Rs. 10,00,000 and Rs. 6,83,125 on 05.03.2003 and 06.03.2003 for a total consideration of Rs. 9,10,025. Similarly the assesse sold 12,500 shares of Mantra Online Ltd. on 25.02.2003. Besides this, Demat account showed the transactions of credit of 20,000 shares of Mantra Online Ltd. on 31.01.2003 and sale of these shares on 20.02.2003 of 7,500 shares and on 22.02.2003 of 12,500 shares. And that assessee had also filed bill along with contract notes from the two brokers which gave details of transactions with the exact time of transaction depicting trade time. This Tribunal noted that at no point of time, the department had been able to pin point that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 and 37 of the appeal paper book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and for the purposes of faulting the revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding has been recorded by CIT(A) to the effect that assessee has made investment in shares which was purchased on the floor of stock exchange and not form M/s Basant Periwal and Co. Against purchases payment has been made by account payee cheque, delivery of shares were taken, contract of sale was also complete as per the Contract Act, therefore, the assessee is not concerned with any way of the broker. Nowhere the AO has alleged that the transaction by the assessee with these particular broker or share was bogus, merely because the investigation was done by SEBI against broker or his activity, assessee cannot be said to have entered into ingenuine transaction, insofar as assessee is not concerned with the activity of the broker and have no control over the same. We found that M/s Basant Periwal and Co. never stated any of the authority that transaction in M/s Ramkrishna Fincap Pvt. Ltd. on the floor of the stock exchange are ingenuine or mere accommodation entries. The CIT(A) after relying on the various decision of the coordinate bench wherein on similar facts and circumstances issue was decided in favour of the assessee came to the conclusion that transaction entered by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e already shown in the balance sheet submitted by the assessee, and therefore, in that situation, how the revenue condemning the transaction even on the ground of steep rise in the shares. If within a period of one year, the share price had risen from Rs. 5 to 55 and from 9 to 160 and one person was holding the shares much prior to that start of rise of the share price, then how can it be inferred that such a transaction entered into a sham transaction few years ago and prepared for getting the benefit after few years when share will start rising steeply. In the present case even there was no reason for such suspicion when the shares purchased years before the unusual fluctuation in the share price. Hence, the appeal of department dismissed CIT(A) and ITAT while allowing the appeal held as under; It is also not in dispute that assessee disclosed the shares in their possession in earlier return and statement of accounts and they are duly entered into the books of the accounts of the assessee which was duly proved by the bank statement." 11. I find that in the case at hand before me, relevant evidence were produced to suggest that the transactions (purchase and sale of shares) wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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