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2013 (7) TMI 950 - ITAT PUNEBogus share transaction - whether the entire sale proceeds of the shares received by these assessees can be treated as an income from undisclosed sources? - reliance placed by the AO on the evidence without affording opportunity to the assessee to cross-examine - Held that:- AO has failed to establish a clear case against the assessees that the share transactions, on which the long-term capital gains have been declared, are sham and camouflage - reliance placed by the AO on the evidence without affording opportunity to the assessee to cross-examine the three brokers who have allegedly denied the issuance of the contract notes also goes in favour of the assessees on the well settled judicial principles that no evidence should be used against the assessee unless the assessee has been given opportunity to cross-examine the deponents. As admittedly all the sales are routed through the demat account, charge of manipulation by the AO is totally baseless. Once the documentary evidence is filed by the assessee pointing out some minor discrepancies and without affording opportunity to cross-examine the said brokers has no weightage as evidence in the judicial proceedings. The charge of sharp rise in the share prices without proper financial footing of the investee companies is general charge and is not established by the AO. We also hold that merely because there is a delay in converting the physical shares into electronic form i.e. the demat account, that cannot be the criteria to hold that the shares transactions are arranged and camouflaged as in all the cases the assessees have recorded their share transactions in the regular books of account prior to the date of search. There was heavy burden on the AO to destroy the claim of the assessee but except going on the general philosophy, nothing has been made out by the AO to show that the claim of the assessee in respect of the sale of shares is not correct. We, therefore, hold that both the authorities below are not justified in holding that the entire sale proceeds shown by the assessee are out of sham and bogus arranged share transactions. - Decided in favour of these assessee. Addition of the alleged payment of commission @ 6 per cent is also without any merit and accordingly grounds are also decided in favour of these assessee.
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