2017 (11) TMI 904 - ITAT KOLKATA

Denial of exemption for long term capital gains treating the same as unexplained cash credit - CIT-A allowed the claim - rejecting the claim of the assessee on the basis of theory of surrounding circumstances, human conduct, and preponderance of probability - Held that:- Donor confirmed the fact of making the gift and delivering the shares by transfer to the Demat Account of the assessee. The copy of the demat account of the Donor are also available in Pages 38-39 of the Paper Book which shows that the Donor was holding 40,000 shares of SOCIL as on 31-03-2006. Thus the assessee has substantiated and the Donors have duly confirmed the transaction of gift, therefore the ld AO was not justified in doubting the gift of shares made to the assessee.

The assessee and / or the stock broker M/s P Didwania & Co and Toshith Securities P Ltd., both registered share and stock brokers with Calcutta Stock Exchange had confirmed the transaction and have issued legally valid contract notes under the Law.

There is absolutely no adverse material to implicate the assessee to the entire gamut of unwarranted allegations leveled by the ld AO against the assessee, which in our considered opinion, has no legs to stand in the eyes of law. We find that the ld DR could not controvert the arguments of the ld AR with contrary material evidences on record and merely relied on the orders of the ld AO. We find that the allegation that the assessee and / or Brokers getting invo2lved in price rigging of SOICL shares fails. It is also a matter of record that the assessee furnished all evidences in the form of bills, contract notes, demat statements and the bank accounts to prove the genuineness of the transactions relating to purchase and sale of shares resulting in LTCG. These evidences were neither found by the ld AO to be false or fabricated. The facts of the case and the evidences in support of the assessee’s case clearly support the claim of the assessee that the transactions of the assessee were bonafide and genuine and therefore the ld AO was not justified in rejecting the assessee’s claim of exemption under section 10(38) of the Act.

Hence we hold that the ld AO was not justified in assessing the sale proceeds of shares of SOICL as undisclosed income of the assessee u/s 68 of the Act and therefore we uphold the order of the ld CIT-A and dismiss the appeal of the revenue. - Decided in favour of assessee.