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2009 (7) TMI 1251 - AT - Income TaxSale and purchase of shares - Long-term capital gain - assessees claimed/offered long-term capital gains on sale of shares of various listed companies - Assessment proceedings u/s 153A - genuineness of transactions - Addition made by the AO u/s 68 - HELD THAT:- We find substantial merit in the view of the learned CIT(A) that it is this fact which has resulted into such action of the AO. We have also noted that voluminous documentary evidences have been filed by the assessee to prove its claim which support the genuineness of the transaction. However, the AO has utilized the statements of the persons who were not cross-examined by the assessee. Hence, as per the settled judicial principle, such statements cannot be given any weightage. On appreciation of documentary evidences submitted by the assessee, the genuineness of the transactions appears to be established. As regards the aspect of off market transactions, it is noted that neither these are illegal nor prohibited and only some of the compliances have to be made by the brokers. As regard the aspect of such compliances, we find that it is not the case that all the off market transactions have not been reported by the concerned brokers to the stock exchange as per rules and even otherwise, any failure on the part of the brokers in doing such compliance cannot make the contract between the assessee and the broker illegal or void as the broker may face the consequences for his default under relevant statute. It is also noted that all the transactions are not off market transactions, hence, the AO's approach to pick and choose the only such instances which are favourable to him cannot justify such addition. We are further of the view that economic consequences as a result of off market transactions or otherwise have taken place and, therefore, such transactions cannot be treated as sham merely for some discrepancies or for the view of the AO in regard to genuineness of these transactions. Thus, we are of the view that the share transactions cannot be considered as ingenuine/sham and, therefore, the sale proceeds of such share transactions cannot be taxed u/s 68 of the Act. Treatment of transactions - We find that the learned CIT(A) has examined the factual details of these transactions on the basis of various parameters like frequency, volume, line of trade in which the assessee is mainly engaged and we are of the view that the decision of the learned CIT(A) is correct in law on that count also. Before parting from this aspect, we may add that this plea of the AO during the course of appellate stage itself contradicts and weakens the stand of the AO regarding his action of making addition under s. 68 because such plea results into an inference that the genuineness of the transaction cannot be doubted in absolute terms. Thus, we hold that there is no merit in any ground of this appeal of the Revenue. Hence, we dismiss all the grounds raised by the Revenue. In the result, the appeal filed by the Revenue stands dismissed. Addition u/s 68 - Statement recorded on oath during the search operations - HELD THAT:- It is noted that the sole basis for making this addition is the statement of Shri Tilak Singh Parmar which has been retracted by him subsequently also. It is also noted that the said person is working in the capacity of peon/office boy. Hence, how his statement only can be a proper basis for making such addition. We further find that the entries recorded in such diary have been reconciled by the assessee from the books of account of various group concerns/assessees. Hence, in our opinion, the order of the learned CIT(A) in deleting the addition is correct in law. Thus, ground No. 3 of the Revenue's appeal is also dismissed. In the result, Revenue's appeal is dismissed.
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