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2016 (5) TMI 1325 - AT - Income TaxAssessments made u/s. 153A - documents found at the time of search which were considered as incriminating for making the impugned assessments - involvement in IPO shares - Held that:- IPO transactions relate to 2005 and, therefore, cannot be considered as incriminating material in the assessments prior to that date because in our considered opinion, the incriminating material should be for each assessment year in the block of six assessment years. Since the impugned/alleged incriminating material did not pertain to conclude assessment years namely A.Y. 2000-01 to 2004-05. Thus we direct the A.O to delete the impugned additions made u/s. 153A of the Act for assessment years 2000-01 to 2004-05. The first issue is decided in favour of the assessee and against the revenue. Several gift deeds found at the time of search - Held that:- AO had proceeded on the basis of gift deeds and copies of return of income of the donors and the post search inquiries to conclude that the gifts received by the assessee are bogus gifts. Before us, Revenue has not placed any material on record to demonstrate that the gifts deeds and copies of return of income of the donors found at the time of search were different documents from those that were considered by the Assessee while claiming the amounts to be the gifts. As decided in the case of CIT vs. Ashok Dua [2008 (8) TMI 897 - DELHI HIGH COURT] all that was found were the gift deeds and the affidavits and there was no incriminating material found in the course of search to suggest that the gifts were bogus. - Decided in favour of the assessee. Treatment of capital gains as business income - Held that:- The intention of the assessee at the time of the purchase of shares is paramount. If the assessee has clear intention of being an investor and showing the shares as investment, we do not find any reason to disturb the intention of the assessee. The assessee's under consideration are investors and, therefore, any gain arising out the transfer of shares should be treated as capital gains be it short term or long term. Thus we direct the A.O to treat the gains arising out of the sale of shares under the head capital gains be it short terms or long term as the case may be.- Decided in favour of the assessee. Denial of the set off of losses on sale of shares - transactions have been done through a related party and the transactions are off market transactions and, therefore, not verifiable - Held that:- We do not find force in the allegations made by the A.O. Firstly, merely because the transactions were with related party would not make the transaction sham or bogus. We find that the accounts of M/s. Grace Investment are audited and even if the transactions are off market transactions, the purchase and sale price are easily verifiable from the stock market. Since the assessee is having a running account with Grace Investment, it is not necessary to make payments for every purchases and receive consideration for every sale. It is customary of such type of transaction to have a running account with the principal broker/intermediary and settle the accounts, debit or credit, at the end of a certain period.Most importantly in similar transactions wherever there was gains, the A.O has accepted such gains as it is, therefore, we do not find any logic/reason in discarding the losses made by the assessee on sale of shares. The revenue cannot blow hot and cold in the same breath for similar transactions. Thus the losses on sale of shares deserve to be set off and we direct the A.O accordingly.- Decided in favour of the assessee. Levy of penalty u/s. 271(1)(c) - Held that:- Since, we have directed the A.O to treat the surplus on sale of shares under the head capital gains and since, we have directed the A.O to allow the set off of losses against the gains, there remains nothing for the levy of penalty u/s. 271(1)(c) of the Act.- Decided in favour of the assessee.
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