2014 (12) TMI 977 - BOMBAY HIGH COURT

Addition u/s 68 – Genuineness of transaction in shares - genuine or sham and bogus – CIT concluded that certain operators and brokers devised a scheme to convert the unaccounted money of the Assessee to accounted income and the Assessee utilized this scheme. - Tribunal deleted the additions on the ground that onus was not discharged by the department.

Held that:- The Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out, what was important and vital was whether the transactions in shares were genuine or sham and bogus - the Tribunal rightly concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies - the Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue - There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of ₹ 25,93,150.

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 - 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 - 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 - inquiry was not carried forward and with a view to discharge the initial or basic onus, then the conclusion of the Tribunal cannot be termed as perverse – thus, no substantial question arises for consideration – Decided against revenue.