TMI Blog2005 (9) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital gain proceeds as unexplained, which we have already concluded otherwise. Thus, we affirm the decision of the CIT(A) and the revenue fails in this ground. We find that the first appellate authority has failed to address the issue in its proper perspective. The only reason considered by the CIT(A) in deleting the addition is to the effect that the addition as made by the Assessing Officer was on the basis that the sale proceeds of the shares sold were found to be unexplained. While the said ground may not be enough to justify the addition, yet the CIT(A) failed to appreciate that the onus still remained on the assessee to explain the sources for making the impugned investment towards acquisition of the property. We do not find any finding by the CIT(A) with regard to the explanation offered by the assessee on this issue. Although we notice that the assessee, by way of his written submissions before the CIT(A), a copy of which is placed at pages 1-5 of the paper book before us, had explained that the assessee withdrew a sum of Rs. 1,40,000 on 6-7-1996 from its bank account for utilization in the purchase of stamp duty, etc., but this aspect has not been considered by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee on the sale of shares which are as follows. The assessee is shown to have sold 27,000 shares of Adam Finman Limited for Rs. 16,12,913 at the rate of Rs. 60 per share on 27-5-1996. These shares were claimed to be purchased by the assessee on 5-4-1995 at the rate of Rs. 7.40 per share and the indexed cost of acquisition of Rs. 2,16,845 was adjusted against sale-price to arrive at long-term capital gain of Rs. 13,96,068. This amount has been considered exempt by the assessee under section 54F on account of investment in the purchase of house property at Civil Lines, Delhi, for a total consideration of Rs. 17,28,000. In order to verify the transaction of purchase and sale of shares, the Assessing Officer called for information under section 133(6) of the Act from two brokers through whom the assessee claimed to have purchased and sold the shares. The assessee claimed that the shares were sold through M/s. S.K. Aggarwal Co., a Member of U.P. Stock Association Ltd. and the purchase was claimed to have been made from M/s. A.V. Investments Ltd., a sub-broker. Information was called under section 133(6) of the Act from both M/s. S.K. Aggarwal Co. and M/s. A.V. Investments. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggarwal Co., the assessee filed a confirmation from the said broker. The assessee further submitted that the name of the said company was on the records of the Registrar of Companies and he also filed a confirmation from the company with respect to his shareholding. In addition, the assessee filed contract notes and bills of M/s. S.K. Aggarwal Co. for the sale of shares and for the purchase of shares, a memo of confirmation and a bill of M/s. A.V. Investments was filed. 4. After considering the aforesaid submissions, the Assessing Officer has since rejected the pleas of the assessee as follows:- The reply of the assessee has been considered. The root starting point, i.e., purchase of shares have remained unverifiable both from the point of transaction with the broker as also the source of investment of Rs. 1,99,800 which is stated to be in cash out of cash availability which is not supported by any documentary evidence. Mere plus-minus of figures, not supported by any evidence does not lead any evidence to assessee s contention. M/s. A. V. Investments was stated to be operating from Savak Chambers, Naiwala, Karol Bagh, New Delhi but the Delhi Stock Exchange, as informed to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale of shares, which was effected during the year, the assessee submitted that the same was sold through M/s. S.K. Aggarwal Co. and payment was received through account-payee cheque. The assessee submitted that the said shares were sold at Magadh Stock Exchange and the same was corroborated by the Magadh Stock Exchange quotation lists. Accordingly, the assessee supported the trans-action of sale of shares by filing the documents viz., copy of contract note and bills by Shri S.K. Aggarwal Co.; quotations of Magadh Stock Exchange; confirmation by the company by M/s. Adam Finman Ltd.; confirmation from U.P. Stock Exchange regarding membership of M/s. Aggarwal Co. and its Delhi address. 7. On this basis, it was contended that there was no basis for disputing the correctness of the sale transaction and the inference drawn by the Assessing Officer about the genuineness of the transaction was contrary to the factual position. The aforesaid submissions of the assessee were considered by the CIT(A) and the remand report was also called for from the Assessing Officer. The Assessing Officer in terms of its letter dated 9-11-2000 submitted the detailed remand report, which is placed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time. The ld. counsel further submitted that insofar as the purchase of shares was concerned, the same took place in the preceding assessment year and that the same could not be doubted by the revenue in the current assessment year. It was explained that the information during the course of remand proceedings was collected at the back of the assessee and, in fact, such information supported the claim of the assessee. For this, our attention was invited to certain annexures of the paper book, i.e., page 45 wherein the bank of M/s. S.K. Aggarwal Co. had confirmed that they were maintaining an account in the name of M/s. S.K. Aggarwal Co. According to the counsel, this clearly depicted that the Assessing Officer was in the knowledge that the concern M/s. S.K. Aggarwal Co. was an existing concern. Similarly, our attention was also invited to page 46 wherein is placed a copy of the report submitted by the Inspector, which also confirmed that M/s. S.K. Aggarwal Co. was available at the address given by the assessee at the relevant point of time. Accordingly, the ld. counsel has assailed the ground of appeal as preferred by the revenue. 10. We have considered the rival submissions as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 11. Nevertheless, it is also noteworthy that the Assessing Officer has failed to establish that in lieu of the aforesaid sale proceeds, the assessee has surreptitiously introduced his unaccounted money in the bank account. After having perused the entire material that is available on record, there is no averment, much less any evidence, with the revenue in this regard. In our view, while there may be enough grounds with the Assessing Officer to carry out the impugned verification exercise to test the efficacy of the transactions resulting in long-term material gains in the hands of the assessee but there is no cogent material or evidence to indicate that the impugned sale proceeds reflected unaccounted income of the assessee. Therefore, we hereby affirm the conclusion drawn by the CIT(A) in this regard. Having sustained the long-term capital gain declared by the assessee, the exemption thereafter claimed by him under section 54F with regard to the investment made for acquisition of the house property is also allowable because the only ground to deny the said exemption was the treatment of the capital gain proceeds as unexplained, which we have already concluded otherwise. Thus, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion offered by the assessee on this issue. Although we notice that the assessee, by way of his written submissions before the CIT(A), a copy of which is placed at pages 1-5 of the paper book before us, had explained that the assessee withdrew a sum of Rs. 1,40,000 on 6-7-1996 from its bank account for utilization in the purchase of stamp duty, etc., but this aspect has not been considered by the CIT(A) and nor by the Assessing Officer. Certainly, the same requires verification. Therefore, for this limited purpose, we set aside the order of the CIT(A) and restore the issue to the Assessing Officer who shall consider and examine the plea of the assessee in this regard. If the Assessing Officer is satisfied that over and above the sale proceeds of the shares, the assessee had sufficient funds to meet the balance investment in the property, no addition shall be required to be made. If on the contrary, the Assessing Officer is not so satisfied, he shall be at liberty to pass such order as is in accordance with law. Of course, the Assessing Officer shall carry out the verification exercise after allowing the assessee due opportunity of being heard in the matter. 14. In the result, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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