TMI Blog2012 (7) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... r, Judicial Member The Revenue has questioned first appellate order on the following grounds : 1. On the facts and circumstances of the case, the CIT(A) erred in treating the income by the assessee from undisclosed sources as capital gains. 2. On the facts and in the circumstances of the case the CIT(A) erred by accepting the cost of purchase/acquisition of the shares as stated by assessee, contradicting his own findings in the appellate order that the purchase contract notes are not genuine and that the shares were not purchased by the assessee in financial year 2003-04. 3. On the facts and in the circumstance of the case, the CIT(A) ignored the fact that once the documents/evidences produced by the assessee have been proved to be fabricated, the only logical conclusion that can be drawn is that the whole transaction is a sham transaction and assessee has tried to introduce his undisclosed income in the guise of long-term capital gain. 4. On the facts and in the circumstances of the case, the CIT(A) erred by applying the decision of Hon'ble High Court of Punjab Haryana delivered in the case of CIT v. Anupam Kapoor [2007] 212 CTR (P H) 491:[2008] 299 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. We have heard and considered the arguments advanced by the parties. In view of the orders of the authorities below, material available on record and the decisions relied upon. 4. The relevant facts are that the AO denied exemption under s. 10(38) of the Act in respect of long-term capital gain mainly on the basis that there was a substantial delay in transferring the shares into D-mat account from the date of purchase, transactions stated to have been mentioned on the contract notes were not routed through the Calcutta Stock Exchange, the assessee was unable to give any satisfactory explanation about the genuineness of the contract notes issued by the sharebroker and acquisition or delivery of shares, and sufficient proof regarding the possession of shares as on the date of purchase was not there. The details of these transactions are being reproduced hereunder : Name of the company Date of contract note Trade No. Settlement No. Quantity of shares Rate including brokerage Amount Oasis Cine Communications 2-4-2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-12-2005 968 2006472R 1,000 196.70 1,96,700 Total 10,000 19,67,750 The learned CIT(A) has accepted the finding of the AO that there is no sufficient and valid evidence available with the assessee to prove that the shares were actually acquired followed by delivery in the relevant financial year. The learned CIT(A) has, however, allowed short-term capital gains treating the dates of the acquisition of the shares as on the date of transfer of shares to the appellant's D-mat account on the undisputed sales of those shares. The parties are thus in cross-appeals. The assessee has basically questioned the first appellate order treating the date of acquisition of the shares as the date of transfer on those shares in the assessee' D-mat account instead of the declared date of acquisition of those shares by the assessee. The Revenue, on the other hand, has questioned first appellate order accepting the cost of purchase/acquisition of the shares as stated by ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to the remand report, return of income along with balance sheet for the asst. yrs. 2004-05 and 2005-06, physical share certificates of Oasis Cine Communication Ltd. and Shiv Om Investment Consultancy Ltd., D-mat account statement, D-mat request application forms in respect of Oasis Cine Communication Ltd. and Shiv Om Investment Consultancy Ltd., D-mat account client master report received from Stock Holding Corporation of India Ltd., contract notes issued by the broker and S.B. Bhutra Co.; confirmation given by Shiv Om Investment Consultancy Ltd., confirmation given by broker, statement recorded of the assessee, and reply of the Kolkata Stock Exchange Association Ltd. The learned Authorised Representative also placed reliance on the following decisions : ( i ) Nisraj Real Estate Export (P.) Ltd. v. Asstt. CIT [2009] 31 DTR 456 (JP). ( ii ) CIT v. Smt. Jamnadevi Agrawal [2012] 20 taxmann.com 529 (Bom.) ( iii ) Asstt. CIT v. Kamal Kumar S. Agrawal (Indl.) [2012] 20 taxmann.com 338 (Nag.) ( iv ) Acchyalal Shaw v. ITO [2009] 30 SOT 44 (Kol.) (URO) ( v ) CIT v. Anupam Kapoor [2008] 299 ITR 179/166 Taxman 178 (Punj. Har.). The learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial year 2004-05. The date of purchase of shares is 25th Nov., 2003 and not 25th Nov., 2005. The said date falls in the asst. yr. 2006-07. It was explained that shares were kept in the physical form till the shares were held by the assessee. When the assessee had decided to sell the shares, he had sent the shares to D.P. (Stock Holding Corporation of India Ltd.) for dematerialization. Assessee had submitted a copy of D-mat account statement received from the D.P. in his first submission dt. 19th June, 2008. The D-mat account statements revealed that the shares D-mat request was received by the D.P. from the assessee , and after some days, D-mat was confirmed by the D.P. It proves that the shares were in the possession of the assessee before dematerialization, explained the assessee. The fact that investment in purchase of shares disclosed in the preceding year's return is very well accepted by the Department. The assessee all along displayed the characteristics of an investor and there was nothing on record to suggest that the assessee had ever indulged in any manipulation in the market. It was submitted that while comparing the date of purchase of shares in physical form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es have been transferred on the given date. It was submitted that it is for the assessee to hold the shares in physical form or dematerialized form. The assessee could not be penalized either for not opening D-mat account when he had purchased shares in the physical form. It was further submitted by the assessee that during the inspection of records allowed by AO (after completion of assessment and for the purpose of preparation of first appeal), it was noticed that the broker S.B. Bhutra Co. in their letter dt. 10th Nov., 2008 had informed the AO that they had transactions with Shri Ajay Lalwani during financial year 2003-04 as per ledger account furnished with the said letter. From the copy of the ledger account extract received from the said broker, it would be seen that the names of both the companies and relevant details i.e. quantities of shares and the amount of purchases are duly reflected. It was submitted that the assessee is assessed to tax since asst. yr. 1991-92 having substantial income out of which, he had purchased shares; the contract note and bill issued by the broker is full and complete supporting evidence for purchase of shares. 11. In case of Oasis Cine C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely because there was substantial delay in transferring the shares into D-mat account from the date of purchase and the transactions not routed through Calcutta Stock Exchange, the AO was not justified in doubting the declared date of purchase of the shares ignoring the above evidences. In the case of Smt. Jamnadevi Agrawal ( supra ), copy supplied, the property broker had stated the share transactions as sham and bogus. However, the purchase and sale prices of the shares declared by the assessee were in conformity with the market sales prevailing on the respective dates, the related company had confirmed to have handed over the shares purchased by the assessee, sale of the shares to the respective buyers was also supported by the documents, the Hon'ble High Court has been pleased to uphold the finding of the Tribunal that transactions were genuine. Likewise in the case of Kamal Kumar S. Agrawal (Indl) ( supra ) that Nagpur Bench of the Tribunal has also held that the fact that there was difference in the information as per contract notes and that received from the stock exchange is not material as admittedly some off-market transactions were not reported to the stock exc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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