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TMI Blog2012 (8) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... shares of various companies and those shares were sold after a period of 12 months, and therefore, the share transactions of all the assessees resulted into a long term capital gain only. The Assessing Officer examined each and individual case of the assessee, however, substantially in all the orders, the Assessing Officer took note of the fact that the Securities & Exchange Board of India (SEBI) finding unusual rise in the share of some of the companies was of the opinion that there may be a prima facie case of violation of SEBI ( Prohibition of Fraudulent and Unfair Trade Practices Relating to Security Market) Regulation, 2003 and ordered a detailed enquiry under Section 11 B and 114 of the Security & Exchange Board of India Act, 1992. In the enquiry, findings were recorded against eleven Stock Brokers and their trading was suspended by the Kolkata Stock Exchange from buying and selling the securities. The Assessing Officer in detail considered the report of the SEBI and referred the case of one of the Company M/s Srinidhi Trading Ltd. whose shares had market value Rs.9.02 as on 11.3.2004 which reached to Rs.160.10 as on 29.8.2005. In the SEBI's enquiry report that was one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.6.2005. The shares were sold in the financial year 2006-07. The sale transaction was also verifiable. We have given this one of the example because of the reason that the Assessing Officer in all the cases gave instances of the transaction of this one company namely M/s Srinidhi Trading Ltd. from the report of the SEBI. So far as other assessees are concerned, even if they have not dealt with shares of the M/s Srinidhi Trading Ltd. or through M/s Ahilya Commercial Pvt. Ltd. or any tinted Broker, transaction of those assessees were also declared sham transaction by the Assessing Officer merely on the basis that the transaction of these assessees are identical to the transaction of the shares of the companies whose share price fluctuated and there is steep rise in the share price. The Assessing Officer admittedly did not proceed to hold enquiry after the receipt of the contract note and other material document submitted by the assessees in these cases and did not enquire the matter from the Brokers from whom the assessees purchased the shares. 5. The CIT (Appeals) after considering the facts of the individual case by narrating the facts of the individual share transaction, held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear language used in the Section and relied upon the judgment of Rajasthan High Court delivered in the case of Kota Co-operative Marketing Society Limited Versus C.I.T reported in 2007 ITR 608 (Rajasthan). The learned counsel for the appellant submitted that though the burden is upon the Revenue to show that the receipt concerned and the income is liable to tax but onus of showing how income is exempted lies on the assessee. It is submitted that it was the duty of the assessee to show that the assessee held the shares in fact for more than 12 months immediately preceding the date of transfer then only he could have got the benefit of long term capital gain. Learned counsel for the appellant submitted that even in a case where it has been stated that the transactions are through the cheques and even if where the transactions looked like real transactions but the authorities are permitted to look behind the transactions and find out the motive behind the transactions. Learned counsel for the appellant also submitted that it is highly improbable that the share price of a worthless company gone from Rs.3 to Rs.55/- in a short span of time and mere payment by cheque and receipt of che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was prepared by the SEBI and from the observations made by the Tax Appeal No.4 of 2011 with analogous case Assessing Officer himself, it is clear that after getting that enquiry report, the SEBI prima facie found involvement of some of the share brokers in unfair trade practices. Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share from that broker innocently and bonafidely and if he show his bonafide in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. Fact of tinted broker may be relevant for suspicion but it alone necessarily ..... X X X X Extracts X X X X X X X X Extracts X X X X
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