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TMI Blog2013 (11) TMI 1318X X X X Extracts X X X X X X X X Extracts X X X X ..... s.40 per share. The Assessing Officer asked the assessee to explain as to why the transaction of purchase and sale of share resulting in Long term capital gains should not be treated as bogus. In response, the assessee has explained that the said shares of Blue Chip India Ltd., were purchased from Mumbai based broker Prince Securities on 10.04.2002 and 12.04.2002. Thus, the total of 70,000 shares of Blue Chip India Ltd. were purchased for a consideration of Rs.38,500 at average price 55 paise per share. The payment for the purchase of these shares were stated to be made by way of running account and in cash with the broker M/s. Prince Securities, who is registered with SEBI. In support of the explanation, the assessee filed the ledger account of Prince Securities to show that the part consideration of purchase of shares was adjusted against the speculation profits in respect of shares of Geometric Solutions and Hinduja Finance Ltd., to the extent of Rs.18,800 and the balance was paid out of cash. The assessee further contended before the Assessing Officer that the assessee was given physical delivery of the shares, which were sent to the company for transfer in the name of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer as undisclosed cash credit and deleted by the CIT(A). The common ground raised by the revenue is as under: "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to treat the income as long term capital gains amounting to Rs.29,09,675/- instead of income from undisclosed sources as considered by the AO without appreciating the facts and detailed investigation of the case." Before us the learned DR has submitted that the Assessing Officer has made an investigation and found that the assessee was first given speculation profit and against this profit the purchase cost of the shares of Blue Chip India Ltd was adjusted. This adjustment of purchasing of shares clearly indicates the modus operandi that was being followed regarding purchase of penny stocks. The assessee has claimed to have purchased the shares from Prince Securities whereas the shares were sold to Prakash Nahata & Co., stock and share brokers having their office at Kolkata. The transaction of purchase was off market, which was not reported on the recognized stock exchange i.e. Bombay Stock Exchange. The transaction was arranged in such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently, the shares were demated in the Demat account of the assessee, which shows that the assessee was holding the shares and, therefore, the transaction cannot be said to be bogus. The learned AR has further submitted that the shares were sold through Prakash Nahata & Co., who is a broker of Kolkata Stock Exchange. Sales bill in respect of the sale transactions were produced before the authorities below, as placed at pages 88 to 110 of the paper-book. M/s. Prakash Nahata & Co. has also confirmed the transaction of sale vide letter dated 24.11.2006 in response to the notice issued by the Assessing Officer u/s. 133(6) of the Income Tax Act. The learned AR has further submitted that the sale consideration was received through banking channel and, therefore, it cannot be doubted. He has referred to the return of income for A.Y. 2003-04 and submitted that the shares of Blue Chip India Ltd., were shown in the balance sheet attached therein and, therefore, the assessee has duly disclosed the transaction of purchase. In support of his contention he has relied upon the following cases: i. Mukesh R Morolia Vs. ACIT - (2006) 6 SOT 247 ii. Chandrakant Babulal S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,000 414500 - - - 13.11.03 10,000 428500 - - - The Assessing Officer doubted the transaction mainly on the ground that the shares were purchased as penny stocks at low price of 55 paise per share and the same were claimed to have been sold at Rs.40 per share and thereby the assessee has shown Long term capital gains of Rs.29,09,675. According to him it is not a genuine transaction because the assessee has converted its undisclosed income as Long term capital gains. The Assessing Officer has examined the assessee as well as called for various information by issue of notice u/s. 133(6) to the stock broker though which the assessee has purchased shares as well as from the stock broker to whom the assessee has sold the shares. It is evident that both the stock brokers have confirmed the transaction of purchase as well as sale. Apart from the confirmation, the assessee has also produced relevant documentary evidence in support of the transaction of purchase and sale. There is no dispute as regards the shares were demated in the demat account of the assessee and, thereafter sold to M/s. Prakash Nahata & Co. The Assessing Officer has not given any finding that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above shares were sold through the Calcutta stock Exchange broker namely Prakash Nahata & Co. And the various contracts notes/bills in respect of sales made have been filed with me. (g) After the sales were made, the shares were duly given delivery by demat slip No.246061 dt.11.11.03, No.21550 dt 1.11.03, No.215539 dt. 31.10.03, No.215538 dt.29.10.03, No.215537 dt.29.10.03, No.215536 dt.27.10.03, No.215535 dt. 22.10.03, No.215534 dt. 22.10.03, No.215533 dt. 20.10.03, No.215531 dt. 10.9.03 (h) The appellant in his statement recorded u/s. 131 has confirmed the transaction both of purchase and sale of shares. i) The shares purchased of Bluechip have been duly shown in the balance sheet filed with the Department for the year ending 31- 0302003 i.e. in the year in which the shares were purchased. (j) The price at which the shares were purchased and later on sold are the prices of the shares prevailing at the material time of the transaction and this aspect of the matter is independently confirmed by the details obtained from the Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the finding of the CIT(A) that the shares of Blue Chip India Ltd. were duly shown in the balance sheet filed with the return of income for the A.Y. 2003-04 and, therefore, the assessee has discharged his onus to prove the holding of the shares and in the absence of any contrary evidence brought by the Assessing Officer on record, it cannot be said that the transaction of purchase shown by the assessee is not genuine. In the case of CIT Vs. Jamnadevi Agarwal (supra), the Hon'ble jurisdictional High Court while dealing with similar issue has observed and held as under: "We see no merit in the above contentions. The fact that the assessees in the group have purchased and sold shares of similar companies through the same broker cannot be a ground to hold that the transactions are sham and bogus, especially when documentary evidence was produced to establish the genuineness of the claim. From the documents produced before us, which were also in the possession of the Assessing Officer, it is seen that the shares in question were in fact purchased by the assessees on the respective dates and the company has confirmed to have handed over the shares purchased b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal is based on findings of fact. No substantial question of law arises from the order of the Tribunal. Accordingly, all these appeals are dismissed. No order as to costs." Thus, it is clear that when the assessee has produced all the relevant evidence in support of the claim which has not been proved to be false, then the claim of the assessee cannot be denied. As far as the decision of the Chandigarh Bench of this Tribunal is concerned the same is not applicable in the facts of present case when there is no such glaring contradiction as pointed out by the Tribunal in the said case regarding the shares remained in the name of the assessee even long after the sale of the shares and non-availability of information. In the case in hand, the sale transaction has been duly executed through demat account and, therefore, there is no ambiguity or doubt about the transaction of sale. 6. In view of the above discussion and facts and circumstances of the case, we don't find any error or illegality in the orders of the CIT(A). CO Nos. 183/Mum/2011 & 08/Mum2012 7. The assessee has not raised any new ground in these cross objections but the same are only in support of the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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