TMI Blog2015 (3) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... is appeal hearing before us by Ld. Counsel that after completion of the assessment of the assessee, scrutiny assessment of the seller was taken up and in such scrutiny assessment, the sale of the have been treated to be genuine. This fact was also not examined by the AO from the assessment records of the seller, as the PAN was given. We are of the view that in case the transaction have been treated as genuine in the hands of the seller, the same very transaction cannot be non-genuine in the hands of the purchaser. On identical issue taken up by Hon'ble Gujarat High Court in the case of Prudent Finance (P.) Ltd. [2014 (5) TMI 10 - GUJARAT HIGH COURT] we are of the view that the transaction to unrelated parties i.e. off market transaction, there was no evidence in the present case also which suggests that the shares were artificially sold at a lower rate than the prevailing market rate. Even the AO could not bring anything on record, which suggests that the selling rate was lower than the market rate. Respectfully following Hon'ble Gujarat High Court, we confirm the order of CIT(A) and the issue of revenue's appeal is dismissed. - Decided in favour of assessee. - ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration of the same as a part of stock in trade inasmuch it always remains that a contract for sale can be settled even otherwise than by actual delivery. 4. Ld. CIT(A) has erred in holding that the transactions of purchase of shares of 8000 shares of M/s. Quintegra Solution Ltd. on 23.05.2008 and 145000 shares of Pal Credit Capital Ltd. on 17.06.2008 were not illegal under the Securities Contract Regulation Act as so held illegal by the A.O. for disallowing the loss arising out of valuation of the shares concerned at market rate. 5. Ld. CIT(A) has erred in observing that section 14(2) of the Securities Contract Regulation Act makes it clear that the non members without knowledge of the provisions of the Act can enforce any such contract and recover the sum under the contract which means between non members without knowledge (of) the law is valid which is the basis of his observation that the transactions in question were valid and not illegal whereas section 13 of Securities Contract Regulation Act was the relevant governing provision in the matter of deciding the issue as to whether the transaction of purchase in question were illegal or not and whereas the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the remand report that the transactions of sale in the hands of the seller has not been treated as invalid or bogus. It appears that the assessment in the said case was completed under sec. 143(3). The AO has commented that the said seller had transacted hundred of shares and it was impossible for the AO assessing the said seller namely Beejay Investment to examine each and every transactions. However, this rather established that the said Beejay Investment was regularly trading in shares and was having hundreds of share transactions. In that case this particular transaction cannot be treated as a bogus transaction. No doubt acceptance of an entry in the assessment records of one party may not an estoppels in arriving at a different conclusion but then in the case of purchase and sale there is impliedly transfer of the property and if the transfer is accepted in the hands of one party then necessary corollary follows that the other party has received it. I fully agree with the view of the A/R that in fact there would have been similar loss in the hands of the seller had the sale been not accepted in the hands of the seller. Therefore, the purchase from Beejay Investment ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions in securities in any State or States or area that it is necessary so to do, it may, by notification in the Official Gazette, declared this section to apply to such State or States or area and thereupon every contract in such State or States or area which is entered into after the date of the notification otherwise than between the members of a recognised stock exchange or recognised stock exchanges in such State or States or area or through or with such member shall be illegal: Provided that any contract entered into between members of two or more recognized stock exchanges in such State or States or area, shalli) be subject to such terms and conditions as may be stipulated by the respective stock exchanges with prior approval of Securities and Exchange Board of India; ii) require prior permission from the respective stock exchanges if so stipulated by the stock exchanges with prior approval of Securities and Exchange Board of India. Additional trading floor- 13A. A stock exchange may establish additional trading floor with the prior approval of the Securities and Exchange Board of India in accordance with the terms and conditions stipulated by the said Board. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion that it is necessary to prevent undesirable speculation in specified securities in any State or area, it may, by notification in the Official Gazette, declare that no person in the State or area specified in the notification shall, save with the permission of the Central Government, enter into any contract for the sale or purchase of any security specified in the notification except to the extent and in the manner, if any, specified therein. (2) All contracts in contravention of the provisions of sub-section (1) entered into after the date of notification issued there under shall be illegal. Licensing of dealers in securities in certain areas. 17. (1) Subject to the provisions of sub-section (3) and to the other provisions contained in this Act, no person shall carry on or purport to carry on, whether on his own behalf or on behalf of any other person, the business of dealing in securities in any State or area to which section 13 has not been declared to apply and to which the Central Government may, by notification in the Official Gazette, declare this section to apply, except under the authority of a licence granted by the Securities and Exchange Board of India in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with the copy of the member broker's letter by Speed Post. The broker's letter shows that the transaction was completed before the said Broker. It also appears from the said broker did not even charge the commission because of some disputes but the transaction was out on the persuasion of the said broker. Therefore, it appears that there is no illegality in the said transaction. There is no dispute about the quoted market price of the shares as on the date of purchase of shares as on 31.03.2009. There is also no dispute that the appellant was following the system of valuation of closing stock at cost or market value whichever is lower . Since the shares were actually purchased from the seller duly accepted by the department in his hands the balance of probabilities goes in favour of the appellant and the purchase cannot be treated as bogus. Aggrieved, revenue is in second appeal before Tribunal. 5. We have heard rival contentions and gone through facts and circumstances of the case. We find from the facts that the assessee purchased these shares from Beejay Investments and Financial Consultants P. Ltd (In short BIFC) and consequently, the said party issued the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er unrelated asses sees also. The assessing officer carried a belief that such transactions were not genuine, in the sense that the same would have taken place with anterior dates. In the opinion of the assessing officer, this was done to contrive loss in the hands of some of the assessees who in turn transferring the profits in the hands of other assessees. This was done to ensure that the assessees who had sizable profits from sale of shares could claim such losses as set off. The assessing officer questioned the assessee company in detail. The assessing officer in the order of assessment formed a belief that full details were not made available with respect to such transactions. The sales were not at market price. The amounts were not paid, but only account entries were made. The shares were also not transferred in the name of the purchasers. On such basis, the assessing officer concluded that the transactions were not genuine and applying the ratio of the judgment of the Supreme Court in the case of McDowell Co. Ltd v. Commercial Tax. Officer (1985) 154 ITR 148/22 Taxman 11, held that such loss cannot be allowed. The assessing officer observed that whenever sales were made to o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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