TMI Blog2015 (3) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of these shares during 03/09/99 to 04/10/99 at a cost of ₹ 3,37,445/- and these shares were sold during 11/09/2000 to 30/11/2000 at a hefty sale consideration of ₹ 48,41,763/- within a period of 13 months from the date of purchase. Enquiries were made from various stock exchanges and also from the brokers before initiating the assessment proceedings. Considering these facts, the reopening proceedings are validly initiated - Decided against assessee. Additions made on realized on sale of shares - LTCG OR income from other sources - Held that:- In the present case the assessee has furnished copy of sale and purchase bill, contract note, share certificates etc. The assessee has also furnished the official quotation from various stock exchanges. the evidences brought on record by the assessee in support of the claim of long term capital gain cannot be rejected by the Revenue without bringing adverse material on record and merely on the basis of some statement of some broker. The theory of human probability is also not attracted in the present case because this is noted that the assessee is engaged in the speculation transactions in share also and therefore, the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) as per Para 5 and 5.1 of his order, which are reproduced below for the sake of ready reference:- 5. I have gone through the assessment order and the submissions made by the assessee during the course of the appeal. 5.1 The Assessing Officer had rightly initiated the proceedings under section 147 by issuing the notice under section 148 of the Income-tax Act, 1961 and in case the assessee was not satisfied, she had the option of filing a Writ Petition which she did before the Hon'ble Allahabad High Court who did not grant any relief to the assessee. As the Assessing Officer had valid reasons to initiate the reassessment proceedings, and the notice under section 148 of the Income-tax Act, 1961 has not been quashed nor the proceedings were stayed by the Hon'ble Allahabad High Court, therefore, Ground no. 1 is rejected. 4.1 From the above paras from the order of CIT(A), it is seen that the assessee has filed a Writ Petition before Hon'ble Allahabad High Court challenging the validity of reopening proceedings and neither any relief was granted nor any stay was granted against the reopening proceedings. Even before us, it could not be produced by Learned A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2001, and therefore, on perusal of such relevant facts given in the return of income, it cannot be said that the Assessing Officer could have come to a conclusion that any income chargeable to tax has escaped assessment, and therefore, the entire proceedings under section 147, confirmed by the Ld. CIT(A) are bad in law. WHOLLY WITHOUT PREJUDICE TO THE AFORESAID 5. BECAUSE the Ld. CIT(A) has erred in law and on facts in holding that the consideration aggregating ₹ 48,41,763.50 realized on sale of shares as per particulars given below:- Amount(Rs) (A) Dileep Kumar Bhandri registered with M.P. stock exchange Sale consideration 14,76,000.00 Less:(i)Brokerage 7380.00 (ii)Service Tax 369.00 7,749.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the relevant Assessment Year (2001-02) and as such taxing the entire sale proceeds under the head income from other sources in the impugned assessment year 2001-02 is wholly erroneous not only in law but also on facts. 7. BECAUSE the Ld. CIT(A) has erred in law and on facts in not appreciating the appellant's version of sale of shares for consideration of ₹ 48,41,7637- (Net) particularly that:- (a) the appellant has duly furnished application form for purchase of shares along-with proof of payment made for purchase of such shares; (b) the contract notes issued by respective brokers who were registered members of Stock Exchange; (c) sales bills issued by the brokers for sale of shares; (d) account statement of the appellant given by the respective stock brokers in respect of sale of shares; (e) share certificates and allotment letter giving distinctive numbers of shares as issued by the concerned company; (f) report of listing of shares in respective stock exchanges. and therefore, the contrary view taken by the CIT(A) for sustaining the additions without rebutting the above documents and information is wholly vitiated. 8. BECAUSE the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of three companies as per details given below: S No. Name of company shares No, of shares Date of purchase Cost price Date of sale Sale consideration Long Term Capital Gain 1 Parnami Habitat Developers Ltd. 19,000 03.06.99 1,12,195 11.09.00 21,61,012 20,48,817 2 (a)Unometal Ltd. 15,000 23.08.99 1,25,250 17.10.00 7.48,500 10,87,250 (b)Unometal Ltd. 10,000 18.10.00 4,64,000 3 B.T. Technet Ltd. 10,000 04.10.99 1,00,000 30.11.00 14,68,251 13,68,251 3,37,445 48,41,763 45,04,318 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of accounts issued by S.K. Financial Services (copy placed at page no.71) all go to fully substantiate the purchase transaction of 19,000 shares @Rs.5.80 per share. 8. Not-with-standing the aforesaid, it is stated that as per information made available by the Delhi Stock Exchange Association Ltd. to the Assessing Officer, vide letter dated 28.04.2005, which is on the assessment record, the shares of Parnami Habitat Developers Ltd. were listed on Delhi Stock Exchange and the same were traded at ₹ 39.85 per share on 11.04.1997. A copy of Delhi Stock Exchange Association Ltd/s letter dated 28.04.2005 is enclosed as Annexure IV hereto. It is stated that over a period of time, the market price of shares of Parnami Habitat Developers Ltd. went down which is a very normal feature in this resume of business, and on 02.06.1999, the shares became available at ₹ 5.80 per share. UNOMETALS LTD. 9. As per details given in the table below Para 3 above, the assessee had purchased 25,000 shares of Unometals Ltd. on 23.08.1999 @ ₹ 5.00 per share, through M/s. D.B. Co., a broker duly registered with SEBI. The copy of contract note issued by D.B. Co. is placed at pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 10,000 shares of B. T. Technet Ltd., acquired by the assessee from the company on the basis of preferential allotment, 8000 shares were sold by the assessee on 23.11.2000 @ ₹ 147/- per share and remaining 2000 shares were sold by the assessee on 24.11.2000 @ Rs. ISO/- per share, through Dileep Kumar Bhandari, a stock broker duly registered with SEBI and Member of M.P. Stock Exchange, Indore. In support of sale of shares on behalf of the assessee, the broker Dileep Kumar Bhandari had issued contract notes, sale bills and account statement. The payments were received by the assessee through demand drafts, as per particulars given by the broker in the account statement (copy placed at page no.92 of the paper book) and the same were deposited in assessee's savings bank account No. 4280 in Sate Bank of India. Copies of Contract notes, sale bills, account statement, pay-in-slips and bank account pass book are placed at pages 88 to 98 of the paper book. 15. As far as quotation for the sale period is concerned, it is stated that during the course of re-assessment proceedings, the Assessing Officer had himself provided to the assessee, a copy of letter dated 03.05.2005 from M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... almost equivalent amount of cash deposit in the bank accounts of the creditors. Thirdly, in a few cases, the cash deposit included the commission payable for the drafts. Fourthly, the close proximity between the dates of the cash deposit and the issue of the drafts in some cases were on the same date. Moreover, there was no evidence to show that the creditors had the banking habit in most of the cases, there were very few transactions reflected in the bank statement. The mere fact that the handwriting in the pay-in-slip was that of the creditors did not prove that the monies actually belonged to them. Therefore, considering the circumstances and applying the test of human probabilities it could not be held that the assessee had taken a genuine loan. The decisions in CIT v. DURGA PRASADMORE [1971] 82 ITR 540 (SC) and SUMATI DAYAL v. CIT [1995]214 ITR 801 (SC) were applied. The ratios of 82 ITR 540 (SC) and 214 ITR 801 (SC) are applicable to the facts of the case as the assessee, who had no previous history of either dealing in shares nor had any exceptional knowledge of share market, had shown exorbitant gains merely on the basis of the contract notes and money received through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reproduced above, the assessee has furnished the official quotation of various stock exchanges regarding purchase and sale of these shares. Regarding Parnami Habitat Developers Ltd., the assessee has furnished official quotation of M.P. Stock Exchange as on 05/09/2000, which is available on page No. 77 of the paper book and as per the same, official quotation is shown at ₹ 114/- per share. The assessee has shown sale of these shares on 05/09/2000 at ₹ 114/- per share. Regarding official quotation on date of purchase, it is submitted by Learned A.R. of the assessee in the written submissions that the said quotation is not readily available and it cannot be obtained now because the transaction pertains to more than 15 years old. Regarding transaction in shares of Unometals Ltd., the assessee has submitted that these shares were sold by the assessee on 17/10/2000 at ₹ 50/- per share to the extent of 15,000 shares and balance 10,000 shares were sold on 18/10/2000 @Rs.40/- per share. The assessee has also furnished the copy of Calcutta Stock Exchange on 24/08/99 and the shares were purchased by the assessee on 23/08/2000 available on pages 105 to 106 of the paper boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28/11/2008, copy of which is available on pages 116 to 148 of the paper book. In that case also, the dispute was identical because in that case also, the assessee acquired long term capital gain on sale of some quoted shares and the Revenue was of the view that these are bogus transactions and Revenue in that case also, treated the same as undisclosed income. In that case, the decision of the Tribunal is as per Para 11 of the Tribunal order, which is available on page 134 of the paper book and is reproduced below for the sake of ready reference:- 11. There is no doubt in such cases, the brokers become the witnesses of the department. The department has got statements of these brokers which are used against the assessee. Irrespective of the fact that the statements were recorded at the back of the assessee and that the assessee was or was not afforded opportunity for cross-examination, when overwhelming documentary evidences are produced by the assessee, the burden shifts on the Revenue to explain away them. Every time the statements cannot help the department. How the above mentioned evidences could be ignored? The Revenue has to give reasons for rejecting them. These are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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