TMI Blog2015 (3) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... m of long term capital gain on account of sale of shares of Database Finance Ltd. - Decided in favour of assessee. - ITA No. 1436/PN/2011 - - - Dated:- 15-1-2014 - Shri Shailendra Kumar Yadav And Shri R.K. Panda JJ. For the Appellant : Shri Nikhil Pathak Shri Suhas Bora For the Respondent : Sri S.P. Walimbe ORDER Per R.K. Panda, AM : This appeal filed by the assessee is directed against the orders dated 25-01-2011 of the CIT(A)-III, Pune relating to Assessment Year 2003-04. 2. At the time of hearing the Ld. Counsel for the assessee did not press grounds of appeal No. 1, 2 and 3 for which the Ld. Departmental Representative has no objection. Accordingly, the above grounds are dismissed as not pressed . Grounds of appeal No.5 by the assessee being general in nature are dismissed. 3 Grounds of appeal No.4 by the assessee which is the surviving ground reads as under ; 4. The Ld.CIT(A) erred in holding that the addition of the AO in treating the amount of ₹ 10,38,600/- as income from undisclosed sources without appreciating the submissions of the appellant that the transaction of sale purchase of shares had all essentials of genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red with SEBI and the stock exchange. (e) The company whose shares are sold are registered under the Companies Act. (f) Photocopy of the share certificates in physical format clearly indicates that the shares were transferred in the name of the appellant. (g) Long term capital gain in respect of sale of shares is accepted as genuine U/s. 143(1). (h) The sale proceeds of the shares have been received by A/c Payee Cheque. (i) The learned A.O. has failed to establish that in lieu of the sale proceeds of ₹ 10,38,600/-, the appellant has surreptitiously introduced her unaccounted money in the bank account and there is no evidence about the same in this regard. Thus there is no cogent material or evidence to indicate that the impugned sale proceeds reflect unaccounted income of the appellant. (j) The learned AO has made the addition merely on the basis of suspicion and surmises without bringing any material on the record. It was accordingly submitted that the addition made by the Assessing Officer should be deleted. 6.1 However, the CIT(A) was not satisfied with the explanation given by the assessee. He noted that during the search and seizure operations conducted by the Investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I.T. Act. These persons are claimed to have purchased shares, in physical form through share brokers who have issued back dated contract notes, showing the date of purchase prior to the actual date of purchases of shares. In other words, the date of purchase of shares is ante dated or manipulated in such a way that the period of holding prior to the sale was 12 months or more. In reality, there was no actual purchase transaction at all as on the date of purchase shown in the statement of share brokers and actual transfer or delivery of shares had not taken place on the said date. The persons have converted the shares in Demat form hardly a few days/weeks before the sale. The sale is shown to have done by the persons in whose favour entry of sale of shares is to be given. The sale of shares has also been arranged by brokers of an artificially jacked up price which is 70 to 80 times of purchase of shares. In the above transactions the equivalent amount of sale consideration of shares including commission is passed on to the concerned broker by cash and in turn the sale consideration is paid by cheque by the broker to the beneficiary. The purpose behind the entire arrangement is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the claim of long term capital gain on account of sale of share of Database Finance Ltd. and the Tribunal has dismissed the appeal filed by the Revenue. Referring to the decision of the Hon ble Bombay High Court (Nagpur Bench) in the case of CIT Vs. Jamnadevi Agrawal and others reported in 328 ITR 656 he submitted that the Hon ble High Court in the said decision has held that when the assessee has established the genuineness of purchase and sale of shares by producing documentary evidence and declare the purchase and sale price of shares in conformity with the market rates prevailing on the respective dates, the finding of the Tribunal that the transactions were genuine is a finding of fact based on documentary evidence on record and therefore no substantial question of law arised from the order of the Tribunal deleting the addition u/s.68 of the I.T. Act. He submitted that under similar facts and circumstances the various Benches of the Tribunal have allowed the claim of long term capital gain on account of sale of shares which are known as penny stocks. He submitted that in the instant case the assessee had produced substantial evidence. The broker has not taken the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions cited before us. We find the CIT(A) upheld the action of the Assessing Officer in treating the income from long term capital gain as income from undisclosed sources on account of sale of shares of Database Finance Ltd. on the ground that the whole arrangement or scheme is a money laundering device to convert the unaccounted money and to bring the same into the regular books of account in the garb of exempted long term capital gain on sale of shares. While doing so, he has considered the modus operandi adopted by the brokers and unscrupulous assessees. We find this Bench of the Tribunal in the case of Surendra Peety and others (Supra) (where both of us are parties) has considered the issue of long term capital gain on account of sale of shares of various companies including that of Database Finance Ltd. After thoroughly examining the facts of the case which are similar to that of the present assessee and considering various decisions, the order of the CIT(A) allowing the claim of long term capital gain on account of sale of shares of Database Finance Ltd. has been upheld and the appeal filed by the Revenue has been dismissed. The various other decisions relied upon by the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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