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2015 (10) TMI 2299 - ITAT MUMBAI

2015 (10) TMI 2299 - ITAT MUMBAI - TMI - Genuineness of the transaction - Sale proceeds of shares in Bolton Properties Ltd. received by the appellant as income from undisclosed sources - assessee claimed the same as exempt under section 10(38) - Held that:- Considering the fact that some of the transactions were off marked transaction cannot be a ground to treat the transaction as a sham transaction. We are of the considered opinion that the assessee has discharged its onus of proving the fact t .....

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AO on this account. The orders of the authorities below qua this issue are set aside. - Decided in favour of assessee. - ITA No.960/Mum/2012 - Dated:- 16-9-2015 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER and SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER For The Appellant : Shri V.G.Ginde. For The Respondent: Shri Sumit Kumar (DR). ORDER Per VIJAY PAL RAO, JM: This appeal by the assessee is directed against the order dated 24/11/2011 of the CIT(A)-35, Mumbai, for the assessment year 2008-09. 2. The assessee h .....

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n mere suspicion, surmises and conjectures as well as irrelevant material. 3. The learned CIT(A) further erred in not appreciating your appellant's contention that the material relied upon by the Assessing Officer was not given to the appellant for rebuttal. In light of above, your appellant prays for deletion of the aforesaid addition of ₹ 48,59,131/-. 4. Your appellant craves leave to alter, modify, amend or delete any of the above grounds of appeal, or to add one or more new ground( .....

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8377; 51,500/- and the same were sold on various dates in the years 2007 and 2008 for a consideration of ₹ 48,59,131/-. The AO made reference to the intimation received from DDI, Calcutta vide letter dated 18/12/2007 in the case of Shri Amrutal H.Chithalia that the socalled capital gain arising on sale of shares of BPL is an arranged and had colourful transaction popularly known as Penny Stock transaction . The AO sought information under section 133(6) from Calcutta Stock Exchange. In res .....

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sideration as unexplained income of the assessee amounting to ₹ 48,59,131/-. 4. The assessee challenged the action of the CIT(A) but could not succeed. 5. Before us, the learned authorized representative of the assessee has submitted that the assessee has purchased 15000 equity shares of BPL on 11/4/2002 at the total purchase price of ₹ 61,800/-vide contract note dated 11/4/2002 and purchase bill No.137 dated 16/4/2002 issued by M/s.Prakash Nahata & Co. He has pointed out that th .....

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D-mat account since 2003 upto their sale in the year 2007 to the extent of 12,500 and balance of 2500 shares remained with the assessee. All these transactions are reflected in the Demat Account of the assessee from 2003 to 2008 at pages 15 to 26 of the paper book. Thus, the learned authorized representative of the assessee has submitted that when the shares were held by the assessee in Demat Account then the transaction of purchase cannot be held to be bogus or sham transaction. The AO has not .....

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hares in the Demat account and also showing in the balance sheet since 2003 upto 2008. Learned authorized representative of the assessee has submitted that the transaction of purchase and claim of capital gain cannot be treated as bogus or sham when the assessee has produced all the relevant evidence including the purchase bill and contract note as well as Demat account. In support of his contention, he has relied upon the judgment of the Hon'ble jurisdictional High Court in the case of CIT .....

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n favour of the assessee by holding that the transactions are not bogus. He has filed a copy of the order dated 21/1/2011 in ITA No.2444/Mum/2009 for the assessment year 2005-06. Thus the very basis of the decision of the AO has been reversed by the Tribunal. The learned authorized representative of the assessee has then pointed out that the information summoned by the AO from the Calcutta Stock Exchange would not help the case of the revenue because the transaction was not on the stock exchange .....

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pon the judgment of the Hon ble Rajasthan High Court in the case of CIT vs. Sumitra Devi (229 Taxman 67) and submitted that when the purchase and sale of shares were materialized during the course of regular transaction, then genuineness of the transaction cannot be doubted. 6. On the other hand, the learned DR has submitted that the AO conducted a proper inquiry to verify the genuineness of the transaction. The investigation of the AO has revealed the fact that there was no transaction in the s .....

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by the assessee as well as detected by the AO. The AO has doubted the transaction of purchase and sale of shares as arranged transaction and therefore treated the same as dubious and denied the claim of LTCG and taxed the amount of sale consideration as income from undisclosed sources. There is no dispute that 15000 shares of BPL were transferred in the name of the assessee vide certificate dated 22/4/2002 issued by BPL. The said certificate is placed at pages 13 & 14 of the paper book. We f .....

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the shares are Dematerialised and are standing in the Demat account of the assessee since May 2003 till part of these shares to the extent of 12500 shares sold by the assessee in the year 2007 and 2008 the same remained in the Demat account of the assessee. We have gone through the summary statement of the Demat account of the assessee for each of these years from 2003 to 2008 and all these years these shares were shown in the Demat account of the assessee therefore holding of these shares by t .....

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account. The assessee has produced before the AO copies of the cover note, purchase bill, sales note, certificate of transfer in the name of the assessee, Demat account statement from the month of May 2003 till the shares were sold by the assessee in the year 2007 and 2008, bank statement in which the assessee received the sale proceeds . Therefore, all the relevant evidence in support of the claim was produced by the assessee before the AO. The AO has given more importance to the report of the .....

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ade by the AO about the genuineness of the purchase transaction. M/s Bolton Properties Ltd., whose shares were purchased by the assessee, intimated to the AO in response to summons u/s.131 that the shares were transferred in the name of the assessee on 15-05-2003. In that view of the matter, the fact of assessee having purchased the shares stood amply proved. Once it is proved that the assessee made purchase of shares and also sold the same, the genuineness of the transaction cannot be brought u .....

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Further, the assessee has been showing these shares in the balance sheet right from the beginning which was not doubted by the AO till the shares were sold by the assessee. In the case of CIT vs. Shyam R.Pawar (229 Taxman 256), the Hon ble High Court, while dealing with an identical issue, has observed in paragraph 5 as under: 5. We have perused the concurrent findings and on which heavy reliance is placed b Mr.Sureshkumar. While it is true that the Commissioner extensively referred to the corre .....

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r required a deeper scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockev Marketing Pvt.Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that lie holds that the transactions in sale and purcha .....

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f the Assessee to the accounted income and the present Assessee utilized the scheme. Even otherwise, the report of the Calcutta Stock Exchange does not indicate any thing about the genuineness of the transaction rather the report is only with respect to the fact that on the given date, there was no transaction on stock exchange in the scrip of BPL. Therefore, the said report cannot be considered as a conclusive proof for holding the transaction as bogus transaction, if the transaction of purchas .....

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