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TMI Blog2015 (11) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... ng shares:- (a) Ahmed Nagar Finance. (b) Aptech Ltd (c) Manugraph (d) Micro Techno Ltd (e) Taneja Aerospace. The aggregate sale value of above said shares was Rs. 1,00,63,197/- and the aggregate purchase price was Rs. 38,65,164/- and accordingly the difference between the two has resulted in short term capital gain of Rs. 64,44,753/-. The assessing officer noticed that the assessee had claimed to have purchased the above said shares in the months of April, 2005 to November, 2005 and all of them have been sold in the months of January, 2006 to March, 2006. Before the AO, the assessee filed copies of bills and contract notes in support of the purchases and sales. 4. The AO noticed that the assessee had purchased the shares through a broker named M/s Alliance Intermediateries & Network Pvt Ltd. However, it was noticed that the shares have been credited in the D-mat account of the assessee only in the month of January, 2006. He further noticed that the shares have been transferred to the D-mat account of the assessee from the d-mat account of M/s Sunchan Securities Ltd and not from the d-mat account of M/s Alliance Intermediateries & Network Pvt Ltd. The assessing officer issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Manugraph, i.e., the assessee had sold 4500 shares, where as the BSE reported sale of only 900 shares. 6. In view of the above discrepancies, the AO came to the conclusion that the short term capital gain of Rs. 64,44,753/- declared by the assessee was bogus and not real. Accordingly, the assessing officer assessed the same as income of the assessee from undisclosed sources. 7. In the appellate proceedings, the Ld CIT(A) noticed that M/s Alliance Intermediateries is a member of M/s Interconnected Stock Exchange of India Ltd and hence asked the said stock exchange to confirm the transactions entered by M/s Alliance Intermediateries. However, the above said stock exchange confirmed that there was no trading undertaken by M/s Alliance Intermediateries. The Ld CIT(A), after considering the assessment order, came to the conclusion that the date of purchase of shares claimed by the assessee may not correct and he should have purchased the shares only on the dates on which the shares were credited into the D-mat account of the assessee. The Ld CIT(A) further assumed that the assessee should have purchased the shares at the highest price prevailing on that date. It is pertinent to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne that there is no necessity to credit the shares in the D-mat account of the assessee on the very same day of purchase. For number of reasons, the credit to d-mat account may get delayed. We notice that the Ld CIT(A) has not enquired about the delay or consider such possibilities. We further notice that the tax authorities have not called for any explanation from anyone about the delay in crediting the shares into the D-mat account. 10. At this juncture, it is pertinent to extract below the replies furnished by the assessee before Ld CIT(A). The assessee has furnished following reply in her letter dated 22.10.2010 and the same has been extracted by Ld CIT(A) in paragraph 2.3.9 of his order:- "We are in receipt of your above said letter and we would like to bring to your notice that all the information required under the above letter were already submitted and same has been mentioned point wise below :- * "We have already submitted the confirmation statement of account from all brokers for the above said period i.e. Sunchan Securities Ltd., Alliance lntermediateries and Network Pvt. Ltd. and Sykes and Rays & Equities India Ltd. vide our letter dated 12.02.2010 along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant has complied all the requirements of the STCG under the the Income- Act and all the brokers have confirmed the transactions which are also on record then there is no question to take the rate on the date of receipt of the shares. It is not mandatory in the Income-tax Act, 1961 that shares should be taken or received in demat account within particular No. of days from the date of purchase. Similarly, there is no provision in the I.T. Act that the payment should be made within a particular period of the date of purchase of shares. It is between the appellant and broker to decide or accommodate each other. The appellant had produced all the evidence in her support are complied with all the terms and conditions of the STCG under the Income tax Act, 1961. If the AO was not satisfied with the submission of the appellant then it was his duty to bring and gather the material on record in his support but the AO was unable to bring on record any material in his support and wrongly assume the STCG as a undisclosed income which was without any basis or material in his hand. The fact is that the appellant has made the STCG and paid the tax thereon under the provisions of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation available on our record and obliged" 11. With regard to the proposal of Ld CIT(A) to adopt the date of credit of shares into the D-mat account as the date of purchases, the assessee has furnished following reply:- "We are in receipt of your above said letter on 15th Nov., 2010 and we are surprised to note that you have taken highest rate for each script without any basis and no transaction can be made on the highest price in real life. Because nobody can find out the top price of the day and there is no evidence been brought by the department till date that share has been purchased in cash on the date of credit of shares in demat account as stated by you and hence there is no question to enhance unaccounted income assessed by the AO and there is no basis there the highest rate of script is applied for the purchased. Hence, your proposal for enhancement of income u/s.25(1) of the Act is bad in law, due to without any basis or without any record/evidence available on record of the department. We also come to know that highest rate taken by you is also not correct in some of the case. We also observed that there was no trading in the BSE on the date of credit of the- shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es purchased by her. We further notice that all the shares purchased by the assessee are that of reputed companies only. 13. On the contrary, the Ld CIT(A), as noticed earlier, has drawn only inferences about the date of purchases and he has not brought any material on record to support the view taken by him. Hence, we are confronted with two different situations, viz., (a) the assessee has furnished materials to support the claim of purchases and both the assessee and the seller of shares have confirmed those materials and (b) the Ld CIT(A) has drawn inferences which is not supported by any materials. Under these set of facts, in our view, the case of the assessee should weigh more, since his claim is supported by certain documents. 14. In view of the above, we are unable to uphold the view taken by Ld CIT(A) that the shares have been purchased only on the date on which they were credited in the d-mat account. Accordingly, we set aside the order of the Ld CIT(A) on this issue and direct the assessing officer to assess the impugned income declared by the assessee as short term capital gain. 15. The next addition relates to the commission expenses estimated by the AO. Since the L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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