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2015 (11) TMI 1297 - ITAT MUMBAI

2015 (11) TMI 1297 - ITAT MUMBAI - TMI - Short term capital gain - AO held to be as bogus and not real accordingly assessed the same as income of the assessee from undisclosed sources - Held that:- The assessee has furnished all the details relating to purchases as well as the sales. The brokers through whom the assessee had purchased the shares have also confirmed the transactions. The payments towards purchase of shares have gone through the banking channels except a very small amount. The sha .....

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ient documentary evidences and those documentary evidences were also confirmed by the share broker also. Further, it is settled proposition that date of broker notes is considered as the date of purchase and in this regard, one may refer to the Circular No.704 dated 28-04-1995. In our view, the assessee cannot be punished in respect of defaults, if any, committed by the share broker, since the factum of purchase and sale of shares have been accepted by Ld CIT(A). From the point of view of the as .....

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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. 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) .....

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the order of Ld CIT(A) on this issue and direct the AO to delete this addition.- Decided in favour of assessee. - I.T.A. No.1490/Mum/2011 - Dated:- 9-10-2015 - HON BLE S/SHRI JOGINDER SINGH (JM), AND B.R.BASKARAN (AM) For The Assessee : S/Shri Rajeev Khandelwal and Nilkanth Khandelwal For The Revenue : Shri Jitendra Kumar ORDER PER B.R. BASKARAN (AM) The appeal filed by the assessee is directed against the order dated 25.11.2010 passed by Ld CIT(A)-31, Mumbai and it relates to the assessment ye .....

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return of income filed for the year under consideration, the assessee declared short term capital gains arising on sale of following 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 ₹ 1,00,63,197/- and the aggregate purchase price was ₹ 38,65,164/- and accordingly the difference between the two has resulted in short term capital gain of ₹ 64,44,753/-. The assessing office .....

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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 notices u/s 133(6) of the Act to the above said two brokers in order to ascertain the genuineness of the purchases. Though M/s Sunchan Securities Ltd initi .....

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rtain deficiencies in the contract cum bill submitted by the assessee, i.e., it did not contain the code number of clients. Further he noticed that the payments have been made by the father of the assessee. The AO also made enquiries with M/s National Stock Exchange (NSE) and M/s Bombay Stock Exchange (BSE). The NSE confirmed that M/s Sunchan Securities Ltd and M/s Skyes & Ray Equities (I) Ltd are registered trading members of NSE. It further submitted that M/s Alliance Intermediateries is a .....

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nce Intermediateries and hence it did not report about transactions carried out by M/s Alliance Intermediateries. However, it confirmed that M/s Alliance Intermediateries is not registered with it. With regard to M/s Sunchan securities Ltd, the BSE reported that it was permitted to carry on trading only with effect from 03-02-2006 and prior to that it was undertaking transactions through M/s Ajmera Associates Pvt Ltd. Based on the replies furnished by the stock exchanges, the AO came to the conc .....

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ared 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 .....

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the genuineness of purchase and sale of shares. Accordingly he computed the aggregate purchase cost of all the shares at ₹ 1,06,56,850/-. Since the assessee had given payment for purchases from the disclosed sources to the tune of ₹ 38,67,201/-, the Ld CIT(A) presumed that the difference between the two amounts mentioned above, i.e., ₹ 67,89,649/- represents the payment made by the assessee from out of undisclosed sources. Since the assessing officer has already assessed a sum .....

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nd Ld CIT(A) has taken two different views in this matter. The AO has taken the view that the assessee has managed to get Short term capital gain, i.e., the purchase and sale of shares were a make belief arrangement. However, the Ld CIT(A) has taken the view that they are genuine transactions, but the purchases have been made on the date on which the shares were credited in the D-mat account of the assessee. Thus, we notice that the sale of shares have been accepted by the Ld CIT(A), since the d .....

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only dispute is about the date of purchase of shares. 9. It is pertinent to note that the Ld CIT(A) has only presumed that the shares should have been purchased by the assessee only on the dates on which they were credited into the D-mat account of the assessee. We notice that the Ld CIT(A) has not brought any material on record to support his presumptions. It is in the common knowledge of everyone that there is no necessity to credit the shares in the D-mat account of the assessee on the very s .....

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etter 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 Netw .....

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kers had already confirmed all the sale, purchase and payment transactions which are on your record under our above said letter dated 12.02.2010. It means that they have confirmed the client ID. When we ask our brokers then they said that there is no such type of practice in existence to get the confirmation from the exchange. We had already submitted our demat statement in which all shares were received and delivered for the shares purchased and sold and it was proved to your satisfaction and a .....

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n respect of all the shares credited in our demat account vide our letter dated 24.06.2010. Xerox copy of the same is enclosed herewith. We have already worked out the STCG if you take the rate on the date of delivery received in our demat account we have already given full details of rate of each share on the basis of receipt of the shares in our demand account as required by you. The appellant has purchased the share from the broker who is registered with the SEBl, Inter-stock Exchange etc. Xe .....

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ed to the AO. The 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 .....

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t 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.T. Act, 1961 and fulfilled all the requirements of STCG tax as per the IT. Act. The AO has not brought any material on record which proves that the appellant had made any undisclosed income so that the AO can treat the STCG as an unexplained investment. The appellant also want to put on r .....

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to treat the same, then he should have gathered some information about the receipt of the shares or source of receipt of the shares on the date of receipt in demat account. Hence in the absence of any material on record STCG cannot be treated as income from undisclosed sources since AO has failed to bring the material on record in support either the source of undisclosed income of that the shares has been purchased out of the undisclosed investment and shares have been purchased on the date of r .....

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tiality and shares has been received from the CDSL and there is no such system to find the DP holder name. Xerox copy of the letter written to the HDFC depository was already submitted to your honour vide our letter dt.l4.09.2010. Xerox copy of the same is enclosed herewith. From the above, it is very clear that all the details required under the above said letter was already complied with to your honour from time to time and the same are available on your record and there is no need to resubmit .....

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e 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 .....

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ques and all shares has been received in demat account. Secondly, we could not come to know that how your honour has taken the cash price ₹ 67,89,649/- since from your above said letter there is no working for ₹ 67,89,649/-and there is no evidence has been gathered by the department in your support. Your honour is requested to give the detail for the sale, so that we can submit our reply for the same. Thirdly we could not come to know how you have arrived the figure of ₹ 3,46,9 .....

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ares have also confirmed the transactions. The payments towards purchase of shares have gone through the banking channels except a very small amount. The shares purchased by the assessee have been credited to the D-mat account of the assessee. The deficiency noticed was the time gap between the purchase of shares and credit of the same in the D-mat account of the assessee. The delay in making payment and the delay in crediting the shares in the demat account is dependent upon various factors inc .....

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