TMI Blog2010 (6) TMI 769X X X X Extracts X X X X X X X X Extracts X X X X ..... ip of the shares were also recorded in the form of demat account maintained in Bank of Baroda. The member client agreement was also furnished which indicate that the assessee was registered with the broker as per the norms. Under the facts and circumstances of the case, we are of the view that the capital gain as declared by the assessee is to be accepted and the addition made by the A.O. deserves to be deleted. Consequent to that the assessee is eligible for deduction under section 54F. The A.O. is directed to do so. Accordingly the respective grounds are considered allowed. Addition u/s 69C for the low withdrawals - In the absence of any information on record we deem it fit to restore the issue back to the file of the A.O. to give one more opportunity to the assessee to furnish the necessary details in support of the expenditure. In the absence of any details from the assessee, the A.O. is free to estimate the expenditure keeping in mind the capital account of the assessee in firms and also husband's capital account. With these directions, the issue is restored back to the file of the A.O. Ground is allowed. Appeal partly allowed. - D.K. Agarwal, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on detection of fraud by different Wings of the Department such as 'Business Standard' dated 10.03.2006, 'Indian Express' dated 23.03.2006, 'Economic Times' dated 23.03.2006 and also enquiries pertaining to various scrips which indicated that Bolton Property Ltd. and M/s. Prakash Nahata and Co. have supposed to have involved in converting black money into long term capital gains and since the assessee has transacted with the same broker, the assessee was asked to furnish necessary details and notices under section 133(6) were also issued to the Broker M/s. Prakash Nahata and Co. Replies were received from M/s. Prakash Nahata and Co. but since some of the details of the original sellers of the shares could not be submitted and that there seems to be cash deposits in the bank account of M/s. Prakash Nahata and Co. from various persons, it was presumed that the assessee has deposited its cash with the brokers and converted its unaccounted money into sales proceeds of the shares. It is also one of the contention that purchase of shares is through off market transactions by virtue of sale of the shares of M/s. DSQ Software which was squared off against the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rialisation was confirmed before the CIT(A) to submit that the assessee had indeed in personal possession of the shares and sold them through the Stock Exchange and the sale is not an off market transaction and was confirmed by the Calcutta Stock Exchange. He drew our attention to CIT(A)'s observation in para 10 that the A.O. took note of the fact that in the last few years, several assessees in collusion with certain brokers had shown unrealistic long term capital gains from sale of penny stocks. It was his submission that the assessee was not involved in that modus operandi even though the assessee is incidental beneficiary in the increase in stock price which the assessee has purchased long back and reflected in the regular returns of the assessee. Moreover, it is also submitted that the A.O. has relied on various newspapers such as Business Standard, Indian Express and Economic Times which reported the transactions sometimes in 2006 whereas the assessee has sold as early as December 2001 and march 2002 all the shares and those reports are not connected with the assessee's transactions happened earlier. Moreover, the persons who have deposited large amounts of money for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. could not verify is the source of purchase cost on 17.04.2000 when the assessee was supposed to have purchased shares of M/s. Bolton Properties Ltd. by sale of M/s. DSQ Software which the assessee was held for a year by that time. That transaction alone was an off market transaction. But subsequent sales were through the Stock Exchange and through the broker's notes. Monies have been received through the banking channel. All the above details/facts were made available to the A.O. during the course of assessment proceedings and M/s. Prakash Nahata and Co. have also confirmed the transactions before the A.O. There was correspondence with M/s. Bolton Properties Ltd., which also confirms the issue of jumbo share certificate for the entire 30,000 shares and subsequent dematerialisation also. Even though the Investigation Team have identified that various persons have deposited large amount of cash in the bank account of M/s. Prakash Nahata and Co., nowhere the assessee's name has figured in that. We are not sure whether the ultimate buyers of the shares have deposited the money in the broker's account for purchase of shares for whatever reason, at a higher price. Just be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that these transactions of purchase and sale of shares by the assessee resulting in capital gains is bogus. Not only that the company also transferred the shares in the name of the assessee by issuance of jumbo certificate and ownership of the shares were also recorded in the form of demat account maintained in Bank of Baroda. The member client agreement was also furnished which indicate that the assessee was registered with the broker as per the norms. Under the facts and circumstances of the case, we are of the view that the capital gain as declared by the assessee is to be accepted and the addition made by the A.O. deserves to be deleted. Consequent to that the assessee is eligible for deduction under section 54F. The A.O. is directed to do so. Accordingly the respective grounds are considered allowed. 9. In the course of argument the learned counsel relied on the principles established by the following decisions in support of various contentions:- i) CIT vs. Korlay Trading Co. Ltd. 232 ITR 820 (Cal) ii) Mukesh R. Marolia vs. ACIT 6 SOT 247 (Mum) iii) Acchyalal Shaw vs. ITO 19 DTR (Kol) (Trib) 177 iv) DCIT vs. Smt. Sarojbala A Jain ITA No.3356/Mum/2007 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on record we deem it fit to restore the issue back to the file of the A.O. to give one more opportunity to the assessee to furnish the necessary details in support of the expenditure. In the absence of any details from the assessee, the A.O. is free to estimate the expenditure keeping in mind the capital account of the assessee in firms and also husband's capital account. With these directions, the issue is restored back to the file of the A.O. Ground is allowed. Appeal partly allowed. 12. The assessee has raised the following grounds in this appeal:- (i) The learned Commissioner of Income Tax (Appeals) erred in law and facts in confirming the action of the learned Assessing Officer in treating the transactions resulting in Long Term Capital Gain of ₹ 3,81,324/- as not genuine and assessing the same as income from Undisclosed Sources. (ii) The learned Commissioner of Income Tax (Appeals) erred in law and facts in not allowing the claim of deduction u/s. 54F of ₹ 3,81,324/- on purchase of residential house. (iii) The learned Commissioner of Income Tax (Appeals) erred in law and facts in confirming the addition of ₹ 1,96,000/- on account of low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital gain exemption when the assessee opts for purchase of flat after arising of the capital gain and deposit the sale consideration in the bank account till such appropriation. The assessee cannot be expected to appropriate the sale consideration in respect of the already purchased flat. If such interpretation of the Commissioner (Appeals) was accepted, it would frustrate the object of the provisions of section 54F and lead to absurdity. Therefore, the order of Commissioner (Appeals) was set aside and the assessee was entitled to deduction under section 54F in the relevant assessment year. 14. Accordingly the assessee is entitled to claim deduction under section 54F on the property purchased in A.Y. 2002-03 since the long term capital has arisen within one year from the purchase of the above property. The A.O. is directed to allow deduction under section 54F as claimed. 15. The other issue is with reference to the addition made under section 69C for the low withdrawals. For the reasons discussed in ground No. d) above in para 11 above, the issue is restored back to the file of the A.O. to examine and decide afresh. Assessee should be given proper opportunity in explaining ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
