TMI Blog2012 (5) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... craves leave to add or amend the grounds of appeal on or before the appeal is heard and disposed off. 3. It is prayed that the order of the Commissioner of Income- tax(Appeals) be set-aside and that of the A.O. be restored. 3. Ld. 'DR' referred to the findings of the CIT(A) and also the relevant part of the assessment order. It was contended that ld. CIT(A) ignored the material on record and reversed the findings of the AO. Ld. 'AR' placed reliance on the order passed by the CIT(A). 4. We have carefully perused the rival submissions, facts of the case and the relevant record. In this case, the revenue, in a single substantive ground contended that CIT(A) erred on facts and the circumstances of the case in deleting addition of ₹ 6,19,680/- by holding the share transaction as genuine ignoring the fact that onus to prove genuineness of transaction lies on the assessee. 5. The brief facts of the case are that assessee filed his return of income for the assessment year 2005-06 on 30.09.2005 declaring income of ₹ 8,95,162/-. The assessee is engaged in the trading of iron and steel. The assessee, in the return of income had shown long term capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otri Construction Ltd. (SCL) and by the clients Grafit Dealers (P) Ltd., Fidiliti Merchant (P) Ltd. and Amarjyoti Vyapaar Ltd. that the entities are connected to each other in the following manner: a) Two directors of M/s Sangotri Construction Ltd. namely Sh. Manish Kumar Shokla and Sri Ashesh Patwari are also directors of two dealing client companies namely Grafity Dealers (P) Ltd. and Fidiliti Merchant (P) Ltd. The address of Grafiti Dealers (P) Ltd. and the scrip company SCL is same, 9, Lai Bazar Street, 3rd Floor, Block-A, Koklata-700001. The trading details of Grafiti Dealers (P) Ltd. show that the company has purchased the shares of SCL from ₹ 19.60 to ₹ 114.80. Similarly Fidiliti Merchant (P) Ltd. has purchased at high prices ranging from ₹ 86 to ₹ 109.50. These trading details are not available from CSE data as the broker Mukesh Dokania had traded in CLIENT code. Hence specific client's codes are not present in the exchange data. Hence these data are from broker's back office data. b) Another client company. Amarjyoti Vyapaar Ltd., was given preferential allotment for 45,000 equity shares @ ₹ 38 each for a composite amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. as informed by DDIT, Kolkata. Also the SEBI has informed that the transactions conducted by N.M.Lohia Co. in the present case of the assessee are that the broker has traded in self code. The modus operandi in the present case confirms to the modus operandi adopted by N.M.Lohia Co. in the case of M/s Globe Stocks Securities Ltd. 3. The assessee has not furnished any evidence about the genuineness of the purchase price of the shares of M/s Sangotri Construction Ltd. 4. There was no reason which could explain the overt increase in the value of shares of M/s Sangotri Construction Ltd. Circumstantial evidence 1. The assessee who trades in shares through a broker in .Ludhiana has traded in the shares of M/s Sangotri Construction Ltd. though a broker of Kolkata. Besides the shares of M/s Sangotri Construction Ltd. the assessee has done no other transaction with M/s N.M. Lohia Co. in the said period. 2. Inquiry conducted by ACIT,Circle-36, Kolkata in response to which no reply was submitted. 3. The copy of demat A/c of the N.M.Lohia Co. for the month of April,2004 provided by DDIT, Kolkata shows that the broker has mostly traded in shares of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kolkata Stock Exchange as a small cap company. The company is not shown to be de-listed. Therefore, the transactions entered into by the appellant in respect of sale and purchase of the shares of this company cannot be held to be bogus. The Assessing Officer has taken adverse view of the fact that the broker of the appellant M/s N.M. Lohia Co. was suspended from its membership. However as rightly pointed out by the Ld. Counsel, the suspension of the broker took place in the year 2007 and whereas the transactions in question pertained to the earlier period. Even otherwise transaction of shares entered into by the appellant had not been declared as void by Koltaka Stock Exchange under the relevant provisions of Securities Contracts (Regulation) Act, 1956. The ratio of decision of the Hon'ble Agra Bench of ITAT in the case of ACIT vs. Jitender Aggarwal 23 DTR (Agra Tribunal) 50, which has been relied upon by the Ld. Counsel covers the case of the appellant in his favour as far as this issue is concerned. In view of the above I agree with the Ld. Counsel that the A.O. could not take adverse view against the appellant as far as these facts are concerned. 5.2 Another fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in my opinion the so called factual evidence is also nothing but circumstantial evidence in a way. Therefore the entire assessment has been based upon circumstantial evidence and the circumstantial evidence relied upon by the A.O. cannot be said to be Sufficient to conclude that the transactions of shares of M/s Sangotri instruction Ltd. entered into by the appellant were bogus and ingenuine. The fact that the shares in question were transferred through the D-mat account of the appellant would show that the shares were actually possessed him. For proving the transactions to be ingenuine, it was required to be shown that unaccounted money was given by the appellant in lieu of cheque in respect of sale of these shares Admitted position, however, is that no such evidence is shown to be there. In view of the above discussion it is held that the A.O. was not justified hi making long term capital gain on account of sale and shares of M/s Sangotri Construction Ltd. in the case of the appellant as normal income. The A.O. is directed to bring to tax the income of the appellant from the sale of shares of M/s Sangotri Construction Ltd. under the head capital gains only. These grounds of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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