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TMI Blog2011 (9) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Since identical questions are involved in all the appeals, therefore, all the appeals were heard together and are being disposed of through this common consolidated order. The learned representatives of both the parties argued at length in the case of Smt. Vimlarani Biharilal Batra in ITA No.762/Ahd/2009 and submitted that the issue is same in the other appeals and the order in this case may be followed in the other appeals. For the purpose of disposal of all the appeals through ITA No.762/Ahd/2009 is disposed of as under. ITA No.762/Ahd/2009 (Smt. Vimlarani Biharilai Batra) 4. In this appeal the assessee challenged the order of the learned CIT(A) in confirming the addition of Rs. 9, 92, 2647- for unexplained cash credit u/s 68 of the IT Act as against long term capital gain shown by the assessee on sale of shares of Rs. 8, 86,9097-. 5. The facts as noted in the impugned order are that the assessee is engaged in the business of manufacturing and trading in sarees through her proprietorship concern M/s. Shyam Silk Mills. During the year, the assessee had claimed long term capital gain of Rs. 8,86,909/- from share transactions details of which have been reproduced by the AO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and submissions, the reasons for which have been noted in Para 4 to 6 of the assessment order. Her first observation was that, even though the assessee had claimed to have purchased the shares of M/s. Silicon Valley Infotech Ltd. and Herald Commercial Ltd. through M/s. Renu Poddar, the broker, and that payments had been made by demand drafts, the assessee had failed to furnish any confirmation from the said broker. Notice u/s 133(6) issued to M/s. Renu Poddar was returned unserved. Secondly, while the date of purchase of the shares of M/s. Silicon Valley Infotech Ltd. in the contract note was shown as 21-03-2003, the payment through the demand draft was made on 21-08-2003. It was not possible that the assessee would have been allowed a credit period of almost five months. In the business of share trading, payments have to be made latest within a week from the date of settlement. The facts clearly showed that the shares were never traded on the dates given and the contract notes issued by M/s. Renu Poddar were bogus. Thirdly, it was claimed that the shares of M/s. Silicon Valley Infotech Ltd. and M/s. Herald Commercial Ltd. were entered/credited into the demat account on 25- 07- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sold through M/s. N. M. Lohia & Co, whereas, the shares of M/s. Globe Stock & Securities Ltd. were sold through ASB, and both of them were the members of the CSE. According to the learned Counsel for the assessee, there was simply no discrepancy in the documents furnished by the assessee, or in the transactions. All requisite documentary evidences had been furnished before the AO. Even in the show-cause notice dated 21-12-2007, the AO did not propose to make any addition pertaining to the transactions shown in the shares of M/s. Globe Stock & Securities Ltd. According to the learned Counsel for the assessee, the AO had misinterpreted the information furnished by the CSE. They had only mentioned that M/s. N. M. Lohia and M/s. Renu Poddar had not executed any trade on specific dates in shares of M/s. Silicon Valley Infotech Ltd. and M/s, Herald Commercial Ltd. No such comment was made in respect of the shares of M/s. Globe Stock & Securities Ltd. However, the AO had erroneously observed that as per the information furnished by the CSE, the trade time, number and date(s) pertaining to the transactions in the shares of M/s. Globe Stock & Securities Ltd. as furnished by ASB, did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the shares purchased through the brokers and their credit in the demat account, with the accounts of the said companies. There was no doubt of the fact that the shares which were credited in the demat account had been sold, resulting in the long term capital gain. With regard to the information furnished by the CSE, it has been contended by the learned Counsel for the assessee that the CSE had not denied the transactions involving the sale of shares. The shares could have been sold "off market" by the broker since the trade time and number was not mentioned. It has been argued that since the assessee did not carry out any transaction through the exchange, no adverse inference could be drawn against the assessee. The transactions were all conducted through authorized brokers. The assessee could not be expected to provide any clarification regarding the information furnished by the CSE. When a transaction is executed through a broker who is a member of the stock exchange, the assessee had every right to believe that the contract note issued by the broker regarding such transaction, and the details contained therein, were factually correct. It has been further submitted by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus, the purchases themselves were consequently established as being not genuine. 5.1 Secondly, the AR has attempted to ignore the delay in the payment of purchase consideration by 5 months, by arguing that the genuineness of the purchases was established by the fact that the shares were credited to the demat account and that, the Assessee had made payments through banking channels, and the purchases had appeared in the balance sheet of the Assessee as on 31-03-2003. Even while using the demat account as an evidence in support of the purchases, the AR has attempted to wash his hands off the query raised by the AO regarding the shares coming into the dernat account from the accounts of M/s. Trans Scan Securities Pvt. Ltd and M/s. Mathran Securities Pvt. Ltd. by arguing that the Assessee could not be burdened to establish any correlation between the shares purchased through the broker(s) and its credit in the demat account from the accounts of the said two companies. 5.2 An examination of the demat account of the Assessee clearly exposes the bogus nature of the transactions. Firstly, where it has been claimed that the shares of all the three companies were purchased by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he shares prices of these scripts to exorbitant highs. Various interested parties purchased the sale consideration of such shares at high values. However, to el-aim capital gain, purchases had to be shown, and that too backdated. It is while regularizing the purchases that most of these parties have faltered which has completely exposed the scam. In fact, several stock brokers had been suspended by the CSE for manipulating the prices of these "penny scripts". 5.5 In the case of the Assessee, it was submitted in writing before the AO that the shares of all the three companies were held by M/s Trans. Scan Securities Pvt. Ltd. M/s, Mathran Securities Pvt. Ltd. and East India Securities Pvt. Ltd. (para 4-5, pages-4) but it was not explained as to how the shares of Globe Stock, Hercomm and Silicon Valley had been obtained/purchased from these companies and at what price. No documentary evidence has yet been furnished in support of such trading and transactions. It is for this reason that the AR has attempted to bypass this issue by arguing that the Assessee cannot be burdened to establish the co-relation between the purchase of the shares and its crediting in the demat account. When t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 19-12-2007 intimating that M/s. N. M. Lohia & Co. has done trading of M/s, Herald Commerce Ltd. on 15- 04-2004. Therefore, sale in that case is confirmed. Similarly, the purchase of shares by M/s. Renu Poddar of M/s. Silicon Valley Infotech Ltd. was done on 21-03-2003 is confirmed but no comments have been given for Globe Stock Ltd. PB-9 is the contract note issued by M/s. Ashish Stock Broking Pvt. Ltd. for sale of shares of M/s. Globe Stock & Securities Ltd. PB-10 is for official market rate. PB- 11 is delivery instruction. PB-14 is confirmation of brokers for purchase of shares by the assessee of Globe Stock & Securities Ltd. PB-15 is confirmation of brokers for sale of the same shares for the assessee on 30-06-2004 and payment through cheque. PB-16 is sale consideration of Rs. 5388/- for M/s. Herald Commercial Ltd. PB-17 is the delivery instruction of the same. PB-18 is certificate of M/s. N. M. Lohia & Co. Ltd. for sale of shares in a sum of Rs. 5388/-. PB-20 is account of the broker showing payment through bank of Rs. 5,61,500/- of shares of M/s. Silicon Valley Infotech Ltd. PB-21 is contract note of the same transactions. PB-22 is delivery note of the same transaction. PB- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for purchase and sale of shares, transaction statement of demat account in respect of credit of shares on account of purchase and debit on account of sales, delivery instructions, note for sale of shares, bank statement proving the receipt of sales consideration and payment of purchases, copy of the balance sheet of the earlier year, confirmation/ledger account of the assessee from the brokers books of accounts and the quotation of the stock exchange, letter of the Calcutta Stock Exchange (PB-8) confirming sales made on 15-04-2004 of M/s. Herald Commerce Ltd. by the broker. The purchase of shares of M/s. Silicon Valley Infotech Ltd. on 21-03-2003 was also confirmed. No details of M/s. Globe Stock & Securities Ltd. are mentioned. Thus, the findings of the AO were incorrect as regards this fact. The assessee submitted that since transactions were off market by the brokers, therefore, information given by the stock exchange would not be relevant to the matter in issue. Despite part of the transactions have been confirmed the stock exchange, the purchases and sales of shares were fully supported by copies of the contract note and the details along with account and confirmation etc. o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry appears has to be there. The learned Counsel for the assessee submitted that the same CIT(A) who passed the impugned order has considered the identical issue in the case of Hiteshkumar Babulal Sanghvi (supra) and deleted the similar addition vide order dated 31-10-2007 copy of which is filed at page 17 of the paper book of the case law. The identical issue was considered by ITAT Ahmedabad 'B' Bench in the case of Mahesh Kumar Guipta Vs ITO in ITA No. 2814/Ahd/2007 and 2828/Ahd/2008 dated 07-01- 2011 in which in Para 16 of the order it was held as under: "16. We have considered the rival submissions and material available on record. It was submitted by the assessee that all the transactions were off market transactions and were not conducted through stock exchange. Therefore, information furnished by the stock exchanges was irrelevant. The purchase and sales of shares were fully supported by the copies of contract notes and bills along with account confirmation etc. The purchases of shares were duly recorded and these were made out of disclosed funds and the bills were made by account payee cheques. The bills of purchase and sales of shares were duly recorded and support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of both the parties. Looking to the facts of the case and circumstances of the case, the CIT(A) has called for the Remand Report and the remand report of the A. O. it was seen that CSE vide their letter had clearly confirmed that the shares of both the companies were listed with the exchange. We find that the genuineness of the transactions of purchase and sales of shares. In the remand report it was clearly mentioned that the transaction has been clearly confirmed by the brokers but also through separate letter issued by the brokers dt, 6.3.2006, We find that the CIT(A) has called for the remand report and the inquiries were conducted to ascertain whether or not transactions even though they were conducted on-line it has been duly reported by exchange as required by the guidelines issued by the SEBI. The AO has furnished report dt. 24.4.2007 wherein it has been mentioned that the brokers and the depository have confirmed the said share transactions. Therefore, we are of the view that the CIT(A) is justified in deleting the same and our interference is not required." The same decision is also considered by another Bench of the Tribunal in the case of Sheth Heena Akshay Vs DCIT (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 755/- on account of unexplained cash credit u/s 68 of the IT Act as against long term capital gain shown by the assessee on sale of shares of Rs. 11,89,535/-. In ITA No.764/Ahd/2009 the assessee challenged the addition of Rs. 25,03,873/- on account of unexplained cash credit u/s 68 of the IT Act as against long term capital gain shown by the assessee on Rs. 22,36,388/-. In ITA No.765/Ahd/2009 the assessee challenged the addition of Rs. 7,15,3447- on account of unexplained cash credit u/s 68 of the IT Act as against long term capital gain shown by the assessee on sale of shares of Rs. 6,37,954/-. In ITA No.766/Ahd/2009 the assessee challenged the addition of Rs. 24,78,580/- on account of unexplained cash credit u/s 68 of the IT Act as against long term capital gain shown by the assessee on sale of shares of Rs. 22,11,220/-. The learned representatives of both the parties submitted that the issue in these appeals are same as is considered in ITA No.762/Ahd/2009 in the case of Smt. Vimlarani Biharilal Batra (supra). They had also submitted that the facts and evidences are same in all the cases and the order in ITA No.762/Ahd/2009 may be followed. On consideration of the submissions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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