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TMI Blog2016 (4) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The only issue in this appeal of assessee is against the order of CIT(A) in confirming the action of AO disallowing the claim of short term capital gain/loss on purchase and sale of shares by treating the same as sham transaction. For this, assessee has raised following ground:- "2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the action of the AO in disallowing the claim of Short Term Capital Loss of Rs. 15,38,783/- on genuine purchases and sales of shares authenticated by evidences and documents on record, simply on surmises and on the ground of surrounding circumstances by treating the transactions in shares as sham transactions." 3. Briefly stated facts are that assessee is a Private Ltd. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction was designed that in this transaction lesser taxes were to be paid by the appellant. An inference about the genuineness of apparent off market sale has to be drawn on the basis of the circumstances available on the record and having regard to the conduct of the appellant in making payment as well as other material on the record and the inference can reasonably be drawn that the date of purchase 24-09-2004 of above transaction is non-genuine and the entire transaction is a sham with predetermined result and ulterior motive to avoid payment of taxes. It is held that after considering the surrounding circumstances and applying the test of human probabilities it is rightly concluded that the appellant's claim about the date of purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as short term capital loss. The assessee claimed to have produced following documents before lower authorities in respect of purchase and sale of the scrip of Kwality Builders & Developers Pvt. Ltd. at the prevailing market rate prevalent with the CSE. "1. Copy of the contract note issued by N.M.Lohia & Co. for purchase of shares of Kwality Builders & Developers Ltd. enclosed at Page 1 of the Paper book. 2. Copy of the contract notes issued by Pradeep Kumar Daga for sale of shares of Kwality Builders & Developers Ltd. enclosed at Page 2-3 of the Paper Book. 3. Copy of the Demat account held by the appellant with Zuari Investments Ltd. enclosed at Page 4-5 of the Paper Book. 4. Copy of the stock market quotations for the date of pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that has taken place on 22.03.2005 of 14700 shares, on 24.03.2005 of 600 shares and on 30.03.2005 of 400 shares just before the date of sale. Ld. Counsel for the assessee explained that the entire premise of the AO for disallowance was that the CSE did not confirm the purchase transaction, the stock broker through whom the assessee has purchased did not appear, the payment was made after six months and delivery of shares to the demat account of the assessee just before the date of sale and also purchase of shares at the rate representing PE ratio of 154 times. But he explained that the AO did not point out any deficiency in the sale transactions. He explained that the AO ignored all the evidence of purchase of shares produced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee and the payment received thereafter. These four stages are on different dates and not on the same date. Therefore, it cannot be accepted that the purchase and sale of the shares are on the same date. It is true that the transactions are with some brokers, but in share transactions, the purchase and sale are normally through some broker. Payment by the account payee cheque has not been disputed. Payment on purchase and sale and payment received by account payee cheque was on two different dates. If the share broker, even after issue of summons does not appear, for that reason, the claim of the assessee should not be denied, specially in the cases when the existence of broker is not in dispute, nor the payment is in dispute. Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the brokers and share transactions cannot be held to be bogus. The Hon'ble ITAT, Kolkata in the case of Rajkumar Agarwal (ITA 1330/Kol/2007 dated 10/08/07) has held that when purchase and sale of shares were supported by proper Contract Notes, deliveries of shares were received through demat accounts maintained with various agencies, the shares ITA Nos. 714 to 718/Kol/2011-C-AM Smt. Sunita Khemka 6 were purchased and sold through recognised broker and the sale considerations were received by Account Payee Cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG. 6.4 In the assessment orders under consideration the AO has not considered any of these facts. He has treated the transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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