TMI Blog2016 (4) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Sujit Kr Das, JCIT, Sr DR ORDER Per Shri Mahavir Singh, JM This appeal by assessee is arising out of order of CIT(A)-XXXII, Kolkata in Appeal No. 46/XXXII/11-12/R T/7(4)Kol dated 01.01.2013. Assessment was framed by ITO, Wd-7(4), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for AY 2005-06 vide its order dated 27.12.2007. 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 ₹ 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. Company, engaged in the business of financing and investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of shares on 24-09- 2004, therefore, it is held that the shares should be presumed to be purchased on 22.3.2005; 24-03-2005 and 30-03-2005 and the loss shown to be incurred there on of ₹ 15,38,783/- is disallowed as loss out of purchase of 15700 shares being a sham transaction accordingly. The addition made by the Assessing Officer is upheld. This ground of appeal is dismissed. Aggrieved, now assessee is in second appeal before Tribunal. 4. We have heard rival submissions and gone through facts and circumstances of the case. The main argument of assessee before us was that the purchase of shares of Kwality Builders Developers Ltd. as on 24.09.2004 of 15700 shares at a price of ₹ 108.30 per share was though off market transaction but routed through a registered brokers M/s. N. M. Lohia Co., SEBI Registration No. 1NB030051219. The total purchase was for a sum of ₹ 17,00,310/-. According to assessee, the purchases even though off market transaction was then at a prevalent market price as per CSE where the scrip is listed. The assessee explained that these shares were sold to Shri Pradip Kr. Daga, the registered broker having SEBI Registration No. INB0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account to 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 by the assessee and doubted the purchase transaction. The sale transaction was not doubted. He explained that the purchase transactions were off market transactions and obviously there can be no record regarding these transactions with the Stock Exchange. The broker has filed written explanation before the AO admitting and confirming the purchase made by assessee of these shares. 5. We have gone through the details in entirety and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yee cheques drawn by the concerned Stock Brokers of Calcutta Stock Exchange and duly recorded in the bank accounts and regular Books-of-A/cs. All the shares sold were transferred through Demat Account or handed over physically to concerned brokers. The price at which the shares have been sold is also published in the daily Quotation issued by the Calcutta Stock Exchange. The shares sold after 1st October'04 pertains to the assessment year 2005-06. Security Transaction tax has been deducted from the sale proceeds. 6.3 The decisions of the Hon'ble Calcutta High Court in the case of CIT-VsCarbo Industrial Holdings Ltd (244 ITR 422) and CIT Vs- Emerald Commercial Ltd (250 ITR 549) are also relevant to the issue where the Hon'ble Court has held that where the payments are made by Account Payee Cheques and the existence of the brokers is not disputed the assessee cannot be punished for the default of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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