TMI Blog2009 (9) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the purchase and sale of shares outside floor of stock exchange is not an unlawful activity and the off-market transactions are not illegal. As regards the AO s observation that there is exorbitant rise in the sale price of the shares which created a doubt about the genuineness of the transaction, the assessee has placed reliance upon the decision of Smt. Memo Devi [ 2008 (3) TMI 689 - ITAT AGRA] wherein it has been held that increase in share price by more than 25 times cannot be the basis to assume that the transaction was bogus as abnormal increase in the share price is a normal phenomena. As decided in the case of ITO vs. Smt. Kusumlata [ 2006 (8) TMI 266 - ITAT JODHPUR] wherein it has been held that for making an additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment for asst. yr. 2004-05 has been finalized keeping in view of correspondence made with Addl. Director of IT (Inv.), Kolkata and subsequent information rendered by the Addl. Director of IT (Inv.), Kolkata in respect of so-called tainted broker, M/s Prakash Nahata Co. (2) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not appreciating the fact that the assessee earned capital gain by transacting in single scrip of M/s Prime Capital Market Ltd. (3) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not considering the issue that the assessee has taken interest-free loan of ₹ 30,00,000 from M/s Prime Capital Market Ltd. with whom assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income. Therefore, vide letter dt. 5th May, 2006, assessee was asked to furnish details of computation of long-term capital gains i.e., details of shares purchased and sold with date of purchase and sale, copies of contract notes and copy of demat account. The assessee furnished the details vide letter dt. 24th Aug., 2006. Considering the details filed, AO observed that assessee has purchased 25,000 shares of Prime Capital Market Ltd. on 2nd July, 2001 for ₹ 55,000 and had sold these 25,000 shares on 20th Feb., 2003 for ₹ 28,22,500 and had offered net capital gains of ₹ 27,67,000 for tax in the year under consideration. On going through the details of the capital gains, AO observed that the cost price of the 25,000 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -IV, Kolkotta submitted that summons under s. 131 were issued to the principal office of M/s Prakash Nahata Co. but there was no compliance and nor was there any compliance from Prime Capital Market Ltd. It was also mentioned that the scrips of Prime Capital Market Ltd. were heavily used for giving bogus long-term capital gains entries to many people residing all over the country and M/s Prakash Nahata Co. is a highly tainted concern who had given this kind of entry to many people earlier and still they are doing so. It was also mentioned that the case of longterm capital gains entries in penny stock by Ajay Nawandar (assessee herein) is the case of unaccounted cash being channelised as long-term capital gains through hawala operation f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000 shares from Shri Vinay Pachisia are transferred to the assessee in 2001. He held that had it been a bogus purchase transaction seal of stock exchange would not have been of the year 2001. He also observed that the payment is made by the assessee in the year 2001 out of profit received on sale of shares of Ranbaxy which had been offered as the income of the relevant year and out of the purchase of 50,000 shares, the assessee sold 25,000 shares in the period relevant to asst. yr. 2003-04 and balance 25,000 shares in the relevant asst. yr. 2004-05 and the Department has accepted the sale of shares as genuine transactions during the period relevant to asst. yr. 2003-04. He observed that there is no change in the circumstances in asst. y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase and sale of shares outside floor of stock exchange is not an unlawful activity and the off-market transactions are not illegal. As regards the AO s observation that there is exorbitant rise in the sale price of the shares which created a doubt about the genuineness of the transaction, the assessee has placed reliance upon the decision of the Agra Bench of the Tribunal in the case of Smt. Memo Devi vs. Asstt. CIT (2008) 7 DTR (Agra)(Trib) 158, wherein it has been held that increase in share price by more than 25 times cannot be the basis to assume that the transaction was bogus as abnormal increase in the share price is a normal phenomena. The learned counsel for the assessee placed reliance upon the decision of the Jodhpur Bench in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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