TMI Blog2010 (2) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... taken for the purchase of house property claiming exemption u/s.54F. The AO put the entire purchase sale of share transaction of Mantra Online Ltd. under scanner. The AO took serious note of the fact that the purchase of share transaction has not passed through the bank account. The cash payment against the purchase of shares created serious doubt in the mind of the AO questioning the very authenticity of purchase of share transaction. Further, the AO also noted that the broker M/s. Prakash Nahata Co. has not given the necessary details under the head Order No. and trade time made in the share broker s note given to the assessee. According to the AO, everything did not appear to be normal in respect of shares vis-a-vis bringing the shares under the demant account and transferring the same to the other party. The AO observed that the assessee sold the shares on 7-3-2003 which he got the dematerialization completed on 24-3-2003 by transferring the shares of Acme Resources Ltd. in his demat account. Further, to the surprise of AO, the shares of Acme Resources Ltd. got transferred from his demant account to the demat account of the other party on 31-7-2003 which was almost more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on the decisions in the cases of Emerald Commercial Ltd. (250 ITR 540 (Cal.) and Mukesh R. Marolia (6 SOT 247) (Mum. ITAT). In respect of sale of dematerialization of shares, it was submitted that while the assessee had applied for demat account on 27-2-2003, demat licence was confirmed only on 24-3-2003. In the meantime, the shares were sold through the broker M/s. Prakash Nahata Co. on 7-3-2003. The share consideration against the sale of shares was received by cheque. Prakash Nahata Co. had again confirmed the sale transaction. All the formalities in respect of transfer of shares were completed in writing and the evidence in respect of the same was filed before the AO. After perusing the material and the submissions, the ld. CIT(A) found that the AO was not justified in doubting the transaction of purchase and sale of shares. Accordingly, he deleted the addition made by the AO. 5. Now, the department is in appeal here before the Tribunal. 6. The ld. D.R. placed reliance on the order of the AO. 7. On the other hand, ld. counsel of the assessee placed reliance on the order of CIT(A). Further, reliance was placed on the decision of the Tribunal in the case of Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h R. Marolia v. Addl. CIT, Rg. 15(2) reported in 6 SOT 247 ITA No.1201 (Mum) of 2005. In this particular case, the assessee purchased some share from the off market which were not reflected in the record of Bombay Stock Exchange. The AO held the purchase sale of shares as bogus as it was outside the stock exchange and not through the registered broker. The Hon ble ITAT had a occasion to deal with the issue in the aforesaid case holding that since the purchase and sale of share outside floor of stock exchange is not an unlawful activity, it was not possible to hold that the transaction reported by the assessee were quite sham. The Hon ble ITAT held that transactions were genuine. Here, it may be relevant to reproduce the finding of the Hon ble ITAT in the aforesaid case : 10.3 Purchase and sale of shares outside the floor of stock exchange is not an unlawful activity. Off market transactions are not illegal. It is always possible for the parties to enter into transactions even without the help of brokers. Therefore, it is not possible to hold that the transactions reported by the assessee were quite sham on the legal proposition arrived at by the CIT(A) that off-market transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely turned in favour of the assessee. Therefore, it is very difficult to brush aside the contentions of the assessee that he had purchased shares and he had sold shares and ultimately he had purchased a flat utilizing the sale proceeds of those shares. 10.9 Therefore, in short on the basis of the internal evidences available with the assessee and the fact that the sale proceeds were collected through bank accounts and coupled with the external evidence of survey and statement of parties, we have to hold that the sale proceeds of ₹ 1,41,08,484/- has been explained. Therefore, the said addition is deleted. From the aforesaid decision, it may be said that the off market transaction of share is not a taboo under the law. Being the factual circumstances matching with appellant s case, the ratio-dividendi of Mukesh R.Marolia s case decided Hon ble ITAT, Mumbai F Bench as referred Supra, will have mandatory application in the present appeal. 2.5 I have also perused the fact regarding the chronology of events taken place in respect of opening the demat account, completion of dematerialization of share transferring of share from demat account of the appellant to the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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