TMI Blog2015 (11) TMI 1716X X X X Extracts X X X X X X X X Extracts X X X X ..... ) shares were bought and sold in Kolkata has been duly rebutted and refuted by tendering sufficient evidence and therefore Assessing Officer Assessing Officer can only provoke a suspicion, much less a belief about the transaction. The suspicion of Assessing Officer cannot clinch the transaction against assessee. In view of the above CIT(A) was justified in holding that long term capital gain earned by assessee of ₹ 47,60,462/- should be treated as such and not taxed as income from undisclosed sources - Decided against revenue - ITA No. 223/Mum/2011 - - - Dated:- 27-11-2015 - SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAJESH KUMAR, AM Appellant by: Shri Satya Pal Kumar Respondent by: Shri B.V. Jhaveri O R D E R PER SHAILENDRA KUMAR YADAV, JM This appeal has been filed by Revenue against the order of CIT(A) on following grounds: - 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in holding that the long term capital gain received by the assessee in the scrip Emerald Commercial Ltd was genuine transaction without appreciating the fact that;- a. The assessee could not prove the source of funds while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Murarilal Goenka and Shivam Stock Broking Pvt. Ltd., as per details enumerated as under:- Name of the Broker through whom sold No. of shares sold Order No. Trade No. Date of Sale Time of Sale Total Sale Proceeds (in Rs.) Shivam Stock Broking Pvt. Ltd. 4000 61613384 929 20.09.2005 15:43:43 19,57,240 Murarlilal Goenka 3000 32042 1177 25.11.2005 14:02:13 14,07,180 Muralilal Goenka 2000 32042 1187 28.11.2005 14:16:43 9,36,120 Muralilal Goenka 1000 32042 1208 29.11.2005 15:02:46 4,64,470 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in 154 lTR 148 wherein it has been held that the plain avoidance of tax when breaking the law is no longer approval and legal avoidance of tax done, in this way is required to be cured especially in view of the fact that India has attained independence and is now striving towards building a welfare society and could not just simply rely on age-old observation in the cases decided in England. 5) The AO also argued that the decision of the Supreme Court in the case of Azadi Bachao Andolan reported in 263 ITR 706 doe not prevail upon his own judgment in Mcdowell. The AO also relied on the Mumbai ITAT decision in the case o Housing Development and Finance Corp. Ltd given in (ITA No.2913/MUM/1995 dt.12.09.2005 wherein the Mumbai (ITAT has held that the findings of Mcdowell's case is still applicable and has to be respected. The AO has also further relied upon the Apex Court Judgment in the case of Sumati Dayal reported in 214 ITR 801 Durgaprasad More in 82 ITR 540 where the Apex Court has held that certain matters have to be considered by applying the test of human probabilities. 4. The matter was carried before the first Appellate Authority wherein assessee stated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore the transaction is not abnormal or unnatural. vii) The AR further argued that it has paid Security Transaction Tax (STT) on the sale of 10,000 shares amounting to ₹ 47,60,462/- and as per provision of sec.10(38) when the gains made by the appellant is Long Term and on the sale of the shares STT is paid, then the gain on sale of said share is exempt u/s. 10(38) of Income Tax Act, 1961. viii) Regarding addition u/s.68 of Income Tax Act, 1961 as unexplained cash credit of ₹ 47,60,462/- , the AR argued that the credits in the Bank Account are absolutely identified with the sale proceeds on sale of 10,000 shares of Emrald Commercial Ltd and therefore the credits are duly explained and hence there is no reason for the AO to take adverse view that the impugned sale proceeds are unexplained cash credits u/s.68 of the Act. ix) The AR further argued that the AO in the present case is guided by suspicions, surmises and conjectures and except for doubting the transactions, the AO could not disprove the transactions in any way. The AR further relied upon the following judgments in support of the view carried that gains on the sale of shares is genuine. a) Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... execuging purchase. In this background the CIT(A) failed to not that shares of M/s. Badri Prasad and Sons stock broker who has been penalized by SEBI for indulging in penny stock transaction during the year 2005 which is relevant to the current year under consideration. So the CIT(A) erred in holding that the transaction was genuine without appreciating the fact that broker M/s. Badri Prasad and Sons though whom assessee has claimed to have purchased the shares has clearly denied the executing of any share transaction of M/s. Emerald Commercial Ltd. on 06.05.2004, the date on which assessee has claimed to have purchased 10,000 shares. Purchase transactions are out of cash in hand which was on account of gift received by assessee from his relatives. Purchase of shares was off bolt and such purchases are not reflected in the stock exchange. In this background the learned D.R requested to set aside the order CIT(A) and to restore that of Assessing Officer. On the other hand the learned A.R. for the assessee supported the order of the CIT(A). 7. After going through the rival submissions and material on record we find that Assessing Officer rejected the claim of long term capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere purchased in cash, the same cannot be verified. Since no return of income was filed by assessee for the A.Y.2005-06, it was not possible to verify the cash in hand of ₹ 3,45,602/-. According to Assessing Officer the cash in hand is not substantiated. In this regard the stand of the assessee has been that assessee was given a gift of ₹ 1,01,000/- by his father Shri Mohamed All Bharwani on 26.5.2003 and by his elder brother Shri Munir M. Bharwani of ₹ 1,28,000/- on 26.5.2003 being on the occasion of assessee s birthday. Assessee has stated that in the returns of income for the A.Y.2004-05, in the case of his father and brother, the gifts in question have been duly reflected. Copies of the relevant returns of income alongwith capital accounts have been furnished before CIT(A) at relevant point of time and in this background it was the stand of the assessee that because of these gifts from the aforesaid two persons that there was so much cash in hand with the assessee. This fact has not been looked into by the Assessing Officer at relevant point of time. 10. The observation of the Assessing Officer that the transaction is not genuine and is engineered with a so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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