TMI Blog2016 (10) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 68 of the Act and allow STCG as returned by the assessee. - Decided in favour of assessee. - I.T.A. No.3553/Mum/2015 - - - Dated:- 27-10-2016 - SHRI SAKTIJIT DEY, JM AND SHRI RAJESH KUMAR, AM Appellant by : Shri Ashwin S Chhag Respondent by : Shri B S Bist O R D E R PER RAJESH KUMAR, AM : This is an appeal filed by the assessee against the order dated 31.3.2015 passed by the ld.CIT(A)-36, Mumbai and it relates to the assessment year 2006-07. 2. The assessee has challenged in the grounds of appeal, that the reopening of the assessment u/s 147 r.w.s 148 of the Income Tax Act, 1961 (hereinafter called as the Act) for the assessment year 2006-07 is abinitio null and void and also challenged the finding of the lower authorities on merits for making the addition by invoking the provisions of section 68 of the Act treating thereby the Short Term Capital Gains from as undisclosed income from other sources. 3. The brief facts of the case are that the assessee filed its original return of income on 22.9.2006 declaring the total income of ₹ 12,86,780/- which was processed under section 143(1) of the Act. The case of the assessee was reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submitted the bank statement corroborating the payment. The delay for crediting the shares in the demat account by months was explained by the assessee by submitting that initially 2000 shares were purchases but broker has purchased 10000 shares in his name which could not be paid to the share broker due to non availability of funds with the purchaser and as a result, the shares purchased by the broker on behalf of the assessee were kept by the broker in pull account with the assurance that money will be paid as and when the assessee may arrange the funds. The payment was ultimately paid made in the ensuing month of Feb. 2006 and the broker allowed the credit facility to the assessee. However, the AO rejected the contention of the ld.AR and came to the conclusion that transactions shown by the assessee through M/s Alliance Intermediateries and Network Pvt Ltd. were colourable device for the purpose of evading the tax by showing gain as gain as STCG and paying tax at the rate of 10%. The AO finally passed an order u/s 143(3) r.w.s.147 of the Act vide order dated 31.12.2012 assessing the total income at ₹ 12,86,780/- by treating the STCG as unexplained cash credit u/s 68 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bought 10,000 shares of the said company. It was further submitted that during that period the appellant had no money to pay up the purchase consideration of 10,000 shares and accordingly requested the broker to retain the shares for payment as and when possible. It was submitted that the broker accepted the request of the appellant and retained the shares in their pull account, transferring it to the Demat account of the appellant when full payment of ₹ 3,31,573/- was made. The appellant further submitted that he could only pay this amount by cheque no. 564901 dated 20/02/2006 drawn on the Bank of Baroda and that the shares were subsequently transferred to the appellant's Demat account with M/s Action Financial Services (India) Ltd. on 28/02/2006. It was further stated that these shares were sold through M/s R.R.Nabar Co., Share brokers on 28/02/2006 and that after this initial unhappy experience with M/s Alliance Intermediaries and Network Private Ltd., the appellant had stopped doing trade with that broker. 5.4 I have considered the facts in the instant case and the submissions of the appellant. From the same, it is clear that the main evidence relied by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Aliiance Intermediaries and Network Private Ltd. who had erroneously purchased 10,000 shares of M/s Aptech Ltd. and that the said broker had willingly kept these shares in its pull account in the name of the appellant for a long period of 9 months, till the appellant was in a position to make the payment of ₹ 3,31,573/-. As rightly observed by the AO, the sequence of events drawn up by the appellant is not believable as the appellant did not produce any evidence to show that there was actually any dispute between him and M/s Alliance Intermediaries and Network Private Ltd. Further the appellant was unable to explain how he managed to get an unusually long credit window of 9 months without any security from the said broker in this sole transaction whereas his regular broker also did not allow him such credit facility as brought to light by the statement of the appellant recorded by the AO. Though subsequent sale and transfer of shares after sale from the appellant are shown but the purchases are not substantiated. In light of the facts unearthed by the Investigations carried out by the Department, the payment shown to or from M/s Alliance Intermediaries Network Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi and his group companies could not be the basis for making genuine purchases as non-genuine and making it as addition u/s 68 of the Act. When the payments were duly recorded in the books of account and made through banking channel. The delay in making payment and transferring the share into demat account was also duly explained before the AO and also at the time recording the statement of the assessee under section 131 of the Act on 26.11.2012. The ld. AR also submitted that no cross-examination of Shri Mukesh Chokshi was allowed to the assessee as the AO framed the assessment on the strength of information found from the search on Shri Mukesh Chokshi and his group companies that the assessee was one of the beneficiary of 3000 beneficiaries. Accordingly, the ld. AR submitted that the AO has violated principle of natural justice. 5. The ld.DR, on the other hand, supported the orders of authorities below and submitted that the assessee had taken bogus and fraudulent entries from M/s Alliance Intermediaries and Network P Ltd which was a group company of Mr.Mukesh Chokshi who was engaged in the business of providing bogus and fraudulent entries in the marked and it is proved durin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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