TMI Blog2018 (1) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... anking channel from sale of shares held in Dmat account through the recognized stock exchange which is verifiable from the contract note. Both the lower authorities erred in treating the alleged transaction of sale of equity shares as a sham transaction. - Decided in favour of assessee - ITA No. 968/Ind/2016 - - - Dated:- 19-1-2018 - Shri Kul Bharat, Judicial Member And Shri Manish Borad, Accountant Member Respondent by : Shri Rajeev Jain, Sr.DR Appellant by : Shri Girish Agrawal, CA (AR) ORDER Per Manish Borad, AM. This appeal filed by the Assessee is directed against the order of ld. Commissioner of Income-tax (Appeals)-I, Indore [in short referred to as the CIT (A)] dated 23.05.2016 is arising out of the order u/s 143(3) of the Income Tax Act dated 15.12.2010 framed by the Assistant Commissioner of Income Tax, Circle 1(2), Indore pertaining to Assessment Year 2008-09. 2. The assessee has raised following grounds of appeal. 1 Because of facts and in circumstances of the case, the learned CIT(Appeal) has erred in confirming action of Ld. Assessing Officer of treating short term capital gains as income u/s 68 of the IT Act 1961 at ₹ 6,62,87 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30/- was paid on 1.07.2007. The Ld.AO called for the details from the broker Chandravadan Bhaichand Muchchala, Mumbai as well as National Security Exchange. He was not convinced even though confirmation of account confirming the impugned transaction was received. The Ld.A.O doubted the purchases and took a view that the alleged transaction of short term capital gain is bogus and actually ₹ 7,64,346/- is unexplained credit liable to be added to the income of the assessee. Alongwith other minor disallowances income assessed to ₹ 15,76,610/-. 4. Aggrieved assessee filed an appeal before the Ld. CIT(A) and partly succeeded. However the issue relating to unexplained credit of ₹ 7,64,346/- was dealt by the Ld.CIT(A) observing as follows thereby restricting the addition to ₹ 6,62,870/-; 2. Finding and order:- During the appellate proceedings the A/R of the appellant appeared. He confirmed following facts: 1. The appellant asked the broker M/s Chandravadan Bhaichand Muchchala to buy 12000 shares of IFCI on 17.10.2006. 2. The payment for these shares @9.95 per share was made on 1/7/2007 by a/c payee cheque. 3. The shares were transferred to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of IFCI shares will be as under: Sale price for 12000 shares as declared ₹ 764346. Less cost of shares as on 13/8/2007 at average @ ₹ 65.2 = 67 x 12000 = 782400. Thus this transaction would have resulted in short term capital loss of ₹ 18054. The appellant has not shown source of ₹ 782400/- which he must have paid to buy shares. The appellant has shown payment of ₹ 119530/- to M/s. Chandravadan Bhaichand Muchchala. On 10/8/2007 appellant could not have purchased 12000 shares of IFCI for ₹ 119530/- since the cost at prevailing stock exchange rate was ₹ 782400 @ ₹ 65.20 per share. Logically the appellant must have paid the balance amount i.e. 782400 119530 = 662870 from unknown sources. 5. Aggrieved, the assessee is now filed an appeal before the Tribunal raising 7 grounds of appeal out of which Ground No.7 is general in nature which needs no adjudication and Ground No. 1 to 6 are focused towards addition of ₹ 6,62,870/- confirmed by the Ld.CIT(A). The Ld. Counsel for the assessee submitted that; Assessee purchased 12,000 shares of the IFCI Limited on 17.10.2006 at a price of ₹ 9.95 per share. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be so. In the present case the Ld.CIT(A) has not brought on record any documentary or other evidence to substantiate his conclusion (assumption) that the assessee has purchased the said shares on 10.08.2007. This view was upheld by the Hon ble Supreme Court in the case of CIT vs Dualat Ram Rawatmull [87 ITR 349 (SC)] The relevant paragraphs of the order are reproduced below:- The onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of B, the burden laid on the department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of B. A simple way of discharging the onus and resolving the controversy was to trace the source and origin of the amount and find out its ultimate destination. So far as the source was concerned, there was no material on the record to show that the amount came from the coffers of the respondent firm or that it was tendered in B Calcutta branch of the Central Bank, on behalf of the respondent. As regards th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd No. 1 to 6 raised by the assessee, the sole grievance is against the order of Ld.CIT(A) partly confirming the addition made by Ld. A.O by treating the short term capital gain of ₹ 6,62,870/- as income from undisclosed sources which was added by the Ld.A.O applying provisions of section 68 of the Act. We observe that the issue revolves round the transaction of short term capital gain from sale of shares. The Ld.A.O has doubted the genuineness of purchase of IFCI shares which were bought through the broker M/s. Chandravan Bhaichand Muchchala, Mumbai by contract note No.7024 dated 17.10.2006. At that point of time price per equity share of IFCI Ltd was ₹ 9.95. However the payment for this purchase of ₹ 1,19,530/- was made after nine months i.e. 1.7.2007. The 12000 equity shares bought by the assessee @Rs.9.95 per share were transferred to Dmat account on 13.8.2007 and then these were sold on 17.8.2007 and the price per equity share on the date of sale was around ₹ 63. 9. The Ld.A.O doubted the impugned purchase because the payment was made after nine months even when there was no regular transaction between the assessee and broker and also there was extra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner (Appeals) who allowed the said ground of appeal and directed the Assessing Officer to accept the claim of the assessee of ₹ 34,65,171/- as capital gains. The revenue carried the matter in appeal before the Tribunal, but did not succeed. 3. Mr. Manav Mehta, learned counsel for the appellant has assailed the impugned order by placing reliance upon the reasoning adopted by the Assessing Officer. 4. As can be seen from the impugned order, the Tribunal, after appreciating the evidence on record, has found that before the Assessing Officer the assessee had explained that the purchase transactions were made on the Online Trading System and these transactions are genuine. Earlier, this is prior to 1.4.2005, it was not compulsory for the client to have his own transaction record under SEBI guidelines. Therefore, the purchases earlier were made using the broker s code, and it was for this reason that the broker had used the self code . Since the shares were sold after 1.4.2005, the transactions were not under the broker s code. As regards service tax and stamp charges the contract note of the broker clearly mentioned that the brokerage was inclusive of service tax e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cum bill for sale of shares 12. Now above referred details except for the genuineness of purchase, the Ld.A.O has not challenged the genuineness of other details most importantly the sale of shares which have been effected by the assessee through Bombay Stock Exchange portal and sold through Angel Capital Debt Market Ltd. The relevant documents in the paper book from page 23 to 30 prove beyond doubt the genuineness of sale of equity shares. It is also not disputed that the share of IFCI Ltd were dematized after the purchase and they have been debited from this account at the time of sale. As far as purchase is concerned the shares have been purchased through a registered broker who is a member of Stock Exchange, Bombay having SEBI registration No.INB010005219. For the only reason that the payment of purchase has been made after a lapse of 9 months cannot render the purchase as non genuine unless and otherwise any material is brought on record which could negate this fact. 13. Further we find that the addition has been made for the unexplained credit of ₹ 7,64,346/- but nowhere right from the assessment proceedings and till the proceedings before the appellate auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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