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TMI Blog2011 (4) TMI 1500X X X X Extracts X X X X X X X X Extracts X X X X ..... of proving the claimed share transaction as genuine as discussed in the assessment order." 2. The brief facts relating to the issue are that the Assessing Officer received information from Addl. DIT(Inv), Agra that one M/s North India Securities Pvt. Ltd Delhi had provided bogus entries of sale proceeds of shares to the assesses through the State Bank of Bikaner & Jaipur, Delhi. The Addl. DIT(Inv), Agra had provided a list of beneficiaries of payments from the said broker which list contained the name of the assessee also. The said list showed entries of different amounts, totaling to ₹ 11,03,945/-, relating to the demand drafts issued from State Bank of Bikaner & Jaipur, Delhi by M/s North India Securities Pvt. Ltd Delhi. Said drafts were deposited in assessee's SB A/c No. 26819 with Canara Bank Belanganj, Agra. In view of this information the AO took action U/s 147 of the Act after recording the reasons and issued notices u/s 142(1) & 143(2) requiring the assessee to furnish various details relating the share transactions, alleged to have been made for earning impugned capital gains. 3. In response, the assessee filed necessary details relating to her share transactions v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d so that the same may be submitted to you. But instead of receiving the letter, the ITO - 4(3) has sent 4 copies of the annexures (pages 6,7,10 & 18), which are being sent herewith. It is humbly requested that in case any further information is required, the ITO - 4(3), may kindly be asked to furnish the same." 5. The Addl. DIT(Inv)-1, Agra also responded the letter of CIT(A) as under : - " As desired, the requisite information / material / evidence / statement of bank account extract etc. in respect of the following brokers in the spiral binding (Rapped & Sealed ) are being sent to you which may kindly be returned to this office after doing the needful at your end." The CIT(A) after considering the arguments of the assessee, material on record, various decisions cited before him and also the replies / material given by Assessing Officer Addl. DIT(Inv) during the appellate proceedings, deleted the addition by observing as under :- "3.3 I have considered the rival contentions and perused the material on record and find as under - In the assessment records, there is no material other than a list showing long term capital gains on sale of shares shown by various individuals i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the addition and the order of CIT(A) is liable to be set aside. 7. The learned AR, on the other hand, relying upon the order of CIT(A) contended that all the relevant documents and evidences as were in his possession and control were submitted. The assessee submitted before the Assessing Officer various documents such as share application, allotment letter and share certificates to prove that the shares were allotted to her in preferential issue of the company M/s Goyal Achal Sampatti Vikas Evam Niyojan Nigam Ltd. Copy of the balance sheet for the previous year was also filed showing the investment in said shares. As regards the sale of shares photocopies of contract note, sale bill, and statement of account from the broker M/s North India Securities Ltd were filed. The Assessing Officer has failed to prove that all these documents / evidences were false, forged and fabricated. The impugned shares were acquired in the previous year and were also disclosed in the balance sheet of earlier year. AO has not made any independent enquiry either from the company or the broker. The only material is the information from the DDI(Inv.) Wing, Agra which also does not specifically prove tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee by bringing proper evidence on record and the assessee could not be expected to call the concerned persons in evidence to help the department to discharge the burden that lay upon it. On the contrary, the shares in question were acquired in the previous year and were also disclosed in the balance sheet of earlier year. We further noted that in support of her claim regarding acquisition and sale of shares, the assessee had furnished all the relevant documentary evidences in the shape of application made in the preferential issue of the company, allotment letters, copies of share certificates, contract notes and sale bills of the broker, copy of the balance sheet for the previous year showing the investment in said shares, and statement of account from the broker M/s North India Securities Ltd. The Assessing Officer has failed to prove that all these documents / evidences were false, forged and fabricated. The assessee had paid the application money for purchase of shares by account payee drafts and also received the sale proceeds through account payee drafts from the broker and deposited the same in his bank account. The photocopies of share certificates were also submitted showi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction of the assessee was not genuine and he had obtained demand drafts in lieu of cash payment. 10. As regards the observation of Assessing Officer regarding tremendous increase in the price of shares, which led him to doubt the impugned share transactions, we find that fluctuation in share price is a natural phenomena and it cannot be made basis for doubting the transaction of purchase and sale of shares until some contrary material is brought on record, which is lacking in the present case. Moreover, the increase in share prices by more than 25 times of its purchase value has not been taken as abnormal by ITAT Agra Bench in the case of Memo Devi, 7 DTR 158. This decision has been considered by the Agra Bench of Tribunal in the case of Seema by Third Member in the case of Baijnath Agarwal vs. ACIT 40 SOT 475(Agra Tribunal - third Member) in the similar circumstances for doubting the share transactions. The decision in the case of Memo Devi (supra) has also been considered by the Tribunal in the common order dated 31st March, 2009 in the case of Seema Garg & Others (supra), copy filed on record. Therefore, this allegation of the Revenue, in our opinion, is not sustainable for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 133(6). Payment of sale consideration also flowed from the bank accounts of the brokers where funds came through clearing and not in cash. All these vital facts and evidences have been completely brushed aside by the assessing officer and the CIT(A). As a matter of fact decisions of the lower authorities seems badly affected by the general observations of the Investigating Wing that arose a suspicion, turned into conclusive proof in the minds of the authorities that everybody who dealt in the shares that registered high increase in price was converting his unaccounted money into white by taking such alleged accommodation entries. This approach cannot be approved. As held by the Hon'ble Apex Court in the case of Umacharan Shaw & Bros Vs CIT (37 ITR 271), suspicion who so ever strong cannot take the place of proof." This order of the Agra Bench has been approved by the Hon'ble Allahabad High Court vide its order dated 15th February 2011. 13. The reliance placed by the AO on various precedents, the pith and substance of which is that the taxing authorities cannot put blinkers to the hard realities of life, they have to lift the veil put up by the tax evaders and that the colourable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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