RANJEETSINGH D. BINDRA, MUMBAI V. ACIT CEN CIR 24 & 26, MUMBAI

CO 8/MUM/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8385 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-03-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 05-03-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 16-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RUPINDER BRAR
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Cost of acquisition; Accommodation entries; Sham transactions; Penny stocks
• Section: 143(3); 153A; 133(6); 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI VIJAY PAL RAO ,JM & SHRI D KARUNAKARA RAO , AM ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 ASSESSMENT YEAR: 2004-05 THE ACIT CENT. CIR. 24 & 26, VS. SHRI RANJITSINGH D BINDRA, MUMBAI A/71, COZIHOME, 251 PALI HILL, BANDRA (W), MUMBAI- 400 050 PAN: AERPB 2424A (APPELLANT) (RESPONDENT) CO NOS. 183/MUM/2011 & 08/MUM/2012 (ARISING OUT OF ITA NOS.: 5534/MUM/2010 & 3814/MUM/ 2011 ASSESSMENT YEAR: 2004-05 SHRI RANJITSINGH D BINDRA, VS. THE ACIT CENT. CI R. 24 & 26, A/71, COZIHOME, MUMBAI 251 PALI HILL, BANDRA (W), MUMBAI- 400 050 PAN: AERPB 2424A (CROSS-OBJECTOR) (RESPONDENT) FOR THE ASSESSEE : MS. RUPINDER BRAR FOR THE DEPARTMENT : MR. RAJESH SANGHVI DATE OF HEARING : 05.03.2013 DATE OF PRONOUNCEMENT : 13.03.2013 ORDER PER VIJAY PAL RAO, JM : THESE TWO APPEALS BY THE REVENUE AND CROSS-OBJECTIO NS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF THE CIT(A) DATED 26. 04.2010 AND 14.02.2011 ARISING ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 2 FROM ASSESSMENT ORDERS PASSED U/S. 143(3) AND U/S. 153A OF THE IT ACT RESPECTIVELY FOR A.Y. 2004-05. 2. THE BRIEF FACTS EMERGING FROM RECORD ARE THAT TH E ASSESSEE FILE HIS RETURN OF INCOME ON 1.11.2004 DECLARING TOTAL INCOME OF RS.30 ,71,151. THE TOTAL INCOME CONSISTED OF INCOME FROM SPECULATION BUSINESS, CAPI TAL GAINS, INTEREST ETC. CAPITAL GAINS SHOWN BY THE ASSESSEE IS LONG TERM CAPITAL GA INS OF RS.29,09,675 ARISING FROM SALE OF 70,000 SHARES OF BLUE CHIP INDIA LTD. THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PURCHASED THE SHARES AT AN EXTREMELY L OW PRICE OF AROUND 50 PAISE PER SHARE AND THE SAME HAVE BEEN SOLD AT CONSIDERABLY H IGH PRICE OF RS.40 PER SHARE. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE TRANSACTION OF PURCHASE AND SALE OF SHARE RESULTING IN LONG TERM C APITAL GAINS SHOULD NOT BE TREATED AS BOGUS. IN RESPONSE, THE ASSESSEE HAS EXPLAINED THAT THE SAID SHARES OF BLUE CHIP INDIA LTD., WERE PURCHASED FROM MUMBAI BASED BROKER PRINCE SECURITIES ON 10.04.2002 AND 12.04.2002. THUS, THE TOTAL OF 70,0 00 SHARES OF BLUE CHIP INDIA LTD. WERE PURCHASED FOR A CONSIDERATION OF RS.38,500 AT AVERAGE PRICE 55 PAISE PER SHARE. THE PAYMENT FOR THE PURCHASE OF THESE SHARES WERE S TATED TO BE MADE BY WAY OF RUNNING ACCOUNT AND IN CASH WITH THE BROKER M/S. PR INCE SECURITIES, WHO IS REGISTERED WITH SEBI. IN SUPPORT OF THE EXPLANATION, THE ASSES SEE FILED THE LEDGER ACCOUNT OF PRINCE SECURITIES TO SHOW THAT THE PART CONSIDERATI ON OF PURCHASE OF SHARES WAS ADJUSTED AGAINST THE SPECULATION PROFITS IN RESPECT OF SHARES OF GEOMETRIC SOLUTIONS AND HINDUJA FINANCE LTD., TO THE EXTENT OF RS.18,80 0 AND THE BALANCE WAS PAID OUT OF CASH. THE ASSESSEE FURTHER CONTENDED BEFORE THE AS SESSING OFFICER THAT THE ASSESSEE WAS GIVEN PHYSICAL DELIVERY OF THE SHARES, WHICH WE RE SENT TO THE COMPANY FOR TRANSFER IN THE NAME OF THE ASSESSEE AND THE SAME W ERE RECEIVED BACK FROM THE COMPANY WITH A COVERING LETTER DATED 17.08.2002 AND 31.08.2002. THUS, THE ASSESSEE CONTENDED THAT THE SHARES WERE PURCHASED T HROUGH SUB BROKER REGISTERED WITH THE STOCK EXCHANGE HOLDING A VALID MEMBERSHIP AND THE TRANSACTION OF PURCHASE IS SUPPORTED BY CONTRACT NOTE, BILL AND SEBI REGISTR ATION. THE ASSESSEE RECEIVED A ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 3 PHYSICAL CERTIFICATE OF THE SHARES AS WELL AS TRANS FER FROM THE COMPANY. THE SHARES WERE PURCHASED AT THE PREVAILING MARKET PRICE AND, THEREFORE, THE TRANSACTION OF PURCHASE AND SALE OF SHARES IS GENUINE. THE ASSESSI NG OFFICER RECORDED THE STATEMENT OF THE ASSESSEE U/S. 131 AND CONCLUDED TH AT THE LONG TERM CAPITAL GAINS TRANSACTION WAS A COLLUSIVE AND ARTIFICIALLY ENGINE ERED TRANSACTION WITHOUT ANY SUPPORT AND COULD NOT BE RELIED UPON AND, HENCE, IT WAS A D EVICE TO CONVERT UNEXPLAINED CASH AS LONG TERM CAPITAL GAINS. ACCORDINGLY, THE ASSES SING OFFICER BROUGHT TO TAX THE LONG TERM CAPITAL GAINS OF RS.29,48,175 TREATING IT AS UNEXPLAINED CASH CREDIT. SUBSEQUENT TO PASSING THE ASSESSMENT ORDER U/S. 143 (3) A SEARCH AND SEIZURE ACTION U/S. 132 OF THE IT ACT WAS CONDUCTED ON 8.5.2007 AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE BINDRA GROUP OF CASES. THE ASSESSE E WAS, INTER ALIA, COVERED IN THE SEARCH OPERATIONS. CONSEQUENTLY, THE ASSESSING OFF ICER ISSUED NOTICE U/S. 153A ON 19.08.2008 ASKING THE ASSESSEE TO FILE THE RETURN O F INCOME. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED THE RETURN OF INCOME ON 15.10.2008 DECLARING TOTAL INCOME AT RS.34,45,691. DURING THE ASSESSMENT PROCEEDINGS U/S. 153A, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAINS OF RS.29,09,675 ON SALE OF 70,000 SHARES OF BLUE CHIP INDIA LTD. THE ASSESSING OFFICER RELIED UPON THE INVESTIGATION CARRIED OUT IN THE OR IGINAL ASSESSMENT PROCEEDINGS U/S. 143(3) AND HELD THAT THE TRANSACTIONS ARE NOT GENUI NE AND ADDED RS.29,48,175 AS UNEXPLAINED CASH CREDIT. ON APPEALS AGAINST THE O RDER PASSED U/S. 143(3) AS WELL AS ASSESSMENT ORDER PASSED U/S. 153A, THE CIT(A) HAVE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER AND HELD THAT THE LONG TERM C APITAL GAINS EARNED BY THE ASSESSEE AMOUNTING TO RS.29,09,675 SHOULD BE TAXED AS SUCH AND NOT AS INCOME FROM UNDISCLOSED SOURCE. 3. THE SOLITARY COMMON ISSUE RAISED BY THE REVENUE IN BOTH THE APPEALS IS REGARDING THE LONG TERM CAPITAL GAINS TREATED BY TH E ASSESSING OFFICER AS UNDISCLOSED CASH CREDIT AND DELETED BY THE CIT(A). THE COMMON GROUND RAISED BY THE REVENUE IS AS UNDER: ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO TREAT THE INCOME AS LONG TERM CAPITAL GAINS AMOUNTING TO RS.29,09,675/- INSTEAD OF INCOME FROM UNDISCLOSED SOURCES AS CONSIDERED BY THE AO WI THOUT APPRECIATING THE FACTS AND DETAILED INVESTIGATION OF THE CASE. BEFORE US THE LEARNED DR HAS SUBMITTED THAT THE ASS ESSING OFFICER HAS MADE AN INVESTIGATION AND FOUND THAT THE ASSESSEE WAS FIRST GIVEN SPECULATION PROFIT AND AGAINST THIS PROFIT THE PURCHASE COST OF THE SHARES OF BLUE CHIP INDIA LTD WAS ADJUSTED. THIS ADJUSTMENT OF PURCHASING OF SHARES CLEARLY INDICATES THE MODUS OPERANDI THAT WAS BEING FOLLOWED REGARDING PURCHASE OF PENNY STOCKS. THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED THE SHARES FROM PRINC E SECURITIES WHEREAS THE SHARES WERE SOLD TO PRAKASH NAHATA & CO., STOCK AND SHARE BROKERS HAVING THEIR OFFICE AT KOLKATA. THE TRANSACTION OF PURCHASE WAS OFF MARKE T, WHICH WAS NOT REPORTED ON THE RECOGNIZED STOCK EXCHANGE I.E. BOMBAY STOCK EXCHANGE . THE TRANSACTION WAS ARRANGED IN SUCH A WAY THAT NO CONSIDERATION WAS PA ID BY THE ASSESSEE EXCEPT A NOMINAL AMOUNT AND MAJOR PART OF THE CONSIDERATION WAS ALLEGEDLY ADJUSTED AGAINST SPECULATION PROFIT. THE ASSESSING OFFICER HAS POIN TED OUT THAT PRINCE SECURITIES HAVE NOT TRANSACTED IN SHARES OF BLUE CHIP INDIA LTD. FO R ANY OTHER CLIENT EXCEPT THE TRANSACTION IN QUESTION. IT DOES NOT HAVE ANY DEMA T ACCOUNT. THE ASSESSEE STATED TO HAVE PURCHASED THE SHARES IN THE MONTH OF APRIL 2002 WHEREAS THE SHARES WERE DEMATED IN AUGUST 2002 AND OCTOBER 2003 I.E. ALMOST ONE AND HALF YEARS AFTER THE ALLEGED PURCHASE. THERE IS NO EXPLANATION IN THIS REGARD AS TO WHY THE ASSESSEE DEMATED THE SHARES JUST BEFORE THE ALLEGED SALE OF THE SHARES. THE TRANSACTION OF SALE OF SHARES IN KOLKATA STOCK EXCHANGE WITHOUT ANY EXPLANATION IS NOT A NORMAL HUMAN BEHAVIOUR, WHEN THE ASSESSEE IS HAVING ACCOUN T WITH SUB-BROKER IN MUMBAI. THE ASSESSING OFFICER RECEIVED THE INFORMATION FROM BOMBAY STOCK EXCHANGE THAT THE SHARES OF BLUE CHIP INDIA LTD., WAS NOT TRADED ON THE STOCK EXCHANGE ON THE DATES GIVEN BY THE ASSESSEE. THUS, THE LEARNED DR HAS SUBMITTED THAT THE FACTS AND ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 5 CIRCUMSTANCES OF THE CASE CLEARLY SHOWS THAT THE AS SESSEE HAS MANIPULATED THE ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAINS AG AINST HIS OWN UNDISCLOSED INCOME. HE HAS RELIED UPON THE DECISION OF THE CHA NDIGARH BENCH OF THIS TRIBUNAL IN THE CASE OF CIT V. SOM NATH MAINI 100 TTJ 917 (CHD. ) 4. ON THE OTHER HAND, THE LEARNED AR OF THE ASSESSE E SUBMITTED THAT THE TRANSACTION OF PURCHASE IS DULY SUPPORTED BY THE DO CUMENTARY EVIDENCE. HE HAS REFERRED THE BILLS ISSUED BY PRINCE SECURITIES IN R ESPECT OF THE PURCHASE OF SHARES OF BLUE CHIP INDIA LTD., AT PAGES 72 TO 77 OF THE PAPE R-BOOK. THE PAYMENT WAS PARTLY MADE THROUGH CASH VIDE RECEIPT DATED 10.04.2002 PLA CED AT PAGE 76 OF THE PAPER- BOOK. HE HAS ALSO REFERRED TO THE LEDGER ACCOUNT O F PRINCE SECURITIES SHOWING THE TRANSACTION OF PURCHASE OF SHARES. THE LEARNED AR HAS FURTHER SUBMITTED THAT PRINCE SECURITIES HAS ALSO GIVEN THE CONFIRMATION MEMO IN RESPECT OF THE SPECULATION PROFIT ARISING FROM THE TRANSACTION IN THE SHARES OF GEOME TRIC SOLUTIONS AND HINDUJA FINANCE LTD. THE ASSESSEE APPLIED FOR TRANSFER OF THE SHARES TO BLUE CHIP INDIA LTD., AND RECEIVED THE COMMUNICATION DATED 17.08.2002 AND 31.08.2002 WHEREBY THE SHARES WERE TRANSFERRED WITH DISTINCTIVE NUMBERS AN D CERTIFICATE MEMOS IN THE NAME OF THE ASSESSEE. SUBSEQUENTLY, THE SHARES WERE DEM ATED IN THE DEMAT ACCOUNT OF THE ASSESSEE, WHICH SHOWS THAT THE ASSESSEE WAS HOL DING THE SHARES AND, THEREFORE, THE TRANSACTION CANNOT BE SAID TO BE BOGUS. THE LE ARNED AR HAS FURTHER SUBMITTED THAT THE SHARES WERE SOLD THROUGH PRAKASH NAHATA & CO., WHO IS A BROKER OF KOLKATA STOCK EXCHANGE. SALES BILL IN RESPECT OF THE SALE T RANSACTIONS WERE PRODUCED BEFORE THE AUTHORITIES BELOW, AS PLACED AT PAGES 88 TO 110 OF THE PAPER-BOOK. M/S. PRAKASH NAHATA & CO. HAS ALSO CONFIRMED THE TRANSACTION OF SALE VIDE LETTER DATED 24.11.2006 IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING O FFICER U/S. 133(6) OF THE INCOME TAX ACT. THE LEARNED AR HAS FURTHER SUBMITTED THAT THE SALE CONSIDERATION WAS RECEIVED THROUGH BANKING CHANNEL AND, THEREFORE, IT CANNOT BE DOUBTED. HE HAS REFERRED TO THE RETURN OF INCOME FOR A.Y. 2003-04 A ND SUBMITTED THAT THE SHARES OF BLUE CHIP INDIA LTD., WERE SHOWN IN THE BALANCE SHE ET ATTACHED THEREIN AND, ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 6 THEREFORE, THE ASSESSEE HAS DULY DISCLOSED THE TRAN SACTION OF PURCHASE. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE FOLLOWING CAS ES: I. MUKESH R MOROLIA VS. ACIT - (2006) 6 SOT 247 II. CHANDRAKANT BABULAL SHAH VS. ITO IN ITA NO. 6108/MU M/2009 DATED 15.12.2010. III. CIT VS. JAMNADEVI AGARWAL 328 ITR 656 HE HAS FURTHER SUBMITTED THAT SIMILAR ISSUE HAS BEE N DECIDED IN FAVOUR OF THE ASSESSEE IN ALL THESE DECISIONS. IN THE CASE OF JA MNADEVI AGARWAL, THE HONBLE HIGH COURT HAS HELD THAT EVEN THE STATEMENT OF STOCK BRO KERS DENIAL OF TRANSACTION WAS PROVED TO BE WRONG BY PRODUCING DOCUMENTARY EVIDENC E TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEE WERE IN CONSONANCE WITH THE MA RKET PRICE. HE HAS FURTHER SUBMITTED THAT THE DECISION IN THE CASE OF SOM NATH MAINI (SUPRA), RELIED UPON BY THE ASSESSING OFFICER IS NOT APPLICABLE TO THE FACTS OF THE CASE IN HAND BECAUSE IN THE SAID CASE THE TRIBUNAL HAS FOUND THAT THE RECORDS O F THE BROKER WAS NOT AVAILABLE AND SHARES REMAINED IN THE NAME OF THE ASSESSEE EVEN LO NG TIME AFTER THE SALE OF SHARES THEREFORE, THE TRANSACTION DOES NOT STAND THE TEST OF PROBABILITY, WHEREAS IN THE CASE OF THE ASSESSEE THERE IS NO SUCH LACK OF AVAILABILI TY OF RECORD OR DEFECT IN THE TRANSACTION OF SALE. HE HAS SUPPORTED THE ORDER OF THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE CLAIMED TO HAVE PURCHASED 70, 000 SHARES OF BLUE CHIP INDIA LTD., IN THE MONTH OF APRIL 2002 AS UNDER: PURCHASED ON 10.04.02 37,000 SHARES FOR RS.20,350 PURCHASED ON 12.04.02 37,000 SHARES FOR RS.18,150 ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 7 THE ASSESSEE PURCHASED TOTAL 70,000 SHARES OF BLUE CHIP INDIA LTD. FOR A TOTAL CONSIDERATION OF RS.38,500 AT AVERAGE COST OF 55 PA ISE PER SHARE. THESE SHARES WERE CLAIMED TO HAVE BEEN SOLD ON VARIOUS DATES FROM SEP TEMBER 2003 NOVEMBER 2003. THE DETAILS OF SALE ARE GIVEN BY THE ASSESSING OFFI CER IN PARA 5.4.3 AS UNDER: DATE OF SALE QUANTITY OF SHARES AMOUNT OF SALE PROCEEDS DATE ON DELIVERY WAS GIVEN BY THE ASSESSEE DATE OF PAYMENT TO ASSESSEE AMOUNT 10.09.03 7,000 376950 11.09.03 7000 17.09.03 76950 20.10.03 1,500 61725 20.10.03 1500 03.11.03 366475 21.10.03 2,500 101000 22.10.03 2500 10.11.03 284200 22.10.03 2,500 101000 23.10.03 2500 10.11.03 295875 23.10.03 2,500 102750 27.10.03 2500 12.11.03 376175 28.10.03 7,500 295875 29.10.03 12000 18.11.03 310000 29.10.03 7,000 284200 31.10.03 9500 18.11.03 500000 30.10.03 9,500 386175 01.11.03 15000 03.12.03 428500 05.11.03 10,000 395500 11.11.03 17500 - - 07.11.03 10,000 414500 - - - 13.11.03 10,000 428500 - - - THE ASSESSING OFFICER DOUBTED THE TRANSACTION MAINL Y ON THE GROUND THAT THE SHARES WERE PURCHASED AS PENNY STOCKS AT LOW PRICE OF 55 P AISE PER SHARE AND THE SAME WERE CLAIMED TO HAVE BEEN SOLD AT RS.40 PER SHARE A ND THEREBY THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS OF RS.29,09,675. ACC ORDING TO HIM IT IS NOT A GENUINE TRANSACTION BECAUSE THE ASSESSEE HAS CONVERTED ITS UNDISCLOSED INCOME AS LONG TERM CAPITAL GAINS. THE ASSESSING OFFICER HAS EXAMINED THE ASSESSEE AS WELL AS CALLED FOR VARIOUS INFORMATION BY ISSUE OF NOTICE U/S. 133(6) TO THE STOCK BROKER THOUGH WHICH ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 8 THE ASSESSEE HAS PURCHASED SHARES AS WELL AS FROM T HE STOCK BROKER TO WHOM THE ASSESSEE HAS SOLD THE SHARES. IT IS EVIDENT THAT B OTH THE STOCK BROKERS HAVE CONFIRMED THE TRANSACTION OF PURCHASE AS WELL AS SA LE. APART FROM THE CONFIRMATION, THE ASSESSEE HAS ALSO PRODUCED RELEVANT DOCUMENTARY EVIDENCE IN SUPPORT OF THE TRANSACTION OF PURCHASE AND SALE. THERE IS NO DISP UTE AS REGARDS THE SHARES WERE DEMATED IN THE DEMAT ACCOUNT OF THE ASSESSEE AND, T HEREAFTER SOLD TO M/S. PRAKASH NAHATA & CO. THE ASSESSING OFFICER HAS NOT GIVEN A NY FINDING THAT THE PREVAILING PRICE OF THE SHARES ON THE ALLEGED DATE OF PURCHASE WAS MORE THAN WHAT HAS BEEN CLAIMED BY THE ASSESSEE. THEREFORE, THERE IS NO FI NDING OR DISPUTE ON THE POINT OF PREVAILING PRICE AT THE TIME OF PURCHASE OR AT THE TIME OF SALE OF SHARES. THE ASSESSING OFFICER HAS DOUBTED THE MODUS OPERANDI AN D ALLEGED THAT BY THIS TRANSACTION THE ASSESSEE HAS CONVERTED HIS UNDISCLO SED INCOME AS LONG TERM CAPITAL GAINS BY ACCOMMODATION ENTRIES. IT IS PERTINENT TO NOTE THAT THE TRANSACTION OF HOLDING OF SHARES HAS BEEN DULY SHOWN IN THE BALANC E SHEET ATTACHED WITH THE RETURN OF INCOME FOR THE A.Y. 2003-04 AS THE SAME IS PLACE D AT PAGE 178 OF THE PAPER-BOOK. THE CIT(A) AFTER CONSIDERING ALL THE RELEVANT FACTS AND MATERIAL HAS GIVEN HIS FINDINGS IN PARA 11 OF THE ORDER, WHICH IS AS UNDER: 11. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER, THE SUBMISSIONS MADE BY THE A.R AND THE FACTS OF THE CA SE AND VARIOUS CASE LAWS RELIED UPON. IT IS EVIDENT FROM THE SUBM ISSIONS MADE AND THE EVIDENCE FOR PURCHASE AND SALE OF SHARES OF M/S. BL UECHIP INDIA LTD., PRODUCED BEFORE ME THAT A) THE APPELLANT HAS PURCHASED 7000 SHARES OF M/S. BLU ECHIP INDIA LTD. FROM M/S. PRINCE SECURITIES LTD. AND THE BILLS /CONFIRMATIONS IN RESPECT OF SUCH PURCHASES HAVE BEEN DULY FILED BEFO RE ME B) THE SOURCE FOR THE PURCHASE IS PROFIT EARNED IN THE TRANSACTION OF HINDUJA FINANCE & GEOMETRIC SOFTWARE AND THE BALANC E AMOUNT HAS BEEN PAID BY CASH C) THE SHARES WERE RECEIVED BY THE APPELLANT IN PHYSIC AL FORM AND THE SHARES WERE DULY TRANSFERRED IN THE NAME OF THE APP ELLANT BY LETTER ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 9 OF THE COMPANY DTD. 17.8.2002 & 31.8.2002. SHARE T RANSFER LETTER FROM BLUECHIP INDIA LTD WITH DISTINCTIVE NUMBERS, C ERTIFICATE NUMBERS AND FOLIO NOS WERE ALSO SUBMITTED EVIDENCIN G THE TRANSFER OF SHARES IN THE NAME OF THE APPELLANT. D) THE SHARES WHICH WERE TRANSFERRED IN THE NAME OF TH E APPELLANT WERE LATER ON DEMATED ON 15.7.03, 24.7.03 & 24.7.03 . COPIES OF DEMAT CONVERSION SLIPS IN THIS RESPECT WERE FILED B EFORE ME. E) IN THE DEMAT A/C FILED WITH ME, NAMELY FOR THE MONT H OF JULY, 2003 THE ABOVE 70,000 SHARES WERE DULY FOUND IN THE LIST OF DEMAT SHARES ALONG WITH OTHER SHARES F) THE ABOVE SHARES WERE SOLD THROUGH THE CALCUTTA STO CK EXCHANGE BROKER NAMELY PRAKASH NAHATA & CO. AND THE VARIOUS CONTRACTS NOTES/BILLS IN RESPECT OF SALES MADE HAVE BEEN FILE D WITH ME. G) AFTER THE SALES WERE MADE, THE SHARES WERE DULY GIV EN DELIVERY BY DEMAT SLIP NO.246061 DT.11.11.03, NO.21550 DT 1.11. 03, NO.215539 DT. 31.10.03, NO.215538 DT.29.10.03, NO.215537 DT.2 9.10.03, NO.215536 DT.27.10.03, NO.215535 DT. 22.10.03, NO.2 15534 DT. 22.10.03, NO.215533 DT. 20.10.03, NO.215531 DT. 10. 9.03 H) THE APPELLANT IN HIS STATEMENT RECORDED U/S. 131 HA S CONFIRMED THE TRANSACTION BOTH OF PURCHASE AND SALE OF SHARES. I) THE SHARES PURCHASED OF BLUECHIP HAVE BEEN DULY SHO WN IN THE BALANCE SHEET FILED WITH THE DEPARTMENT FOR THE YEA R ENDING 31- 0302003 I.E. IN THE YEAR IN WHICH THE SHARES WERE P URCHASED. J) THE PRICE AT WHICH THE SHARES WERE PURCHASED AND LA TER ON SOLD ARE THE PRICES OF THE SHARES PREVAILING AT THE MATERIAL TIME OF THE TRANSACTION AND THIS ASPECT OF THE MATTER IS INDEPE NDENTLY CONFIRMED BY THE DETAILS OBTAINED FROM THE BOMBAY STOCK EXCHAN GE. IN MY VIEW WHEN THE APPELLANT HAS HIMSELF CATEGORIC ALLY SUBMITTED THAT THE TRANSACTION ENTERED INTO BY HIM WERE OFF MARKET, THERE IS NO REASON WHY IT COULD NOT BE BELIEVED ESP ECIALLY IN VIEW OF THE FACT THAT THE NECESSARY EVIDENCE REQUIRED TO SUPPOR T A TRANSACTION IS DULY SUBMITTED IN THE ASSESSMENT PROCEEDINGS AND AL SO BEFORE ME. THERE IS NO LAW WHICH PROHIBITS OFF MARKET TRANSACT IONS IN RESPECT OF SHARES WHICH ARE OTHERWISE LISTED IN THE STOCK EXCH ANGE. ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 10 ON THE FACTS AND IN THE CIRCUMSTANCES THE OBSERVATI ON OF THE AO THAT THE TRANSACTION IS NOT GENUINE AND IS ENGINEER ED WITH A SOLE INTENTION TO SHOW LTCG WHICH IS LIABLE TO LOWER RAT E OF INCOME TAX IS BECAUSE OF (I) OFF MARKET TRANSACTION, (II) THE PAY MENT FOR TRANSACTION IS PARTLY THOUGH CASH (III) PHYSICAL DELIVERY OF SHARE S HAS BEEN GIVEN, (IV) PRINCE SECURITIES FROM WHOM THE SHARES WERE PURCHAS ED HAS NOT DEALT WITH IN THIS SHARES EXCEPT FOR THE APPELLANT., (V) PRINCE SECURITIES DID NOT HAVE ANY DEMAT A/C, (VI) SHARES OF BLUECHIP LTD WERE DEMATED AFTER LONG TIME OF 16 MONTHS. (VII) SHARES WERE BROUGHT I N MUMBAI AND SOLD IN CALCUTTA, (VIII) SHARES OF BLUECHIP WERE NOT TRA DED ON BSE ON THE DATES ON WHICH THE APPELLANT HAS DONE THE TRANSACTI ONS, (IX) SALE CONSIDERATION WAS RECEIVED AFTER A WEEK FROM THE DA TE OF SALE, (X) THE REPLIES OF THE APPELLANT IN THE STATEMENT RECORDED U/S. 131 WERE EVASIVE (XI) THE APPELLANT HAS NOT SHOWN THE PURCHA SE OF SHARES IN THE BALANCE SHEET AS ON 31.3.2003 HAS BEEN DULY REFUTED BY TENDERING SUFFICIENT EVIDENCE AND, THEREFORE, IN MY VIEW THE DISBELIEF OF THE AO CAN ONLY PROVOKE A SUSPICION, MUCH LESS A BELIEF AB OUT THE TRANSACTION AND IN MY VIEW, THE SUSPICION OF THE AO CANNOT CLIN CH THE TRANSACTION AGAINST THE APPELLANT. THE VARIOUS CASE LAWS RELIED UPON BY THE AO VIZ. OF THE ITAT, CHANDIGARH A BENCH IN THE CASE OF SOMNATH MANI REPO RTED 100 TTJ 917, THE SUPREME COURT DECISION IN MCDOWELL & CO. L TD. 154 ITR 148 & SUPREME COURT DECISION IN THE CASE OF AZAD BACHAO A NDOLAN REPORTED IN 263 ITR 706 HAS BEEN DULY EMPHASIZED BY THE AO WHIL E BRINGING TO TAX LTCG AS UNEXPLAINED INCOME. THEREFORE, IN MY CONSID ERED VIEW, THE LONG TERM CAPITAL GAINS EARNED BY THE APPELLANT OF RS.29,09,675 SHOULD BE TAXED AS SUCH AND NOT AS INCOME FROM UNDISCLOSED SOURCES. THE GROUNDS OF APPEAL ARE ALLOWED. IT IS CLEAR FROM THE FINDING OF THE CIT(A) THAT THE SHARES OF BLUE CHIP INDIA LTD. WERE DULY SHOWN IN THE BALANCE SHEET FILED WITH THE RETU RN OF INCOME FOR THE A.Y. 2003-04 AND, THEREFORE, THE ASSESSEE HAS DISCHARGED HIS ONU S TO PROVE THE HOLDING OF THE SHARES AND IN THE ABSENCE OF ANY CONTRARY EVIDENCE BROUGHT BY THE ASSESSING OFFICER ON RECORD, IT CANNOT BE SAID THAT THE TRANSACTION O F PURCHASE SHOWN BY THE ASSESSEE IS NOT GENUINE. IN THE CASE OF CIT VS. JAMNADEVI AGARWAL (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT WHILE DEALING WITH SIMILA R ISSUE HAS OBSERVED AND HELD AS UNDER: ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 11 WE SEE NO MERIT IN THE ABOVE CONTENTIONS. THE FACT THAT THE ASSESSEES IN THE GROUP HAVE PURCHASED AND SOLD SHARES OF SIMI LAR COMPANIES THROUGH THE SAME BROKER CANNOT BE A GROUND TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DO CUMENTARY EVIDENCE WAS PRODUCED TO ESTABLISH THE GENUINENESS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED BEFORE US, WHICH WERE A LSO IN THE POSSESSION OF THE ASSESSING OFFICER, IT IS SEEN THA T THE SHARES IN QUESTION WERE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY HAS CONFIRMED TO HAVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE SALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH T HE MARKET RATES PREVAILING ON THE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, THE FACT THA T SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. THE STATEMENT OF PRADEEP KUMAR DAGA THAT THE TRANSA CTIONS WITH THE HALDIRAM GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCING DOCUMENTARY EVIDENCE TO THE EFFECT THAT T HE SHARES SOLD BY THE ASSESSEES WERE IN CONSONANCE WITH THE MARKET PR ICE. ON A PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARR IVED AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT TO OUR NOTICE THAT THE FINDINGS RECORDED BY THE TRIBUNAL A RE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. THE TRIBUNAL HAS FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE BANK ACCOUNTS OF SOME OF THE BUYERS OF SHARE S CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, IN THE LIGHT OF THE DOC UMENTARY EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET PRICE, THE TRIBU NAL RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE BUYERS ' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOU ND WITH THE ABOVE FINDING RECORDED BY THE TRIBUNAL. RELIANCE PLACED BY THE COUNSEL FOR THE REVENUE ON T HE DECISION OF THE APEX COURT IN THE CASE OF SUMATI DAYAL [1995] 214 I TR 801 IS WHOLLY MISPLACED. IN THAT CASE, THE ASSESSEE THEREIN HAD C LAIMED INCOME FROM ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 12 HORSE RACES AND THE FINDING OF FACT RECORDED WAS TH AT THE ASSESSEE THEREIN HAD NOT PARTICIPATED IN RACES, BUT PURCHASE D WINNING TICKETS AFTER THE RACE WITH THE UNACCOUNTED MONEY. IN THE P RESENT CASE, THE DOCUMENTARY EVIDENCE CLEARLY SHOWS THAT THE TRANSAC TIONS WERE AT THE RATE PREVAILING IN THE STOCK MARKET AND THERE WAS N O QUESTION OF INTRODUCING UNACCOUNTED MONEY BY THE ASSESSEES. THU S, THE DECISION RELIED UPON BY THE COUNSEL FOR THE REVENUE IS WHOLL Y DISTINGUISHABLE ON THE FACTS. FOR ALL THE AFORESAID REASONS, WE HOLD THAT THE DEC ISION OF THE TRIBUNAL IS BASED ON FINDINGS OF FACT. NO SUBSTANTIAL QUESTI ON OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL. ACCORDINGLY, ALL THESE A PPEALS ARE DISMISSED. NO ORDER AS TO COSTS. THUS, IT IS CLEAR THAT WHEN THE ASSESSEE HAS PRODUC ED ALL THE RELEVANT EVIDENCE IN SUPPORT OF THE CLAIM WHICH HAS NOT BEEN PROVED TO B E FALSE, THEN THE CLAIM OF THE ASSESSEE CANNOT BE DENIED. AS FAR AS THE DECISION OF THE CHANDIGARH BENCH OF THIS TRIBUNAL IS CONCERNED THE SAME IS NOT APPLICABLE IN THE FACTS OF PRESENT CASE WHEN THERE IS NO SUCH GLARING CONTRADICTION AS POINTED O UT BY THE TRIBUNAL IN THE SAID CASE REGARDING THE SHARES REMAINED IN THE NAME OF THE AS SESSEE EVEN LONG AFTER THE SALE OF THE SHARES AND NON-AVAILABILITY OF INFORMATION. IN THE CASE IN HAND, THE SALE TRANSACTION HAS BEEN DULY EXECUTED THROUGH DEMAT AC COUNT AND, THEREFORE, THERE IS NO AMBIGUITY OR DOUBT ABOUT THE TRANSACTION OF SALE . 6. IN VIEW OF THE ABOVE DISCUSSION AND FACTS AND CI RCUMSTANCES OF THE CASE, WE DONT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE CIT(A). CO NOS. 183/MUM/2011 & 08/MUM2012 7. THE ASSESSEE HAS NOT RAISED ANY NEW GROUND IN TH ESE CROSS OBJECTIONS BUT THE SAME ARE ONLY IN SUPPORT OF THE IMPUGNED ORDERS OF THE CIT(A). IN VIEW OF OUR ITA NOS.: 5534/MUM/2010 & 3814/MUM/2011 CO NOS. 183/MUM/2011 & 08/MUM/2012 ASSESSMENT YEAR: 2004-05 13 FINDINGS ON THE ISSUE RAISED BY THE REVENUE, THE CR OSS-OBJECTIONS FILED BY THE ASSESSEE BECOME INFRUCTUOUS. 8. IN THE RESULT, THE APPEALS FILED BY THE REVENUE AND THE CROSS-OBJECTIONS FILED BY ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF MARCH 2013. SD/- SD/- (D.KARUNAKARA RAO) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT :13 TH MARCH, 2013 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. CONCERNED MUMBAI 4. CIT (A) CONCERNED MUMBAI 5. THE DR, D - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI