Dy. CIT, Circle 1(1), Pune V. Mr. Mukesh P Gada, Pune

ITA 1218/PUN/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6921 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Unexplained cash credit; Tax effect
• Section: 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , ! ' # , $% &' #' , ' # '( BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWAS THY, JM '%. / ITA NO. 1038/PUN/2013 * +* / ASSESSMENT YEAR : 2009-10 MR. MUKESH P. GADA, SHOP NO. 1, AMIT RESIDENCE, 412, SHANIWAR PETH, PUNE 411030 PAN : ADXPS2128R ....... / APPELLANT /VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE / RESPONDENT '%. / ITA NO. 1218/PUN/2013 * +* / ASSESSMENT YEAR : 2009-10 DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE ....... / APPELLANT /VS. MR. MUKESH P. GADA, SHOP NO. 1, AMIT RESIDENCE, 412, SHANIWAR PETH, PUNE 411030 PAN : ADXPS2128R / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 02-03-2017 / DATE OF PRONOUNCEMENT : 24-03-2017 2 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 , / ORDER PER VIKAS AWASTHY, JM : THESE TWO CROSS APPEALS BY THE ASSESSEE AND THE DEPA RTMENT ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DATED 28-03-2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A PROPRIETOR OF GADA ENTERPRISES. THE ASS ESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30 -03-2010 DECLARING TOTAL INCOME OF ` 27,98,800/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY STATUT ORY NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE ON 20-08-2010. DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE SOLD SHA RES OF BIOGREEN INDUSTRIES LTD. AND RELIANCE NATURAL RESOURCES LTD. (RNR L) AND CLAIMED THE GAIN ARISING FROM SALE OF SAID SHARES AS LONG TE RM CAPITAL GAIN. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER REJECTED THE CLAIM OF ASSESSEE AND MADE ADDITIONS U/S. 68 OF THE ACT, ON ACCOUNT OF: I. UNEXPLAINED INCOME FROM SPECULATION BUSINESS ` 1,36,778/-. II. UNEXPLAINED CREDITS : A) SALE OF SHARES OF BIOGREEN INDUSTRIES ` 11,55,917/- B) SALE OF SHARES OF RNRL ` 8,45,256/- C) SALE OF SHARES OF HINDUSTAN ZINC LTD. ` 1,77,461/- TOTAL ` 21,78,634/- THE ASSESSING OFFICER HELD THE ASSESSEE HAS NOT BEEN ABL E TO SHOW FROM COGENT EVIDENCE THE PURCHASE OF SHARES AND S ALES OF SHARES. HENCE, THE SALE CONSIDERATION RECEIVED IN RESPECT OF SALE OF SHARES OF 3 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 BIOGREEN INDUSTRIES AND RNRL WAS CONSIDERED AS UNEXPLAIN ED CREDITS U/S. 68 OF THE ACT. IN RESPECT OF ` 1,77,461/- THE ASSESSING OFFICER HELD THAT IT IS A SHAM TRANSACTION. THE ASSESSEE HAS ARRANG ED THE AMOUNT FROM UNDISCLOSED SOURCES IN THE FINANCIAL YEAR RELEVANT TO A SSESSMENT YEAR UNDER APPEAL. AGGRIEVED BY THE ASSESSMENT ORDER DATED 28-12-2011, T HE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TA X (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORD ER CONFIRMED THE QUANTUM ADDITIONS. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT INCOME ARISING FROM SALE OF S HARES IS SHORT TERM CAPITAL GAIN AND NOT UNEXPLAINED CREDITS U/S. 68 OF THE ACT. AGAINST THESE FINDINGS OF THE COMMISSIONER OF INCOME T AX (APPEALS) BOTH, THE ASSESSEE AND THE DEPARTMENT ARE IN APPEAL. 3. SHRI M.K. KULKARNI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEA R UNDER APPEAL THE ASSESSEE HAD SOLD SHARES OF BIOGREEN INDUSTRIES, RE LIANCE NATURAL RESOURCES LTD. AND PARSHWANATH DEVELOPERS. THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PURCHASED T HE SHARES OF BIOGREEN INDUSTRIES ON 11-04-2007 THROUGH BROKER M/S. VVL SECURITIES, MUMBAI AND THE SAME WERE SOLD ON 09-04-2007 FOR ` 11,55,917/- THROUGH BROKER M/S. PUNE E-STOCK BROOKING P VT. LTD. THE CAPITAL GAIN EARNED ON SALE OF SHARES WAS DECLARED BY THE ASSESSEE AS LONG TERM CAPITAL GAIN. THE ASSESSEE HAD ALSO PURCH ASED SHARES OF RNRL IN APRIL, 2007 THROUGH M/S. ALLIANCE INTERMEDIARIES & NE TWORK PVT. LTD. AND SOLD THE SAID SHARES ON 21-05-2008 FOR ` 8,45,256/- THROUGH M/S. PUNE E-STOCK BROOKING PVT. LTD. THE GAIN A RISING ON SALE OF SHARES OF M/S. RNRL ` 6,83,000/- WAS ALSO IN THE NATURE OF LONG TERM CAPITAL GAIN AND WAS DISCLOSED AS SUCH IN THE RETUR N OF INCOME. 4 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 THE LD. COUNSEL FOR THE ASSESSEE POINTED THAT THE SHARES OF BOTH THE ABOVE SAID COMPANIES WERE CREDITED TO DEMAT ACCOUNT OF THE ASS ESSEE IN MAY, 2008. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN CONSIDERING THE DATE OF CREDIT OF SHARES TO DEMAT ACCOUN T AS DATE OF ACQUISITION OF SHARES. THE ASSESSEE HAD PRODUCED RELEVAN T DOCUMENTS INCLUDING CONTRACT NOTES BEFORE THE AUTHORITIES BELOW TO S HOW THAT THE ASSESSEE HAD ACQUIRED SHARES MUCH PRIOR TO THEIR CREDIT IN THE DEMAT ACCOUNT. THE SHARES WERE CREDITED TO THE DEMAT ACCOU NT JUST PRIOR TO THE SALE OF SHARES. THE LD. COUNSEL SUBMITTED THAT MERELY BECAUSE THE SHARES WERE CREDITED TO DEMAT ACCOUNT JUST PRIOR TO S ALE WOULD NOT MAKE THE GAIN ARISING FROM SALE OF SHARES AS SHORT TERM CAPITAL GAIN. THE LD. COUNSEL CONTENDED THAT THE AUTHORITIES BELOW HAV E ERRED IN DISBELIEVING THE CONTRACT NOTES FURNISHED BY THE ASSESSEE. 3.1 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PE R CBDT CIRCULAR NO. 2927, LETTER NO. F - NO. 225/12/2016 DATED 02-02-2016 CAPITAL GAINS ARISING FROM TRANSFER OF UNLISTED SHARES IS TO BE TREATED AS CAPITAL GAINS U/S. 45 OF THE ACT. THE LD. COUNSEL PLACED ON RECORD A COPY OF AFORESAID CIRCULAR. THEREFORE, THE FINDINGS OF ASSESSIN G OFFICER IN TREATING THE GAIN ARISING FROM SALE OF SHARES AS UNEXPLAIN ED CREDIT U/S. 68 OF THE ACT IS NOT SUSTAINABLE. TO FURTHER STRENGT HEN HIS SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RE LIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMIS SIONER OF INCOME TAX VS. SHRI MUKESH RATILAL MUROLIA IN INCOME TAX AP PEAL NO. 456 OF 2007 DECIDED ON 07-09-2011. 3.2 THE LD. COUNSEL HAS SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO SPECULATION TRANSACTIONS ON 03-04-2007, 05-04-2007 AND 09-04-2007 IN RESPECT OF SHARES OF CESE LTD., MARUTI UDYOG LTD. AND H INDUSTAN 5 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 ZINC LTD. THE ASSESSEE EARNED PROFIT OF ` 1,36,779/- AND KEPT THE SAME WITH THE BROKERS. THE SPECULATION INCOME ACCRUED TO TH E ASSESSEE IN ASSESSMENT YEAR 2008-09 WAS DECLARED IN ASSESSMENT YE AR 2009-10. LATER ON, THIS SPECULATION PROFIT WAS UTILIZED BY THE ASSESS EE TO PURCHASE THE SHARES OF M/S. BIOGREEN INDUSTRIES LTD. TH E ASSESSING OFFICER REJECTED THE CONTENTIONS OF THE ASSESSEE AND MAD E ADDITION OF THE SPECULATIVE PROFIT ` 1,36,779/- AS UNEXPLAINED CREDIT U/S. 68 OF THE ACT AND ALSO THE SALE CONSIDERATION RECEIVED FROM SALE OF S HARES OF BIOGREEN INDUSTRIES AS UNEXPLAINED CREDIT U/S. 68 OF THE A CT. IN FIRST APPEAL THE COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD TH E GAIN ON SALE OF SAID SHARES AS SHORT TERM CAPITAL GAIN. 3.3 THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF ` 1,77,461/- AS UNEXPLAINED CASH CREDIT. THE ASSESSEE HAD EXPLAINED THAT THE SAID AMOUNT WAS EARNED AS SHORT TER M CAPITAL GAIN ON SALE OF SHARES OF HINDUSTAN ZINC LTD. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2008-09 AND HAD OFFERED THE SAME TO TAX IN THE RETURN OF INCOME. THE ASSESSEE HAD ADJUSTED THE AFORES AID SHORT TERM CAPITAL GAIN AGAINST PURCHASE OF SHARES OF RNRL AND THUS NO SEPARATE MONEY WAS PAID BY THE ASSESSEE TO THE BROKER FOR PURC HASE OF SHARES OF RNRL. THE ASSESSING OFFICER HAS ERRED IN HOLDING THAT PU RCHASE OF SHARES AND MODE OF PAYMENT IS NOT GENUINE. HENCE, THE S ALE OF SHARES IS ALSO NON-GENUINE. THE ASSESSING OFFICER MADE ADDITION OF ` 1,77,461/- AND CONSIDERATION RECEIVED ON SALE OF SHARES OF RNRL ` 8,45,256/- AS UNEXPLAINED CREDIT U/S. 68 OF THE ACT. IN FIR ST APPEAL COMMISSIONER OF INCOME TAX (APPEALS) HELD THE GAIN ARISING O N SALE OF SHARES OF RNRL AS SHORT TERM CAPITAL GAIN. 6 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 3.4 THE LD. COUNSEL SUBMITTED THAT THE AUTHORITIES BELOW HA VE ERRED IN HOLDING THAT CONTRACT NOTES THROUGH WHICH THE ASSESS EE HAS PURCHASED SHARES OF BIOGREEN INDUSTRIES AND RNRL ARE FAKE. THE LD. COUNSEL POINTED THAT THE ASSESSING OFFICER HAD RECORDED STATEMENT OF VINIT CHIMANLAL SHAH OF M/S. VVL SECURITIES AT THE BACK OF A SSESSEE. THE OPPORTUNITY OF CROSS-EXAMINATION WAS NOT OFFERED TO T HE ASSESSEE, THEREFORE, HIS STATEMENT IS NOT BINDING ON THE ASSESSEE. 3.5 THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT AS FAR AS THE APPEAL OF DEPARTMENT IS CONCERNED, THE SAME IS LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN TERMS OF CBDT CIRCULAR NO. 21/2015, DATED 10-12-2015. 4. ON THE OTHER HAND SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE FINDINGS OF ASSESSING OFFICER IN MAKING THE ADDITIONS U/S. 68 OF THE ACT. THE LD. DR SUBMIT TED THAT THE ASSESSEE COULD NOT FORTIFY THE TRANSACTIONS IN SHARES. T HE ASSESSEE COULD NOT PRODUCE CONTRACT NOTES TO SUBSTANTIATE THE PURCHASE OF SHARES OF BIOGREEN INDUSTRIES AND RNRL. THE BROKERS TH ROUGH WHOM THE ASSESSEE HAD PURCHASED THE SHARES I.E. M/S. VVL SEC URITIES AND M/S. ALLIANCE INTERMEDIARIES & NETWORKS P. LTD. WERE NOT TH E AUTHORIZED TRADING MEMBERS OR SUB-BROKERS OF ANY TRADIN G MEMBER OF THE STOCK EXCHANGE. ENQUIRIES CONDUCTED BY THE ASSESS ING OFFICER FROM BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE REVEAL THAT M/S. VVL SECURITIES WAS DECLARED DEFAULTER W.E.F. 08-02-2002 AND M/S. ALLIANCE INTERMEDIARIES & NETWORKS P. LTD. WAS NEITHER REGIS TERED AS TRADING MEMBER WITH THE STOCK EXCHANGE NOR AS A SUB-B ROKER AFFILIATED TO TRADING MEMBER OF THE EXCHANGE. M/S. ALLIANCE INTERMED IARIES & NETWORKS P. LTD. WAS SUB-BROKER AND ITS REGISTRATION WA S CANCELLED ON 7 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 19-02-2004. IT IS EVIDENT FROM THE DOCUMENTS ON RECORD THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES OR SPECULATION TRANSACTION AS CLAIMED BY THE ASSESSEE WERE NEVER CARRIED OUT THRO UGH ANY STOCK EXCHANGE. THE CONTRACT NOTES PRODUCED BY THE ASSES SEE ARE NOT GENUINE. THE LD. DR FURTHER SUBMITTED THAT EVEN IF THE SALE AND PURCHASE OF SHARES IS ACCEPTED, THE ASSESSEE HAS NOT BEEN ABLE TO SHOW FROM COGENT EVIDENCE THAT THE ASSESSEE HAD PURCHASED SHARES PRIOR TO THE DATE OF SHARES CREDITED IN THE DEMAT ACCOUNT OF TH E ASSESSEE. THEREFORE, THE DATE OF PURCHASE OF SHARES IS THE DATE ON WHICH SHARES ARE CREDITED IN THE DEMAT ACCOUNT OF THE ASSESSEE. A PERUSAL OF TRANSACTIONS IN DEMAT ACCOUNT WOULD REVEAL THAT THE ASS ESSEE HAS PURCHASED SHARES OF BIOGREEN INDUSTRIES ON 27-05-200 8 AND HAS SOLD THE SHARES ON VARIOUS DATES, THE LAST TRANSACTION BEING ON 11-03-2009. SIMILARLY, IN THE CASE OF RNRL, THE ASSESSEE HAD PURCHASED 7500 SHARES ON 21-05-2008 AND SOLD ON 22-05-2008. THE ASS ESSEE HAS RETAINED THE SHARES FOR A VERY SHORT PERIOD. THUS, THE GAIN ARISING FROM SALE OF SUCH SHARES CANNOT BE TREATED AS LONG TERM CA PITAL GAIN AS CLAIMED BY THE ASSESSEE. 4.1 IN RESPECT OF APPEAL FILED BY THE DEPARTMENT, THE LD. DR ADMITTED THAT THE TAX EFFECT IN THE APPEAL IS LESS THAN ` 10 LAKHS. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE ASSESSEE IN GROUND NO. 1 OF THE APPEAL HAS ASSAILED THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN TREATING THE GAIN A RISING FROM SALE OF SHARES AS SHORT TERM CAPITAL GAIN. THE ASSESSEE HAS DECLARED THE GAIN ON SALE OF SHARES AS LONG TERM CAPITAL GAIN. THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE HAS PURCHASED SHARES O F BIOGREEN 8 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 INDUSTRIES AND RNRL MUCH PRIOR TO THEIR CREDIT IN THE D EMAT ACCOUNT OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE IS THAT FO R PURCHASING THE SHARES OF BIOGREEN INDUSTRIES THE ASSESSEE UTILIZED THE IN COME GENERATED FROM SPECULATION TRANSACTIONS CARRIED OUT BY THE ASSESSEE IN APRIL, 2007. THE SAID SPECULATION INCOME HAS BEEN PURPORTE DLY DECLARED IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 200 9-10, ALTHOUGH, IT WAS EARNED IN THE PERIOD RELEVANT TO ASSESSM ENT YEAR 2008-09. IN RESPECT OF PURCHASE OF SHARES OF RNRL THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE HAD PURCHASED THE SHARES FROM THE SALE CONSIDERATION ARISING FROM SALE OF SHARES OF HINDUSTAN Z INC LTD. ON 02-04-2007. THE SHORT TERM CAPITAL GAIN ARISING FROM SALE OF SHARES OF HINDUSTAN ZINC LTD. ` 1,77,461/- WAS OFFERED TO TAX IN ASSESSMENT YEAR 2008-09. 6. A PERUSAL OF THE DEMAT ACCOUNT OF THE ASSESSEE REPR ODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER REVEAL THAT SHA RES OF BIOGREEN INDUSTRIES WERE CREDITED TO THE DEMAT ACCOUNT OF THE ASSESSEE ON 27-05-2008 AND THEREAFTER THERE WERE SERIES OF SALE AND PURCHASE TRANSACTIONS IN THE SHARES OF BIOGREEN INDUSTRIES. THE LA ST TRANSACTION, SALE OF 200 SHARES WAS CARRIED OUT ON 11-03-2009. EVEN IF FIFO METHOD IS ADOPTED BY THE ASSESSEE IN TRANSACTING THE S HARES, THE ASSESSEE RETAINED THE SHARES OF BIOGREEN INDUSTRIES FOR A VERY SHORT TIME I.E. MUCH LESS THAN 12 MONTHS. HENCE, ANY GAIN ARISING FROM SALE OF SHARE OF BIOGREEN INDUSTRIES IS SHORT TERM CAPITAL GAIN. SIMILARLY, IN THE CASE OF RNRL 7500 SHARES WERE CREDITED TO DEMAT ACCOUNT OF THE ASSESSEE ON 21-05-2008. ENTIRE SHARES WERE SOLD ON 22 -05-2008. THE SHARES WERE RETAINED BY THE ASSESSEE FOR ONE DAY ONLY . THEREFORE, THE CAPITAL GAIN ARISING ON SALE OF SAID SHARES IS AGAIN SHORT TE RM CAPITAL GAIN. 9 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 7. THE ASSESSEE HAS CONTENDED THAT THE SHARES OF BIOG REEN INDUSTRIES WERE PURCHASED BY UTILIZING THE INCOME ARISING FROM SPECULATION TRANSACTIONS PERTAINING TO SCRIPTS OF CESE LTD ., MARUTI UDYOG LTD. AND HINDUSTAN ZINC LTD. IN THE MONTH OF APRIL, 20 07. THE ASSESSEE HAD ALLEGEDLY EARNED SPECULATION INCOME OF ` 1,36,779/- AND THE PURCHASE CONSIDERATION PAID FOR THE SHARES OF BIOGREE N INDUSTRIES WAS ` 1,36,922/-. THE SAID SHARES WERE ALLEGEDLY PURCHASED BY THE ASSESSEE THROUGH M/S. VVL SECURITIES. THE ASSESSEE FUR NISHED CONTRACT NOTE DATED 11-04-2007 ISSUED BY M/S. VVL SEC URITIES. ON ENQUIRIES MADE BY THE ASSESSING OFFICER IT WAS REVEALED THA T M/S. VVL SECURITIES WAS NOT AUTHORIZED BROKER OR SUB-BROKER OF A NY STOCK EXCHANGE. M/S. VVL SECURITIES WAS DECLARED DEFAULTER W.E.F. 08-02-2002. THUS, THE CONTRACT NOTES PRODUCED BY THE ASSESSEE DATED 11-04-2007 DOES NOT INSPIRE ANY CONFIDENCE TO BELIEVE THE ACTUAL DATE OF PURCHASE OF SHARES OF BIOGREEN INDUSTRIES AS 11-04-20 07. IT WOULD BE RELEVANT TO MENTION HERE THAT IN THE DETAILS OF INVEST MENTS IN SHARES AS ON 31-03-2008 PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE SHARES OF BIOGREEN INDUSTRIES WERE NOT INCLUDE D. THE ASSESSEE HAS NOT GIVEN ANY REASON AS TO WHY THE SHAR ES ALLEGEDLY PURCHASED ON 11-04-2007 WERE NOT TRANSFERRED TO DEMA T ACCOUNT OF THE ASSESSEE TILL 21-05-2008. FROM THE FACTS DISCUSSED ABOVE , IT CAN BE SAFELY CONSTRUED THAT THE DATE OF ACQUISITION OF SHARES O F BIOGREEN INDUSTRIES IS THE DATE ON WHICH THE SHARES WERE CREDITE D IN THE DEMAT ACCOUNT OF THE ASSESSEE. AS PER THE DEMAT ACCOUNT OF THE ASSESSEE THE SHARES WERE HELD FOR THE PERIOD LESS THAN 12 MONTHS. TH EREFORE, ANY GAIN ARISING ON SALE OF SUCH SHARES HAS TO BE TREATED AS SHORT TERM CAPITAL GAIN. 10 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 8. IN RESPECT OF SHARES OF RNRL THE CONTENTION OF THE A SSESSEE IS THAT THE SHARES WERE PURCHASED FROM CAPITAL GAIN ARISING FROM SALE OF SHARES OF HINDUSTAN ZINC LTD. ON 05-04-2007 THE ASSESS EE HAD PURPORTEDLY EARNED PROFIT OF ` 1,77,461/- ON SALE OF AFORESAID SHARES. THE PROFIT ARISING FROM SALE OF SHARES WAS ALLEGEDLY ADJUSTE D AGAINST PURCHASE OF SHARES OF RNRL. THE ASSESSEE HAD NOT PROD UCED ANY CONTRACT NOTE IN RESPECT OF PURCHASE OF AFORESAID SHARES . THE ASSESSEE SOLD SHARES OF RNRL ON 22-05-2008 FOR A CONSIDERATION OF ` 8,45,256/-. THE CAPITAL GAIN ARISING FROM SALE OF SHARES OF RNRL WAS DE CLARED BY THE ASSESSEE AS LONG TERM CAPITAL GAIN. THE ASSESSING O FFICER DISBELIEVE THE TRANSACTION WITH RESPECT TO ALLEGED SALE OF S HARES OF HINDUSTAN ZINC LTD. AS THE ASSESSEE HAS FAILED TO PRODUC E ANY CONTRACT NOTE AND MADE ADDITION OF ` 1,77,461/- U/S. 68 OF THE ACT AND ALSO THE ENTIRE SALE CONSIDERATION RECEIVED FROM SALE OF SHARES OF RN RL ` 8,45,256/- AS UNEXPLAINED CREDITS U/S. 68 OF THE ACT. IN FIR ST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE G AIN ARISING ON SALE OF SHARES OF RNRL IS SHORT TERM CAPITAL GAIN. SINCE, TH E ASSESSEE HAS FAILED TO PRODUCE ANY RELIABLE EVIDENCE TO SHOW THAT THE SHARES W ERE PURCHASED MUCH PRIOR TO THE DATE OF THEIR CREDIT IN THE DEMAT ACCOUNT, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE DA TE OF PURCHASE OF SHARES IS THE DATE ON WHICH THE SHARES WE RE CREDITED TO THE DEMAT ACCOUNT OF THE ASSESSEE I.E. ON 21-05-2008. HENCE , THE PROFIT ARISING FROM SALE OF THE SHARES OF RNRL WAS HELD TO BE SH ORT TERM CAPITAL GAIN BY THE COMMISSIONER OF INCOME TAX (APPEALS). 9. WE DO NOT FIND ANY ERROR IN THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THE GAIN ARISING FROM SALE OF SHARES OF BIOGREEN INDUSTRIES AND RNRL AS SHORT TERM CAPITAL GAIN . THE LD. COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVE RT THE FINDINGS OF 11 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 COMMISSIONER OF INCOME TAX (APPEALS). NO COGENT EVIDENCE H AS BEEN PLACED ON RECORD BY THE LD. COUNSEL TO SHOW THAT THE SH ARES WERE PURCHASED PRIOR TO THE DATE OF CREDIT IN DEMAT ACCOUNT OF THE ASSESSEE. HENCE, WE UPHOLD THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND DISMISS GROUND NO. 1 RAISED IN TH E APPEAL BY THE ASSESSEE. 10. IN GROUND NO. 2 OF THE APPEAL, THE ASSESSEE HAS A SSAILED THE ADDITION OF ` 1,77,461/- CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AS UNEXPLAINED CASH CREDIT. THE CONTENTION OF TH E ASSESSEE IS THAT THE ASSESSEE HAS EARNED SHORT TERM CAPITAL GAIN O F ` 1,77,461/- FROM THE SALE OF SHARES OF HINDUSTAN ZINC LTD. THE SAID S HARES WERE ALLEGEDLY SOLD BY THE ASSESSEE ON 02-04-2007 AND HAD O FFERED THE SAME TO TAX AS SHORT TERM CAPITAL GAIN IN THE ASSESSMENT YEA R 2008-09. THE CONTENTION OF THE ASSESSEE IS THAT THE S HORT TERM CAPITAL GAIN ON SALE OF SHARES OF HINDUSTAN ZINC LTD. IS UTILIZED TO P URCHASE SHARE OF RNRL. THE COMMISSIONER OF INCOME TAX (APPEALS) RE JECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASS ESSEE HAS NOT BEEN ABLE TO SHOW THAT THE AMOUNT OF ` 1,77,461/- SHOWN AS SHORT TERM CAPITAL GAIN IN THE ASSESSMENT YEAR 2008-09 HAS BEEN UT ILIZED TO PURCHASE THE SHARES OF RNRL. THE ASSESSEE HAS PURCHA SED SHARES OF RNRL THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORKS PVT. LTD. HOWEVER, THE ASSESSEE HAS FAILED TO PRODUCE CONTRACT NO TES FOR THE PURCHASE OF SAID SHARES. THE ASSESSEE HAS NOT BEEN AB LE TO SHOW FROM RECORDS THE SOURCE FOR MAKING INVESTMENT IN THE SHARES OF RNRL. SINCE, THE SOURCE OF INVESTMENT HAS NOT BEEN EXPLAINED B Y THE ASSESSEE THE AUTHORITIES BELOW HAVE MADE ADDITION OF ` 1,77,461/- I.E. THE AMOUNT INVESTED FOR PURCHASE OF RNRL SHARES, AS UNDISCLOS ED CASH CREDITS. 12 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 WE ARE OF THE CONSIDERED VIEW THAT FOR MAKING ADDITION U/S . 68 IT IS NECESSARY THAT THERE ARE CREDIT ENTRIES IN THE BOOKS OF THE ASSESSEE. THE RELEVANT EXTRACT OF SECTION 68 IS REPRODUCED HERE-IN-BELOW: 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSES SING] OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THERE IS NO FINDING OF FACT BY THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME TAX (APPEALS) THAT ANY SUCH SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE IN THE PERIOD RELEV ANT TO ASSESSMENT YEAR 2009-10. MERELY, FOR THE REASON THAT THE ASSESSEE HAS MADE INVESTMENT OF A CERTAIN AMOUNT AND THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THE SOURCE OF INVESTMENT, ADDITION U/S. 68 OF THE ACT CANNOT BE MADE. UNDER SUCH CIRCUMSTANCES WE FIND THAT ADDITION OF ` 1,77,461/- AS UNEXPLAINED CASH CREDIT IS UNWARRANTED, HENC E, THE ADDITION IS DELETED. ACCORDINGLY, GROUND NO. 2 RAISED BY TH E ASSESSEE IS ALLOWED. 11. THE GROUND NO. 3 RAISED IN THE APPEAL RELATE TO LEVY OF INTEREST U/S. 234A, 234B AND 234C OF THE ACT. THE LEVY OF INTERES T IS CONSEQUENTIAL AND MANDATORY. ACCORDINGLY, GROUND NO. 3 RAISED IN THE APPEAL IS DISMISSED. 12. THE GROUND NO. 4 RAISED IN THE APPEAL BY THE ASSESS EE IS GENERAL IN NATURE. HENCE, REQUIRES NO ADJUDICATION. 13. IN APPEAL BY THE DEPARTMENT, WE FIND THAT THE APPE AL SUFFERS FROM LOW TAX EFFECT. THE TAX EFFECT INVOLVED IN APPEAL IS LESS THAN THE MONETARY LIMIT PRESCRIBED BY CBDT FOR FILING OF APPEALS BEFORE TRIBUNAL. 13 ITA NOS. 1038 & 1218/PUN/2013, A.Y. 2009-10 THE CBDT VIDE CIRCULAR NO. 21/2015, DATED 10-12-2015 HA S RAISED THE MONETARY LIMIT OF TAX EFFECT TO ` 10 LAKHS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE THE TRIBUNAL. THE CIRCULAR APPLIES TO T HE APPEALS TO BE FILED BY THE DEPARTMENT IN FUTURE, AS WELL AS THE APPEALS PENDING BEFORE THE TRIBUNAL. THUS, IN VIEW OF THE CBDT CIRCULAR THE PRESENT APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 24 TH DAY OF MARCH, 2017. SD/- SD/- ( / ANIL CHATURVEDI) ( ! / VIKAS AWASTHY) ' ! / ACCOUNTANT MEMBER # ! / JUDICIAL MEMBER ' / PUNE; $% / DATED : 24 TH MARCH, 2017 RK , - ./& 0&+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. & & ' () / THE CIT(A)-I, PUNE 4. & & ' / THE CIT-I, PUNE 5. *+ ,- , & ,- , . ./ , ' / DR, ITAT, B BENCH, PUNE. 6. +01 23 / GUARD FILE. // // TRUE COPY// &'4 / BY ORDER, 5 %6 / ASSISTANT REGISTRAR, & ,- , ' / ITAT, PUNE