SOWMYASHREE L. BELUR, MUMBAI V. ACIT RG 20(3), MUMBAI

ITA 1490/MUM/2011

• Counselvise Citation: 149019914 RSA 2011
• Duration Of Justice: 4 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 09-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Cost of acquisition
• Section: 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH ( JM ) , AND B.R.BASKARAN (AM) , . . , ./ I.T.A. NO. 1490 /MUM/ 20 1 1 ( / ASSESSMENT YEAR : 200 6 - 07 ) MS.SOWMYASHREE L BELUR A - 60/1222, AZAD NAGAR, VEER DESAI ROAD, ANDHERI (W), MUMBAI - 400053 / VS. ASSTT. COMMISSIONER OF INCOME TAX, RANGE - 20(3), PIRAMAL CHAMBERS, LA L BAUG, PAREL, MUMBAI - 400012. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : A HZPB5856D / ASSESSEE BY S/ SHRI RAJEEV KHANDELWAL AND NILKANTH KHANDELWAL / REVENUE B Y SHRI JITENDRA KUMAR / DATE OF HEARING : 9.7 . 201 5 / DATE OF PRONOUNCEMENT : 09. 10. 201 5 / O R D E R PER B.R. BASKARAN (AM) THE APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 25.11.2010 PASSED BY LD CIT(A) - 31, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2006 - 07. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ASSESSMENT OF SHORT TERM CAPITAL GAIN OF RS.64,44,753/ - AS INCOME FROM UNDISCLOSED SOURCES AND FURTHER ENHANCING THE SAME BY A SUM OF RS.3,46,933/ - . THE ASSESSEE IS ALSO AGGRIEVED BY THE DECISION OF LD CIT(A) I.T.A. NO . 1490 /MUM/20 1 1 2 IN CONFIRMING THE ADDITION OF RS.3,22,238/ - ON ACCOUNT OF ALLEGED PAYMENT OF COMMISSION FOR GETTING SHOR T TERM CAPITAL GAINS. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BRIEF. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE DECLARED SHORT TERM CAPITAL GAINS ARISING ON SALE OF FOLLOWING SHARES: - (A) AHMED NAGAR FINANC E. (B) APTECH LTD (C) MANUGRAPH (D) MICRO TECHNO LTD (E) TANEJ A AEROSPACE. THE AGGREGATE SALE VALUE OF ABOVE SAID SHARES WAS RS.1,00,63,197/ - AND THE AGGREGATE PURCHASE PRICE WAS RS.38,65,164/ - AND ACCORDINGLY THE DIFFERENCE BETWEEN THE TWO HAS RE SULTED IN SHORT TERM CAPITAL GAIN OF RS.64,44,753/ - . THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED TO HAVE PURCHASED THE ABOVE SAID SHARES IN THE MONTHS OF APRIL, 2005 TO NOVEMBER, 2005 AND ALL OF THEM HAVE BEEN SOLD IN THE MONTHS OF JANUARY , 2006 TO MARCH, 2006. BEFORE THE AO, THE ASSESSEE FILED COPIES OF BILLS AND CONTRACT NOTES IN SUPPORT OF THE PURCHASES AND SALES. 4. THE AO NOTICED THAT THE ASSESSEE HAD PURCHASED THE SHARES THROUGH A BROKER NAMED M/S ALLIANCE INTERMEDIATERIES & NET WORK PVT LTD. HOWEVER, IT WAS NOTICED THAT THE SHARES HAVE BEEN CREDITED IN THE D - MAT ACCOUNT OF THE ASSESSEE ONLY IN THE MONTH OF JANUARY, 2006 . HE FURTHER NOTICED THAT THE SHARES HAVE BEEN TRANSFERRED TO THE D - MAT ACCOUNT OF THE ASSESSEE FROM THE D - MAT ACCOUNT OF M/S SUNCHAN SECURITIES LTD AND NOT FROM THE D - MAT ACCOUNT OF M/S ALLIANCE INTERMEDIATERIES & NETWORK PVT LTD. THE ASSESSING OFFICER ISSUED NOTICES U/S 133(6) OF THE ACT TO THE ABOVE SAID TWO BROKERS IN ORDER TO ASCERTAIN THE GENUINENESS OF THE PURCHASES. THOUGH M/S SUNCHAN SECURITIES LTD INITIALLY DENIED ANY TRANSACTION WITH THE ASSESSEE, BUT LATER ON CLARIFIED THAT IT TRANSFERRED THE I.T.A. NO . 1490 /MUM/20 1 1 3 SHARES TO THE ASSESSEE ON BEHALF OF M/S ALLIANCE INTERMEDIATERIES & NETWORK PVT LTD. BEFORE THE AO, M/S ALLIAN CE INTERMEDIATERIES FILED A LETTER CONFIRMING THE CONTRACT NOTES AND PURCHASE BILLS ALREADY FURNISHED BY THE ASSESSEE. IT IS TO BE NOTED HERE THAT THE ASSESSEE SOLD ALL THE ABOVE SAID SHARES THROUGH ANOTHER BROKER NAMED M/S SKYES AND RAYS EQUITY INDIA LTD . 5. THE ASSESSING OFFICER NOTICED CERTAIN DEFICIENCIES IN THE CONTRACT CUM BILL SUBMITTED BY THE ASSESSEE, I.E., IT DID NOT CONTAIN THE CODE NUMBER OF CLIENTS. FURTHER HE NOTICED THAT THE PAYMENTS HAVE BEEN MADE BY THE FATHER OF THE ASSESSEE. THE AO ALSO MADE ENQUIRIES WITH M/S NATIONAL STOCK EXCHANGE (NSE) AND M/S BOMBAY STOCK EXCHANGE (BSE). THE NSE CONFIRMED THAT M/S SUNCHAN SECURITIES LTD AND M/S SKYES & RAY EQUITIES (I) LTD ARE REGISTERED TRADING MEMBERS OF NSE. IT FURTHER SUBMITTED THAT M/S ALLIANCE INTERMEDIATERIES IS A REGISTERED SUB - BROKER AFFILIATED TO M/S ISE SECURITES & SERVICES LTD, ANOTHER TRADING MEMBER OF NSE. HOWEVER, THE NSE SAID THAT IT COULD NOT FURNISH THE DETAILS ABOUT M/S ALLIANCE INTERMEDIATERIES, SINCE ITS REGISTRATION WA S CANCE L ED IN FEBRUARY, 2004. THE BSE ATTACHED A LIST OF TRANSACTIONS ENTERED BY M/S SKYES & RAY EQUITIES (INDIA) LTD ON BEHALF OF THE ASSESSEE HEREIN. HOWEVER, THE BSE REPORTED THAT THE ASSESSING OFFICER DID NOT ATTACH THE BILLS/CONTRACT NOTES PERTAININ G TO M/S ALLIANCE INTERMEDIATERIES AND HENCE IT DID NOT REPORT ABOUT TRANSACTIONS CARRIED OUT BY M/S ALLIANCE INTERMEDIATERIES. HOWEVER, IT CONFIRMED THAT M/S ALLIANCE INTERMEDIATERIES IS NOT REGISTERED WITH IT. WITH REGARD TO M/S SUNCHAN SECURITIES LTD, THE BSE REPORTED THAT IT WAS PERMITTED TO CARRY ON TRADING ONLY WITH EFFECT FROM 03 - 02 - 2006 AND PRIOR TO THAT IT WAS UNDERTAKING TRANSACTIONS THROUGH M/S AJMERA ASSOCIATES PVT LTD. BASED ON THE REPLIES FURNISHED BY THE STOCK EXCHANGES, THE AO CAME TO THE CONCLUSION THAT THE PURCHASES OF SHARES HAVE NOT BEEN ROUTED I.T.A. NO . 1490 /MUM/20 1 1 4 THROUGH THE STOCK EXCHANGES. WITH REGARD TO THE SALES MADE THROUGH M/S SKYES & RAYS EQUITIES (I) LTD, THERE WAS SOME DISCREPANCY WITH REGARD TO THE SALES REPORTED BY THE ASSESSEE IN RESPECT OF SHARES OF M/S MANUGRAPH, I.E., THE ASSESSEE HAD SOLD 4500 SHARES, WHERE AS THE BSE REPORTED SALE OF ONLY 900 SHARES. 6. IN VIEW OF THE ABOVE DISCREPANCIES, THE AO CAME TO THE CONCLUSION THAT THE SHORT TERM CAPITAL GAIN OF RS.64,44,753/ - DECLARED BY T HE ASSESSEE WAS BOGUS AND NOT REAL. ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THE SAME AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. 7. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) NOTICED THAT M/S ALLIANCE INTERMEDIATERIES IS A MEMBER OF M/S INTERCONNECTED STOCK EXCHANGE OF INDIA LTD AND HENCE ASKED THE SAID STOCK EXCHANGE TO CONFIRM THE TRANSACTIONS ENTERED BY M/S ALLIANCE INTERMEDIATERIES. HOWEVER, THE ABOVE SAID STOCK EXCHANGE CONFIRMED THAT THERE WAS NO TRADING UNDERTAKEN BY M/S ALLIANCE INTERMEDIATERIES. THE LD CIT(A), AFTER CONSIDERING THE ASSESSMENT ORDER, CAME TO THE CONCLUSION THAT THE DATE OF PURCHASE OF SHARES CLAIMED BY THE ASSESSEE MAY NOT CORRECT AND HE SHOULD HAVE PURCHASED THE SHARES ONLY ON THE DATES ON WHICH THE SHARES WERE CREDITED INTO THE D - MAT ACCOUNT OF THE ASSESSEE. THE LD CIT(A) FURTHER ASSUMED THAT THE ASSESSEE SHOULD HAVE PURCHASED THE SHARES AT THE HIGH EST PRICE PREVAILING ON THAT DATE. IT IS PERTINENT TO NOTE THAT THE LD CIT(A) HAS ACCEPTED THE GENUINENESS OF PUR CHASE AND SALE OF SHARES. ACCORDINGLY HE COMPUTED THE AGGREGATE PURCHASE COST OF ALL THE SHARES AT RS.1,06,56,850/ - . SINCE THE ASSESSEE HAD GIVEN PAYMENT FOR PURCHASES FROM THE DISCLOSED SOURCES TO THE TUNE OF RS.38,67,201/ - , THE LD CIT(A) PRESUMED THAT THE DIFFERENCE BETWEEN THE TWO AMOUNTS MENTIONED ABOVE, I.E., RS.67,89,649/ - REPRESENTS THE PAYMENT MADE BY THE ASSESSEE FROM I.T.A. NO . 1490 /MUM/20 1 1 5 OUT OF UNDISCLOSED SOURCES. SINCE THE ASSESSING OFFICER HAS ALREADY ASSESSED A SUM OF RS.64,44,753/ - , THE LD CIT(A) ENHANCED THE ADDITION BY RS.3,44,896/ - . THE LD CIT(A) WORKED OUT THE SALE VALUE OF SHARES AT RS.1,03,09,917/ - AND DIRECTED THE ASSESSING OFFICER TO ASSESS A SUM OF RS.3,46,933/ - (RS.1,03,09,917/ - LESS RS.1,06,56,850/ - ) AS SHORT TERM CAPITAL LOSS. THE LD CIT(A) ALSO CONFIRMED THE ADDITION OF RS.3,22,238/ - RELATING TO ALLEGED COMMISSION PAYMENTS. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 8. THUS, WE NOTICE THAT THE AO AND LD CIT(A) HAS TAKEN TWO DIFFERENT VIEWS IN THIS MATTER. THE AO HAS TAKEN T HE VIEW THAT THE ASSESSEE HAS MANAGED TO GET SHORT TERM CAPITAL GAIN, I.E., THE PURCHASE AND SALE OF SHARES WERE A MAKE BELIEF ARRANGEMENT. HOWEVER, THE LD CIT(A) HAS TAKEN THE VIEW THAT THEY ARE GENUINE TRANSACTIONS, BUT THE PURCHASES HAVE BEEN MADE ON T HE DATE ON WHICH THE SHARES WERE CREDITED IN THE D - MAT ACCOUNT OF THE ASSESSEE. THUS, WE NOTICE THAT THE SALE OF SHARES HAVE BEEN ACCEPTED BY THE LD CIT(A), SINCE THE DELIVERY OF SHARES HAS TAKEN PLACE FROM THE D - MAT ACCOUNT OF THE ASSESSEE. HOWEVER T HE CLAIM OF PURCHASE OF SHARES ON THE DATES MENTIONED BY THE ASSESSEE HAS NOT BEEN ACCEPTED BY LD CIT(A) , INSTEAD HE HAS PRESUMED THAT THE SHARES SHOULD HAVE BEEN PURCHASED ON THE DATE THEY WERE CREDITED IN THE D - MAT ACCOUNT . IT IS TO BE NOTICED THAT T HE RE VENUE HAS NOT CHALLENGED THE DECISION OF LD CIT(A) AND HENCE, IN EFFECT, THE PURCHASE AND SALE OF SHARES HAVE NOT BEEN DOUBTED BY THE TAX AUTHORITIES. TH US TH E ONLY DISPUTE IS ABOUT THE DATE OF PURCHASE OF SHARES. 9. IT IS PERTINENT TO NOTE THAT THE LD CIT(A) HAS ONLY PRESUMED THAT THE SHARES SHOULD HAVE BEEN PURCHASED BY THE ASSESSEE ONLY ON THE DATES ON WHICH THEY WERE CREDITED INTO THE D - MAT ACCOUNT OF THE ASSESSEE. WE I.T.A. NO . 1490 /MUM/20 1 1 6 NOTICE THAT THE LD CIT(A) HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUPPORT HI S PRESUMPTIONS. IT IS IN THE COMMON KNOWLEDGE OF EVERYONE THAT THERE IS NO NECESSITY TO CREDIT THE SHARES IN THE D - MAT ACCOUNT OF THE ASSESSEE ON THE VERY SAME DAY OF PURCHASE . FOR NUMBER OF REASONS, THE CREDIT TO D - MAT ACCOUNT MAY GET DELAYED. WE NOTIC E THAT THE LD CIT(A) HAS NOT ENQUIRED ABOUT THE DELAY OR CONSIDER SUCH POSSIBILITIES. WE FURTHER NOTICE THAT THE TAX AUTHORITIES HAVE NOT CALLED FOR ANY EXPLANATION FROM ANYONE ABOUT THE DELAY IN CREDITING THE SHARES INTO THE D - MAT ACCOUNT. 10. AT TH IS JUNCTURE , IT IS PERTINENT TO EXTRACT BELOW THE REPLIES FURNISHED BY THE ASSESSEE BEFORE LD CIT(A). THE ASSESSE E HAS FURNISHED FOLLOWING REPLY IN HER LETTER DATED 22.10.2010 AND THE SAME HAS BEEN EXTRACTED BY LD CIT(A) IN PARAGRAPH 2.3.9 OF HIS ORDER: - WE ARE IN RECEIPT OF YOUR ABOVE SAID LETTER AND WE WOULD LIKE TO BRING TO YOUR NOTICE THAT ALL THE INFORMATION REQUIRED UNDER THE ABOVE LETTER WERE ALREADY SUBMITTED AND SAME HAS BEEN MENTIONED POINT WISE BELOW : - 'WE HAVE ALREADY SUBMITTED THE CONFIRM ATION STATEMENT OF ACCOUNT FROM ALL BROKERS FOR THE ABOVE SAID PERIOD I.E. SUNCHAN SECURITIES LTD., ALLIANCE LNTERMEDIATERIES AND NETWORK PVT. LTD. AND SYKES AND RAYS & EQUITIES INDIA LTD. VIDE OUR LETTER DATED 12.02.2010 ALONG WITH THE CERTIFICATE FROM SU NCHAN SECURITIES LTD. AND ALLIANCE INTERMEDIATERIES & NETWORK PVT, LTD. STATING THAT OUR SHARES WERE LYING IN THEIR POOL ACCOUNT. COPY OF THE LETTER DATED 12.02.20 10 IS ENCLOSED HEREWITH FOR YOUR READY REFERENCE. WE HAVE ALREADY SUBMITTED ALL BILLS AND CONTRACT NOTES FROM ALL THE 3 BROKERS AND THE BILLS AND CONTRACT NOTES WERE HAVING CLIENT ID AND ALL THE 3 BROKERS HAD ALREADY CONFIRMED ALL THE SALE, PURCHASE AND PAYMENT TRANSACTIONS WHICH ARE ON YOUR RECORD UNDER OUR ABOVE SAID LETTER DATED 12.02.2010. IT MEANS THAT THEY HAVE CONFIRMED THE CLIENT ID. WHEN WE ASK OUR BROKERS THEN THEY SAID THAT THERE IS NO SUCH TYPE OF PRACTICE IN EXISTENCE TO GET THE CONFIRMATION FROM THE EXCHANGE. I.T.A. NO . 1490 /MUM/20 1 1 7 WE HAD ALREADY SUBMITTED OUR DE MAT STATEMENT IN WHICH ALL SHARES WERE RECEIVED AND DELIVERED FOR THE SHARES PURCHASED AND SOLD AND IT WAS PROVED TO YOUR SATISFACTION AND ALL PAYMENTS WERE MADE AND RECEIVED BY ACCOUNT PAYEE CHEQUES AND COPY OF THE BANK ACCOUNT DULY MARKED FOR THE PAYMENT RECEIVED AND MADE WAS ALSO SUBMITTED T O YOU VIDE OUR LETTER DATED 23.01.2010. XEROX COPY OF THE SAME IS ENCLOSED HEREWITH FOR YOUR READY REFERENCE. WE HAD ALREADY SUBMITTED FULL DETAILS ABOUT THE 750 HDFC BANK SHARES VIDE OUR LETTER DATED 23.01.2010. XEROX COPY OF THE SAME IS ENCLOSED HEREWITH. WE HAVE ALREADY SUBMITTED THE DETAILS OF RATES OF EACH SHARES PURCHASED IN RESPECT OF ALL THE SHARES CREDITED IN OUR DE MAT ACCOUNT VIDE OUR LETTER DATED 24.06.2010. XEROX COPY OF THE SAME IS ENCLOSED HEREWITH. WE HAVE ALREADY WORKED OUT T HE STCG IF YOU TAKE THE RATE ON THE DATE OF DELIVERY RECEIVED IN OUR DEMAT ACCOUNT WE HAVE ALREADY GIVEN FULL DETAILS OF RATE OF EACH SHARE ON THE BASIS OF RECEIPT OF THE SHARES IN OUR DEMAND ACCOUNT AS REQUIRED BY YOU. THE APPELLANT HAS PURCHASED THE S HARE FROM THE BROKER WHO IS REGISTERED WITH THE SEBL, INTER - STOCK EXCHANGE ETC. XEROX COPY OF THE SAME WAS SUBMITTED VIDE OUR LETTER DT.08.01.2010 UNDER POINT NO. 5 ON PAGE NO.6 WHICH WAS SUBMITTED TO YOUR HONOUR. ALL THE PURCH ASED SHARES WERE CREDITED IN O UR DEMAT ACCOUNT WHICH ARE ON YOUR RECORD AND ALL THE SOLD SHARES WAS DEBITED IN OUR DEMAT ACCOUNT WHICH WAS ALSO ON YOUR RECORD AND ALL THE PAYMENTS HAVE BEEN MADE/RECEIVED THROUGH A CCOUNT PAYEE CHEQUE AND HAS BEEN REFLECTED IN THE APPELLANT PASS BOOK WHI CH IS ON YOUR RECORD, BANK CERTIFICATE TO THAT EFFECT WAS ALSO SUBMITTED TO THE AO. THE APPELLANT HAS COMPLIED ALL THE R EQUIREMENTS OF THE STCG UNDER THE THE INCOME - ACT AND ALL THE BROKERS HAVE CONFIRMED THE TRANSACTIONS WHICH ARE ALSO ON RECORD THEN TH ERE IS NO QUESTION TO TAKE THE RATE ON THE DATE OF RECEIPT OF THE SHARES. IT IS NOT MANDATORY IN THE INCOME - TA X ACT, 1961 THAT SHARES SHOULD BE TAKEN OR RECEIVED IN DEMAT ACCOUNT WITHIN PARTICULAR NO. OF DAYS FROM THE DATE OF PURCHASE . I.T.A. NO . 1490 /MUM/20 1 1 8 SIMILARLY, THERE I S NO PROVISION IN THE I.T. ACT THAT THE PAYMENT SHOULD BE MADE WITHIN A PARTICULAR PERIOD OF THE DATE OF PURCHASE OF SHARES. IT IS BETWEEN THE APPELLANT AND BROKER TO DECIDE OR ACCOMMODATE EACH OTHER. THE APPELLANT HAD PRODUCED ALL THE EVIDENCE IN HER SU PPORT ARE COMPLIED WITH ALL THE TERMS AND CONDITIONS OF THE STCG UNDER THE I NCOME TAX ACT, 1961. IF THE AO WAS NOT SATISFIED WITH THE SUBMISSION OF THE APPEL L ANT THEN IT WAS HIS DUTY TO BRING AND GATHER THE MATERIAL ON RECORD IN HIS SUPPORT BUT THE AO WAS UNABLE TO BRING ON RECORD ANY MATERIAL IN HIS SUPPORT AND WRONGLY ASSUME THE STCG AS A UNDISCLOSED INCOME WHICH WAS WITHOUT ANY BASIS OR MATERIAL IN HIS HAND. THE FACT IS THAT THE APPEL L ANT HAS MADE THE STCG AND PAID THE TAX THEREON UNDER THE PROVISIONS O F THE I.T. ACT, 1961 AND FULFILLED ALL THE REQUIREMENTS OF STCG TAX AS PER THE I T. ACT. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD WHICH PROVE S THAT THE APPELLANT HAD MADE ANY UNDISCLOSED INCOME SO THAT THE AO CAN TREAT THE STCG AS AN UNEXPLAINED INVE STMENT. THE APPELLANT ALSO WANT TO PUT ON RECORD THAT IF THE DELIVERY OF THE SHARES ARE RECEIVED AND ISSUED AND SHARES HAD BEEN SOLD IN THE B ES THROUGH SKYES AND RAYS & EQUITIES INDIA LTD. THEN HOW CAN THE APPELLANT SELL THE SHARES IN BSE. IT IS WELL SET TLED LAW THAT IF THE SHARE HAS BEEN SOLD THEN THE SHARES MUST HAVE BEEN PURCHASED OTHERWISE THE SHARES CANNOT BE SOLD. FROM THE ABOVE, IT IS VERY CLEAR THAT THE AO WAS UNABLE TO PROVE THAT THE SHARES ARE PURCHASED ON THE DATE OF RECEIPT OF THE SHARES IN DEMAT ACCOUNT. IF THE AO WANTS TO TREAT THE SAME, THEN HE SHOULD HAVE GATHERED SOME INFORMATION ABOUT THE RECEIPT OF THE SHARES OR SOURCE OF RECEIPT OF THE SHARES ON THE DATE OF RECEIPT IN DEMAT ACCOUNT. HENCE IN THE ABSENCE OF ANY MATERIAL ON RECORD ST CG CANNOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCES SINCE AO HAS FAILED TO BRING THE MATERIAL ON RECORD IN SUPPORT EITHER THE SOURCE OF UNDISCLOSED INCOME OF THAT THE SHARES HAS BEEN PURCHASED OUT OF THE UNDISCLOSED INVESTMENT AND SHARES HAVE BEEN PURC HASED ON THE DATE OF RECEIPT OF THE SHARES IN DEMAT ACCOUNT . FROM THE ABOVE, IT IS VERY CLEAR THAT THE AO HAS WRONGLY I.T.A. NO . 1490 /MUM/20 1 1 9 TREATED THE STCG AS AN INCOME FROM UNDISCLOSED SOURCE ARBITRARILY AND WITHOUT BRINGING ANY MATERIAL OR EVIDENCE ON RECORD IN HIS SUPPORT , HENCE NOT TENABLE IN THE EYES OF LAW. THE APPELLANT HAD WRITTEN THE LETTER TO HER HDFC DEPOSITORY TO GIVE THE NAME OF DP HOLDER FROM HIM THE SHARES HAVE BEEN RECEIVED BUT THEY HAVE NOT REPLIED TILL NOW AND INFORMED US THAT DP NAME CANNOT BE DISCLOSED D UE TO CONFIDENTIALITY AND SHARES HAS BEEN RECEIVED FROM THE CDSL AND THERE IS NO SUCH SYSTEM TO FIND THE DP HOLDER NAME. XEROX COPY OF THE LETTER WRITTEN TO THE HDFC DEPOSITORY WAS ALREADY SUBMITTED TO YOUR HONOUR VIDE OUR LETTER D T .L4.09.2010. XEROX COP Y OF THE SAME IS ENCLOSED HEREWITH. FROM THE ABOVE, IT IS VERY CLEAR THAT ALL THE DETAILS REQUIRED UNDER THE ABOVE SAID LETTER WAS ALREADY COMPLIED WITH TO YOUR HONOUR FROM TIME TO TIME AND THE SAME ARE AVAILABLE ON YOUR RECORD AND THERE IS NO NEED TO RE SUBMIT THE SAME AGAIN . YOUR HONOUR IS REQUIRED TO PROCEED THE ORDER ON THE BASIS OF INFORMATION /EXPLANATION AVAILABLE ON OUR RECORD AND OBLIGED 11. WITH REGARD TO THE PROPOSAL OF LD CIT(A) TO ADOPT THE DATE OF CREDIT OF SHARES INTO THE D - MAT ACCO UNT AS THE DATE OF PURCHASES, THE ASSESSEE HAS FURNISHED FOLLOWING REPLY: - WE ARE IN RECEIPT OF YOUR ABOVE SAID LETTER ON 15 TH NOV. , 2010 AND WE ARE SURPRISED TO NOTE TH AT YOU HAVE TAKEN HIGHEST RATE F OR EACH SCRIPT WITHOUT ANY BASIS AND NO TRANSACTION C AN BE MADE ON THE HIGHEST PRICE IN REAL LIFE. BECAUSE NOBODY CAN FIND OUT THE TOP PRICE OF THE DAY AND THERE IS NO EVIDENCE BEEN BROUGHT BY THE DEPARTMENT TILL DATE THAT SHARE HAS BEEN PURCHASED IN CASH ON THE DATE OF CREDIT OF SHARES IN DEMAT ACCOUNT AS STATED BY YOU AND HENCE THERE IS NO QUESTION TO ENHANCE UNACCOUNTED INCOME ASSESSED BY THE AO AND THERE IS NO BASIS THERE THE HIGHEST RATE OF SCRIPT IS APPLIED FOR THE PURCHASED. HENCE, YOUR PROPOSAL FOR ENHANCEMENT OF INCOME U /S .25( 1 ) OF THE ACT IS BAD I N LAW, DUE TO WITHOUT ANY BASIS OR WITHOUT ANY RECORD/EVIDENCE AVAILABLE ON RECORD OF THE DEPARTMENT. WE ALSO COME TO KNOW THAT HIGHEST RATE TAKEN BY YOU IS ALSO NOT CORRECT IN SOME OF THE CASE. WE ALSO OBSERVED THAT THERE WAS NO TRADING IN THE BSE ON THE DATE OF CREDIT I.T.A. NO . 1490 /MUM/20 1 1 10 OF THE - SHARES IN DE MAT ACCOUNT. HENCE, YOUR HIGHEST RATE TAKEN IS COMPLETELY WRONG WITHOUT B ASIS, SPECIALLY THE APPELLANT HAS PRODUCED ALL THE EVIDENCE I.E. PURCHASED BILL AND ALL PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUES AND ALL SHAR ES HAS BEEN RECEIVED IN DEM AT ACCOUNT. SECONDLY, WE COULD NOT COME TO KNOW THAT HOW YOUR HONOUR HAS TAKEN THE CASH PRICE RS.67,89,649/ - SINCE FROM YOUR ABOVE SAID LETTER THERE IS NO WORKING FOR RS.67,89,649/ - AND THERE IS NO EVIDENCE HAS BEEN GATHERED BY THE DEPARTMENT IN YOUR SUPPORT. YOUR HONOUR IS REQUESTED TO GIVE THE DETAIL FOR THE SALE, SO THAT WE CAN SUBMIT OUR REPLY FOR THE SAME. THIRDLY WE COULD NOT COME TO KNOW HOW YOU HAVE ARRIVED THE FIGURE OF RS.3,46,933/ - WHICH YOUR PROPOSED TO ENHANCE. Y OU ARE KINDLY REQUESTED TO GIVE THE DETAILS OF THE SAME SINCE YOUR BRACKET FIGURE ARE NOT CORRECT ON RECEIPT OF THE CORRECT FIGURE, WE CAN SUBMIT OUR REPLY ACCORDINGLY. IN VIEW OF THE ABOVE, YOUR HONOUR IS REQUESTED TO GIVE THE EXACT DETAILS BEFORE OUR SU BMISSIONS . 12. FROM THE FOREGOING, WHAT WE UNDERSTAND IS THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS RELATING TO PURCHASES AS WELL AS THE SALES. THE BROKERS THROUGH WHOM THE ASSESSEE HAD PURCHASED THE SHARES HAVE ALSO CONFIRMED THE TRANSACTIONS. THE PAYMENTS TOWARDS PURCHASE OF SHARES HAVE GONE THROUGH THE BANKING CHANNELS EXCEPT A VERY SMALL AMOUNT. THE SHARES PURCHASED BY THE ASSESSEE HAVE BEEN CREDITED TO THE D - MAT ACCOUNT OF THE ASSESSEE. THE DEFICIENCY NOTICED WAS THE TIME GAP BETWEEN THE PURCHASE OF SHARES AND CREDIT OF THE SAME IN THE D - MAT ACCOUNT OF THE ASSESSEE. THE DELAY IN MAKING PAYMENT AND THE DELAY IN CREDITING THE SHARES IN THE DEMAT ACCOUNT IS DEPENDENT UPON VARIOUS FACTORS INCLUDING THE UNDERSTANDING BETWEEN THE BUYER AND SELL ER. THUS, FROM THE POINT OF VIEW OF THE ASSESSEE, SHE HAS ESTABLISHED THE DETAILS OF PURCHASES WITH SUFFICIENT DOCUMENTARY EVIDENCES AND THOSE DOCUMENTARY EVIDENCES WERE ALSO CONFIRMED BY THE SHARE BROKER ALSO. FURTHER, IT IS I.T.A. NO . 1490 /MUM/20 1 1 11 SETTLED PROPOSITION THAT DAT E OF BROKER NOTES IS CONSIDERED AS THE DATE OF PURCHASE AND IN THIS REGARD, ONE MAY REFER TO THE CIRCULAR NO.704 DATED 28 - 04 - 1995. IN OUR VIEW, THE ASSESSEE CANNOT BE PUNISHED IN RESPECT OF DEFAULTS, IF ANY, COMMITTED BY THE SHARE BROKER, SINCE THE FACTUM OF PURCHASE AND SALE OF SHARES HAVE BEEN ACCEPTED BY LD CIT(A). FROM THE POINT OF VIEW OF THE ASSESSEE, THE BROKER HAS DELIVERED THE SHARES PURCHASED BY HER. WE FURTHER NOTICE THAT ALL THE SHARES PURCHASED BY THE ASSESSEE ARE THAT OF REPUTED COMPANIES O NLY. 13. ON THE CONTRARY, THE LD CIT(A), AS NOTICED EARLIER, HAS DRAWN ONLY INFERENCES ABOUT THE DATE OF PURCHASES AND HE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUPPORT THE VIEW TAKEN BY HIM. HENCE, WE ARE CONFRONTED WITH TWO DIFFERENT SITUATION S, VIZ., (A) THE ASSESSEE HAS FURNISHED MATERIALS TO SUPPORT THE CLAIM OF PURCHASES AND BOTH THE ASSESSEE AND THE SELLER OF SHARES HAVE CONFIRMED THOSE MATERIALS AND (B) THE LD CIT(A) HAS DRAWN INFERENCES WHICH I S NOT SUPPORTED BY ANY MATERIALS. UNDER THE SE SET OF FACTS, IN OUR VIEW , THE CASE OF THE ASSESSEE SHOULD WEIGH MORE , SINCE HIS CLAIM IS SUPPORTED BY CERTAIN DOCUMENTS . 14. IN VIEW OF THE ABOVE , WE ARE UNABLE TO UPHOLD THE VIEW TAKEN BY LD CIT(A) THAT THE SHARES HAVE BEEN PURCHASED ONLY ON THE DATE ON WHICH THEY WERE CREDITED IN THE D - MAT ACCOUNT . ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO ASSESS THE IMPUGNED INCOME DECLARED BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN. 15. THE NEXT ADDITION RELATES TO THE COMMISSION EXPENSES ESTIMATED BY THE AO. SINCE THE LD CIT(A) HAS ACCEPTED THE GENUINENESS OF PURCHASE AND SALE OF SHARES AND SINCE WE HAVE DIRECTED THE AO TO ASSESS THE GAIN I.T.A. NO . 1490 /MUM/20 1 1 12 ARISING ON SALE OF SHARES AS SHORT TERM CAPITAL GAIN, TH E IMPUGNED ADDITION MADE ON ESTIMATED BASIS IS LIABLE TO BE DISMISSED. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THIS ADDITION. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 9TH OCT , 2015. 9 TH OCT , 2015 SD SD ( / JOGINDER SINGH ) ( . . , / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 9TH OCT, 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE AP PELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI