ACIT, Circle - 31, Kolkata V. Shri Abhishek Agarwal, Kolkata

ITA 1593/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54650 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 21-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-09-2009
• Court: TRIBUNAL
• Department Lawyers: A K SINGH
• Assessee Lawyers: S L KOCHAR
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Charitable institution; Corroborative evidences; Assessment record

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 1593/KOL/2009 %& '(/ ASSESSMENT YEAR : 2006-07 (*+ / APPELLANT ) A.C.I.T., CIRCLE-31, KOLKATA (PAN : ACMPA 9244 Q) - % - - VERSUS - . (-.*+/ RESPONDENT ) SHRI ABHISHEK AGARWAL, KOLKATA *+ / 0 '/ FOR THE APPELLANT: SHRI A.K.SINGH -.*+ / 0 '/ FOR THE RESPONDENT: SHRI S.L.KOCHAR 1%2 / !# /DATE OF HEARING : 24.10.2011. 3' / !# /DATE OF PRONOUNCEMENT : 11.11.2011. '4 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 24.06.2009 OF THE LD. CIT(A)-XIX, KOLKATA PERTAINING TO A.YR.2006-07. 2. THE FIRST ISSUE RAISED BY THE REVENUE IS RELATIN G TO DELETION OF ADDITION AMOUNTING TO RS.68,66,377/- IN RESPECT OF UNEXPLAIN ED CREDIT. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DOI NG THE SCRUTINY ASSESSMENT ASSESSING OFFICER ON EXAMINATION OF THE BOOKS OF AC COUNTS OF ASSESSEE NOTICED THAT THE CREDIT OF RS.68,66,377/- IS IN THE CAPITAL ACCOUNT OF ASSESSEE AND WHEN ASKED TO EXPLAIN THE NATURE AND SOURCES OF THE SAME ASSESSEE EXPLAINED THAT THE SAID AMOUNT WAS RECEIVED BY HIM BY CHEQUE FROM STATE BANK OF IN DIA, MUMBAI DATED 17.02.2006. ON ACCOUNT OF SURRENDER VALUE OF INDIA MILLENNIUM D EPOSIT (IMD) ASSESSEE FURTHER 2 SUBMITTED THAT HE HAD RECEIVED GIFT OF IMD BONDS CE RTIFICATE NO.D 116080 AND D 116079 DATED 24.02.2003 HAVING VALUE OF USD 50,000 EACH FROM SHRI CHHAJER KESHARI CHAND A NRI WHO HAD AVAILED THIS SCHEME FOR MULATED BY STATE BANK OF INDIA AND GIFTED THE SAID BONDS TO ASSESSEE ON 24.2.2003 BY MAKING ENDORSEMENT ON THE BACK OF THE CERTIFICATE ITSELF. HOWEVER, WHILE DONG THE SCRUTINY ASSESSMENT ASSESSING OFFICER IS OF THE VIEW THAT THERE WAS NO VALID GIFT , THE PROFORMA ON THE REVERSE SIDE OF THE BOND SIGNED BY SHRI CHHAJED ON 24.02.2003 WAS G ENERAL IN NATURE AND THAT WHICH HAD NOT SPECIFICALLY STATED THAT BONDS WERE GIFTED WITHOUT ANY CONSIDERATION BY SHRI K.C.CHHAJED. SHRI CHHAJED WAS ONLY A CASUAL ACQUAIN TANCE WITH ASSESSEE. THEREFORE HE MADE AN ADDITION OF RS.68,66,377/- U/S 68 AS UNE XPLAINED CREDIT. 3.1. ON APPEAL LD. CIT(A) HAS DELETED THE SAME BY O BSERVING THAT : (10) I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AS WELL AS THE REASONS GIVEN BY THE A.O. FOR MAKING ADDITION OF RS.68,66,377/- U/S. 68 OF THE I.T. ACT. I HAVE TAKEN INTO CONSIDERATION THE DOCUMENTS FILED BY THE APPEL LANT AND THE CASE LAWS RELIED UPON BY HIM. I HAVE ALSO GONE THROUGH THE ASSESSMENT REC ORDS. DURING THE RELEVANT PREVIOUS YEAR, THE APPELLANT HAS CREDITED AN AMOUNT OF RS.68 ,66,377/- IN HIS CAPITAL ACCOUNT BEING THE REDEMPTION/MATURITY VALUE OF IMD BONDS CL AIMED TO BE RECEIVED BY HIM FROM A NON-RESIDENT INDIAN, NAMED AS SHRI KESHARI C HAND CHHAJER STAYING IN HONG KONG, ON 24.2.2003. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED BY THE APPELLANT THAT THE SAID IMD BONDS WERE MATUR ED ON 29.12.2005 AND AS A RESULT HE HAS RECEIVED AMOUNT OF RS.68,66,377/- FROM STATE BANK OF INDIA, NRI BRANCH, MUMBAI, VIDE A CHEQUE DT. 17.2.2006. IN SUPPORT OF HIS CLAIM, THE APPELLANT HAS FILED COPIES OF IMD BONDS ISSUED BY STATE BANK OF INDIA, COPIES OF REDEMPTION APPLICATION FORM AND COPY OF HIS BANK STATEMENT ALONG WITH COPY OF CHEQUE DATED 17.2.2006. HOWEVER, THE CLAIM OF THE APPELLANT WAS NOT ACCEPTE D BY THE A.O. FOR THE REASON THAT SHRI K. C. CHHAJER WAS NOT A BLOOD RELATION OF THE APPELLANT, THE GIFT WAS NOT EVIDENCED BY A GIFT DEED, THE ALLEGED GIFT WAS NOT APPEARING IN THE BALANCE SHEET FILED FOR ASSESSMENT YEAR 2003-04 AND THERE WAS NO EVIDEN CE THAT THE IMD BONDS WERE GIFTED BY SHRI K. C. CHHAJER TO THE APPELLANT WITHO UT ANY CONSIDERATION. ON THE BASIS OF VARIOUS OBSERVATIONS AS MENTIONED IN THE ASSESSM ENT ORDER, IT WAS CONCLUDED BY THE A.O. THAT THE APPELLANT HAS BROUGHT HIS OWN UNACCOU NTED CASH IN THE BOOKS OF ACCOUNTS IN THE GARB OF ALLEGED GIFT. IT WAS ALSO O BSERVED BY THE AO THAT EVEN IF IT IS CONSIDERED THAT THE APPELLANT HAS RECEIVED GIFT FRO M SHRI CHAJJER, THE AMOUNT OF RS.68,66,377/- IS TAXABLE U/S. 56(2)(V) BECAUSE THE DONOR WAS NOT A RELATIVE OF THE APPELLANT. ON THE OTHER HAND, THE APPELLANT HAS CON TENDED THAT HE HAD RECEIVED GIFT OF TWO IMD BONDS OF 50,000 USD EACH FROM SHRI K. C. CH HAJER ON 24.2.2003 WHICH IS EVIDENCED BY THE COPIES OF IMD BONDS CERTIFICATE FI LED BEFORE THE A.O. IT WAS ARGUED BY THE APPELLANT THAT THERE WAS NO REQUIREMENT OF A GIFT DEED BECAUSE ON THE REVERSE SIDE OF THE BONDS CERTIFICATE THE SPACE WAS PROVIDE D FOR EXECUTING A GIFT BY THE OWNER OF THE BOND IN FAVOUR OF ANY OTHER PERSON. IN THE C ASE OF APPELLANT, THE DONOR HAS SIGNED ON THE BACK SIDE OF THE CERTIFICATE ON 24.2. 2003 TO EVIDENCED THE GIFT MADE IN 3 FAVOUR OF THE APPELLANT. THE APPELLANT HAS ALSO PUT HIS SIGNATURE ON THE, SAID. BONDS CERTIFICATES ON RECEIPT OF SAID GIFT. (11) ON PERUSAL OF COPY OF IMD BONDS CERTIFICATES ISSUED BY THE STATE BANK OF INDIA, IT IS SEEN THAT ON THE REVERSE SIDE OF THE CERTIFIC ATE THE TERMS AND CONDITIONS OF THE SCHEME OF IMD ARE MENTIONED. WITH REGARD TO TERMS AND CONDITIONS OF GIFTS/TRANSFERS, ON THE CERTIFICATE, IT IS MENTIONE D AS UNDER : THE CERTIFICATE CAN BE GIFTED BY NRIS (EXCEPT MINO RS)/OCB/BANKS ACTING IN FIDUCIARY CAPACITY ON BEHALF OF NRIS/OCBS, ONCE ONL Y, TO ANY PERSON RESIDENT IN INDIA OR TO ANY CHARITABLE TRUSTS RECOGNIZED UNDER THE IN COME TAX ACT, 1961 IN INDIA. ALL BENEFITS UNDER THE IMDS WILL PASS ON TO THE DONEE A S WELL, INCLUDING THE FACILITY FOR PRE-MATURE ENCASHMENT, EXCEPT THAT RESIDENT DONEES WILL NOT BE ELIGIBLE TO TRANSFER THE CERTIFICATE. THE CERTIFICATE IS TRANSFERABLE BETWEE N NRIS/OCBS/BANKS ACTING IN FIDUCIARY CAPACITY ON BEHALF OF NRIS/OCBS BY ENDORS EMENT AND DELIVERY. THE CERTIFICATE IS ALSO TRANSFERABLE BY ENDORSEMENT AND DELIVERY BY NRIS/OCBS/BANK ACTING IN FIDUCIARY CAPACITY ON BEHALF OF NRIS/OCBS TO A RESIDENT INDIAN/CHARITABLE TRUST IN INDIA THROUGH GIFT ONLY. THE GIFT/TRANSFER WILL NEED TO BE REGISTERED WITH SBI, NRI BRANCH, MUMBAL ON PAYMENT OF SERVICE FEES PRESC RIBED FOR THIS PURPOSE AND ON SUBMITTING A STATEMENT BY THE PARTIES IN THE PRESCR IBED FORM. SUCH A FEE WILL BE USD 10 OR RS.500/- PER IMD CERTIFICATE BY WAY OF BANK B RAFT FAVOURING SBI, NRI 8RANCH, MUMBAI. BELOW THESE CONDITIONS, A FORMAT OF REQUEST FOR REC ORDING THE TRANSFER HAS BEEN PROVIDED. IN THAT FORMAT, BOTH THE TRANSFEROR/DONOR AND TRANSFEREE/DONEE ARE REQUIRED TO SIGN ALONG WITH THE PLACE AND DATE. IN THE CASE OF APPELLANT, THE FORMAT OF REQUEST HAS BEEN SIGNED BY BOTH DONOR SHRI K. C. CHHAJER AN D THE APPELLANT. IN THE OPINION OF A.O., FROM THE SAID FORMAT IT IS NOT PROVED THAT AS TO WHETHER THE IMD CERTIFICATES WERE RECEIVED BY WAY OF GIFT OR THEY WERE TRANSFERR ED IN THE NAME OF THE APPELLANT BY PAYING A CONSIDERATION BECAUSE IN THE FORMAT OF REQ UEST WHERE THE SIGNATURES WERE PUT BY BOTH THE PERSONS, THE WORDS TRANSFEROR AND TR ANSFEREE WERE NOT STRIKED OFF. FOR THIS REASON, THE A.O. WAS OF THE OPINION THAT THERE WAS A GREAT EVIDENTIAL VALUE OF THE GIFT DEED. I AM OF THE OPINION THAT THE A.O. WAS NO T JUSTIFIED TO DOUBT TO SUCH AN EXTENT THAT IF THE WORDS TRANSFEROR AND TRANSFEREE WER E NOT STRIKED OFF, THE GIFT WOULD NOT BE A GENUINE GIFT AND THE APPELLANT HAS INTRODUCED HIS OWN UNACCOUNTED CASH IN THE BOOKS OF ACCOUNTS IN THE GARB OF GIFT, WHILE THERE IS NO EVIDENCE TO PROVE THAT ANY CONSIDERATION WAS PASSED ON BY THE APPELLANT TO SHR I CHHAJER AS A CONSIDERATION FOR GIFT. THE A.O. HAS ALSO DOUBTED THE TRANSFER OF THE GIFT FOR THE REASON THAT IF THE GIFT WAS RECEIVED ON 24.2.2003, THE SAME SHOULD HAVE BEE N REFLECTED IN THE BALANCE SHEET FOR AY 2003-04. 1 AM OF THE OPINION THAT THE A.O. W AS NOT CORRECT IN HIS OBSERVATIONS, BECAUSE, AS ON 24.2.2003, THE APPELLANT HAS RECEIVE D THE IMD CERTIFICATES AND THERE WAS NO WAY TO REFLECT THE BONDS IN THE BALANCE SHEE T ON THE ASSETS SIDE BECAUSE THERE WAS NO AMOUNT TO CREDIT THE SAME ON THE LIABILITY S IDE OF THE BALANCE SHEET. THE RECEIPT OF THE GIFT COULD ONLY BE REFLECTED IN THE ACCOUNTS WHEN THE IMD CERTIFICATES WERE MATURED AND THE APPELLANT HAS RECEIVED THE AMOUNT I N TERMS OF MONEY FROM THE STATE BANK OF INDIA, MUMBAI. THUS, I AM OF THE OPINION TH AT THE AO WAS NOT JUSTIFIED IN CONCLUDING THAT THE GIFT TRANSACTION WAS NOT GENUIN E AS THE SAME WAS NOT REFLECTED IN THE BALANCE SHEET AS ON 31.3.2003 AND THE GIFT WAS RECEIVED BY THE APPELLANT DURING FINANCIAL YEAR 2005-06. THE A.O. HAS NOT BROUGHT AN YTHING ON RECORD TO SUBSTANTIATE HIS CONCLUSION THAT THE GIFT WAS RECEIVED BY THE AP PELLANT DURING FINANCIAL YEAR 2005- 06. THE A.O. HAS FURTHER CONCLUDED THAT THE GIFT TR ANSACTION WAS A COLOURABLE TRANSACTION ARRANGED WITH THE MOTIVE OF BRINGING IN TO THE ACCOUNTS THE UNACCOUNTED 4 CASH IN THE GARB OF GIFT. HOWEVER, THERE IS NO MATE RIAL ON RECORD TO PROVE THAT THE GIFT WAS A COLOURABLE TRANSACTION, THEREBY INTRODUCING T HE UNACCOUNTED INCOME INTO THE BOOKS OF ACCOUNTS. MERELY FOR THE REASONS THAT THE APPELLANT COULD NOT GIVE THE REPLY OF CERTAIN QUESTIONS TO THE SATISFACTION OF THE A.O , IT CANNOT BE CONCLUDED THAT THE GIFT TRANSACTION WAS A COLOURABLE TRANSACTION. THE APPEL LANT HAS FILED A NUMBER OF DOCUMENTARY EVIDENCES BEFORE THE A.O TO PROVE THE G IFT TRANSACTIONS, HOWEVER, THE A.O. HAS NOT BROUGHT ANYTHING POSITIVE ON RECORD TO DRAW THE INFERENCE THAT THE CLAIM OF THE APPELLANT WAS NOT GENUINE AND THE APPELLANT HAS INTRODUCED HIS OWN UNACCOUNTED INCOME INTO THE BOOKS IN THE GARB OF GI FT. IN MY OPINION, THE SUSPICION CANNOT REPLACE THE REAL EVIDENTIARY DOCUMENTS. FROM THE DOCUMENTS FILED BY THE APPELLANT IT IS APPARENT THAT THE DONOR SHRI KESHAR I CHAND CHHAJER HAD PURCHASED THE IMD BONDS ON 29.12.2000 AND THE DATE OF REPAYMENT W AS 29.12.2005. THE SAID BONDS WERE GIFTED BY SHRI CHHAJER TO THE APPELLANT ON 24. 2.2003. SINCE THE REDEMPTION DATE WAS ON 29.12.2005, THE APPELLANT HAS LODGED THE IMD CERTIFICATES TO THE STATE BANK OF INDIA, NRI BRANCH, MUMBAL VIDE REDEMPTION APPLICATI ON FORM DT. 30.01.2006 AND IN TURN, THE S.B.I. HAS ISSUED A CHEQUE NO. 403390 DT. 17.2.2006 IN FAVOUR OF APPELLANT FOR AN AMOUNT OF RS.68,66,377/-. THE SAID AMOUNT WA S CREDITED IN THE CAPITAL ACCOUNT OF THE APPELLANT. IN ANY CASE, THE DONOR SHRI K. C. CHHAJER HAS FILED A CONFIRMATION IN WHICH IT WAS CONFIRMED THAT AFTER GOING THROUGH THE SCHEME FORMULATED BY THE GOVERNMENT OF INDIA VIA STATE BANK OF INDIA, HE HAD MADE INVESTMENT IN THE BONDS OUT OF HIS OWN FUNDS AND RESOURCES AVAILABLE WITH H IM AT HONG KONG. IT WAS CONFIRMED BY HIM THAT HE HAS GIFTED TWO BONDS OF US D 50000 EACH TO SHRI ABHISHEK AGARWAL ON 24.2.2003 OUT OF LOVE AND AFFECTION FOR HIM WHICH GREW BY PASSAGE OF TIME. IT WAS ALSO CONFIRMED BY HIM THAT THERE WAS N O CONSIDERATION FOR THE GIFT AND PRESENTLY HE IS OF 66 YEARS OF AGE AND AN NRI SINCE MORE THAN 35 YEARS. IT WAS FURTHER EXPLAINED BY HIM IN THE CONFIRMATION THAT HE HAS CL OSE RELATIONSHIP WITH THE APPELLANTS FAMILY SINCE PAST MORE THAN 40 YEARS OR SO. IN VIEW OF ABOVE, I AM OF THE OPINION THAT AO WAS NOT JUSTIFIED IN MAKING THE ADD ITION U/S. 68 OF THE I.T. ACT WITHOUT CONTROVERTING THE EVIDENCES PRODUCED BY THE APPELLANT AND ALSO WITHOUT BRINGING ANYTHING ON RECORD TO PROVE THAT THE APPEL LANT HAS INTRODUCED HIS OWN UNEXPLAINED CASH IN THE BOOKS OF ACCOUNTS IN THE GA RB OF GIFT AS HELD BY THE A.O. 3.2. AGGRIEVED BY THIS REVENUE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING THE LD.DR APPEARING ON B EHALF OF THE REVENUE REITERATED THE OBSERVATIONS MADE BY AO. 5. ON THE OTHER HAND, THE LD. COUNSEL APPEARING ON BEHALF OF ASSESSEE RELIED ON THE ORDERS OF THE LD. CIT(A) AND FURTHER CONTENDED THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THAT OF THE CASE WHICH WAS DECIDED BY HO NBLE ALLAHABAD HIGH COURT IN THE CASE OF KANCHAN SINGH VS CIT REPORTED IN 174 TAXMAN 383 (ALL). THE LD. CIT(A) ALSO HAS ANALYSED THE FACTS OF THE SAID DECISION OF HON BLE ALLAHABAD HIGH COURT AND 5 COMPARED THE PRESENT FACTS OF ASSESSEE WHILE DELETI NG THE ADDITION MADE BY ASSESSING OFFICER. THEREFORE, HE REQUESTED TO UPHELD THE ACTI ON OF LD. CIT(A). 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT TH AT ENDORSEMENT MADE BY SHRI KESHARI CHAND CHHAJER MADE ON THE REVERSE SIDE OF T HE CERTIFICATES IS A SUFFICIENT PROOF TO THE FACT THAT ASSESSEE HAS RECEIVED THE SA ME ON 24.02.2003 AS A GIFT AND THE LD. CIT(A) HAS RIGHTLY ANALYSED THE FACTS AND BY RELYIN G ON THE DECISIONS OF HONBLE ALLAHABAD HIGH COURT DELETED THE ADDITIONS. IT IS F URTHER OBSERVED THAT AO HAS BROUGHT NO EVIDENCE ON RECORD TO SHOW THAT THE DEPOSIT IN T HE BANK ACCOUNT WAS THE INCOME FROM OTHER SOURCES OF ASSESSEE FOR THE YEAR UNDER C ONSIDERATION. THEREFORE WE ARE OF THE VIEW THAT NO INTERFERENCE IS REQUIRED ON THIS I SSUE. 7. IN THE RESULT GROUND NO.1 OF THE REVENUES APPE AL IS DISMISSED. 8. THE SECOND ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS RELATING TO DELETION OF ADDITION OF RS.20,82,170/- AS UNEXPLAINED CREDIT U/ S 68. 9. THE BRIEF FACTS OF THE CASE ARE THAT WHILE DOIN G THE SCRUTINY ASSESSMENT THE AO NOTICED THAT THE DETAILS OF LONG TERM CAPITAL GAINS WERE SUBMITTED BY ASSESSEE ALONG WITH THE RETURN WHICH ARE AS UNDER :- PURCHASE SALE COMPANYNAME DATE RATE AMOUNT QNTY. DATE RATE AMOUNT PROFIT POONAM PHAR 25.3.03 7.02 24,570/- 3500 16.8.05 302.8694 1060,042.90 1,035,472.90 POONAM PHAR 25.3.03 7.02 7,020/- 1000 23.8.05 301.9694 301,969.40 394,949.40 POONAM PHAR 25.3.03 7.02 15,444/- 2200 24.8.05 303.2694 667,192.68 651,748.68 47,034 20,29,204.98 20,82,170.98 9.1. HOWEVER, ASSESSING OFFICER HAS NOT BELIEVED TH E CONTENTION OF ASSESSEE BY OBSERVING THAT THE KOLKATA STOCK EXCHANGE HAS SPECI FICALLY DENIED THE FACT THAT M/S.AHILYA COMMERCIAL PVT. LTD. HAS NOT MADE ANY T RANSACTIONS ON ONLINE TRADING SYSTEM OF THE EXCHANGE ON 25.03.2003 AS CONTENDED B Y ASSESSEE. HE FURTHER BASED ON 6 THE VARIOUS CORROBORATIVE EVIDENCES GATHERED ON THE FUNCTIONING OF THESE COMPANIES AND BASED ON SEBI INSTRUCTIONS/CIRCULARS FINALLY CO NCLUDED THAT THE ENTIRE TRANSACTIONS OF ALLEGED SALES AND PURCHASES OF SHARES AND EARNIN G OF LONG TERM CAPITAL GAINS IS COLOURABLE. IN ANY CASE, THE PURCHASE TRANSACTION O F SHARES FROM THE BROKER IS NOT GENUINE FOR THE REASON THAT THE TRANSACTION HAS NOT BEEN ROUTED THROUGH THE STOCK EXCHANGE AND HAS NOT BEEN INFORMED TO THE STOCK EXC HANGE BY THE CLOSE OF THE DAY BY THE CONCERNED BROKER. 9.2. IN THE CIRCUMSTANCES, NO EXEMPTION U/S 10(38) WOULD BE AVAILABLE TO THE ASSESSEE ON THE ALLEGED LONG TERM CAPITAL GAIN OF R S.20,82,170/-. THE LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE IS HELD TO BE FI CTITIOUS. IT IS HELD THAT THE ASSESSEE HAS ACTUALLY NOT EARNED THE CAPITAL GAINS AS CLAIME D BY HIM WHEREAS THE ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MONEY INTO THE BOOKS AND CREDITED THE SAME IN THE FORM OF LONG TERM CAPITAL GAINS. THE AMOUNT OF RS.2 0,82,170/- IS TREATED AS UNEXPLAINED CREDIT IN THE BOOKS OF THE ASSESSEE AND IS ADDED TO THE INCOME OF THE ASSESSEE. 9.3. ON APPEAL LD. CIT(A) AFTER TAKING INTO CONSID ERATION THE VARIOUS SUBMISSIONS MADE BY ASSESEE WHICH WERE INCORPORATED IN THE IMPU GNED ORDER TREATED THE LONG TERM CAPITAL GAIN AS SHOWN BY ASSESSEE AS LONG TERM CAPITAL GAIN INSTEAD OF UNEXPLAINED CREDIT U/S 68 OF THE IT ACT BY OBSERVI NG AS UNDER :- (19) I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND PERUSED THE ASSESSMENT ORDER AND REASONS FOR MAKING THE ADDITION U/S. 68 O F THE I.T. ACT. I HAVE ALSO GONE THROUGH THE ASSESSMENT RECORDS MAINTAINED BY THE A. O. DURING THE RELEVANT PREVIOUS YEAR, THE APPELLANT HAS SOLD SHARES OF POONAM PHARM A LTD. WHICH RESULTED INTO GAIN OF RS.20,82,170/-. THE SAID GAIN WAS RETURNED BY THE A PPELLANT AS LONG TERM CAPITAL GAIN AND CLAIMED THE EXEMPTION U/S. 10(38) OF THE I .T.ACT. HOWEVER, THE A.O. HAS TREATED THE GAIN ON SALE OF SHARES AS UNEXPLAINED C ASH CREDIT U/S. 68 OF THE I.T. ACT IN THE HANDS OF THE ASSESSEE. ON PERUSAL OF DOCUMENTS FILED BY THE APPELLANT, IT IS OBSERVED FROM THE BALANCE-SHEET AS ON 31.3.2003 THA T THE APPELLANT HAS SHOWN INVESTMENT IN THE SHARES OF POONAM PHARMA TOTALLING TO 6700 SHARES PURCHASED ON 25.3.2003. AS PER THE DEMAT ACCOUNT MAINTAINED WITH DEPOSITORY PARTICIPANT M/S. DAULAT SECURITIES LTD., THE SAID 6700 SHARES WERE C REDITED IN THE DE-MAT ACCOUNT OF THE APPELLANT. THESE SHARES WERE ALSO REFLECTED IN THE BALANCE SHEET AS ON 31.3.2004 AND 31.3. 2005. THUS, IT IS OBSERVED FROM THE BALANCE S HEET AS WELL AS DE-MAT ACCOUNT THAT AS ON 3 1.3.2005, THE APPELLANT WAS HOLDING 6700 SH ARES OF POONAM PHARMA. DURING THE RELEVANT PREVIOUS YEAR, I.E., A.Y. 2006-07, THE APPELLANT HAD SOLD 6700 SHARES OF POONAM PHARMA LTD. THE SHARES SO SOLD BY THE APPELL ANT HAS BEEN DEBITED IN THE DE- MAT ACCOUNT OF THE APPELLANT AND HE HAS RECEIVED TH E SALE PROCEEDS BY CHEQUE FROM THE SAID BROKER. 7 (20) THE A.O. HAS NOT ACCEPTED THE CLAIM OF THE AP PELLANT MERELY ON THE BASIS OF INFORMATION RECEIVED FROM THE CALCUTTA STOCK EXCHAN GE. IN THE OPINION OF A.O., THE PURCHASE MADE BY THE APPELLANT IN THE SCRIP OF POON AM PHARMA LTD. WAS NOT GENUINE, BECAUSE IN THE CASE OF SCRIP OF POONAM PHARMA, THE BROKER M/S. AHILYA COMMERCIAL PVT. LTD. HAD NOT CARRIED OUT THE TRANSACTION ON TH E ON-LINE TRADING SYSTEM OF THE EXCHANGE AND IF THE TRANSACTION HAD BEEN DONE OUT O F STOCK EXCHANGE, SAME WAS NOT INFORMED TO THE STOCK EXCHANGE. UNDER THE CIRCUMSTA NCES, IT WAS HELD BY THE A.O. THAT THE PURCHASE TRANSACTIONS OF THIS SCRIP WAS NO T GENUINE AND CONSEQUENTLY, THE SALE TRANSACTIONS WERE ALSO NOT GENUINE. ON THE OTHER HA ND, THE APPELLANT HAS PRODUCED THE EVIDENCES IN THE FORM OF RECORDING OF INVESTMENT IN PRECEDING YEARS BALANCE SHEETS, CONTRACT NOTES, BANK STATEMENT AND DEMAT ACCOUNT. W HILE ARRIVING ON HIS CONCLUSION, THE AO HAD ALSO MADE OBSERVATIONS REGARDING PRICE R IGGING AND SUSPENSION OF BROKER FROM THE EXCHANGE ETC. HOWEVER, I AM OF THE OPINION THAT MERELY FOR THE REASON THAT EITHER THE BROKER HAS NOT REPORTED THE OFF-MARKET T RANSACTION TO THE EXCHANGE OR THERE WAS ANY DISCREPANCY ON ACCOUNT OF TRADE NUMBERS REC ORDED ON CONTRACT NOTES VIS-- VIS IN THE RECORD OF THE EXCHANGE, THE PURCHASE TRA NSACTIONS MADE BY THE APPELLANT CANNOT BE TREATED AS FICTITIOUS OR NOT GENUINE. THE EVIDENCES PRODUCED BY THE APPELLANT CANNOT BE BRUSHED ASIDE MERELY ON THE BASIS OF INFO RMATION RECEIVED FROM THE STOCK EXCHANGE WITHOUT BRINGING ANYTHING POSITIVE ON RECO RD TO CONTROVERT OR TO PROVE THAT THE EVIDENCES PRODUCED BY THE APPELLANT WERE FALSE AND FICTITIOUS. IF THE BROKERS HAD NOT COMPLIED ANY RULE & REGULATION OF THE STOCK EXC HANGE, FOR THAT THE APPELLANT CANNOT BE HELD RESPONSIBLE AND HE CANNOT BE PUNISHE D FOR THE SAME. HAD THE PURCHASE TRANSACTION BEEN FICTITIOUS, THE SHARES WOULD HAVE NOT BEEN CREDITED TO THE DE-MAT ACCOUNT OF THE APPELLANT. IT IS NOT THE CASE OF THE A.O. THAT THE SHARES WHICH WERE CREDITED TO THE DEMAT ACCOUNT OF THE APPELLANT, DID NOT EXIST AT ALL. ONCE THE SHARES HAS BEEN CREDITED TO THE DEMAT ACCOUNT AND ALSO APPEARI NG IN THE BALANCE-SHEET OF THE APPELLANT FOR THE YEAR ENDED ON 31.3.2003 TO 31.3.2 005, I AM OF THE OPINION THAT THERE IS NO REASON TO DISBELIEVE THE TRANSACTIONS. FURTHE R, THERE IS NO MATERIAL ON RECORD TO PROVE THAT THERE WAS ANY CONNIVANCE BETWEEN THE BRO KER AND THE APPELLANT. AN OFF- MARKET TRANSACTION OF PURCHASE OR SALE OF THE SHARE S IS ALSO A GENUINE TRANSACTION, AND IT CANNOT BE SAID THAT IF THE SHARE TRANSACTIONS HA S NOT BEEN ROUTED THROUGH THE STOCK EXCHANGE, THE TRANSACTIONS WERE NOT GENUINE. THERE IS ALSO NO EVIDENCE TO SUGGEST THAT THE APPELLANT HAS INTRODUCED HIS OWN MONEY IN THE B OOKS OF ACCOUNT IN THE GARB OF LONG TERM CAPITAL GAINS. THE SUSPICION CANNOT REPLA CE THE REAL EVIDENTIAL DOCUMENTS. THE A.O. HAS MADE ADDITION OF RS.20,82,1 70/- U/S. 68 OF THE ACT. THE AMOUNT OF RS.20,82,170/- IS THE NET GAIN ON SALE OF SHARES SHOWN BY THE APPELLANT. IT MEANS THAT A.O. HAS NOT MADE ADDITION U/S. 68 OF TH E ENTIRE SALE PROCEEDS OF THE SHARES, BUT HAS DEDUCTED THE PURCHASE PRICE OF SHAR ES AT RS.47,034/-, WHICH IS CONTRARY TO THE CONCLUSION DERIVED BY HIM. UNDER THE CIRCUMS TANCES, I AM OF THE OPINION THAT THE A.O. WAS NOT JUSTIFIED IN TREATING THE LONG TER M CAPITAL GAINS AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE I.T. ACT. DURING THE COU RSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS RELIED ON SEVERAL DECISIONS OF HONBL E I.T.A.T., KOLKATA ON THE SIMILAR ISSUE. IN VIEW OF THE ABOVE DISCUSSION AND THE DECISIONS O F HONBLE HIGH COURT AND I.T.A.T., KOLKATA THE AO IS DIRECTED TO TREAT THE G AIN OF RS.20,82,170/- AS LONG TERM CAPITAL GAIN AS RETURNED BY THE APPELLANT AND DELET E THE ADDITION MADE U/S 68 OF THE IT ACT. 9.4. AGGRIEVED BY THIS REVENUE IS IN APPEAL BEFORE US. 8 10. AT THE TIME OF HEARING THE LD. DR APPEARING ON BEHALF OF THE REVENUE HEAVILY RELIED ON THE ORDER OF ASSESSING OFFICER AND FURTHE R POINTED OUT THAT THE OTHER CORROBORATIVE EVIDENCES COLLECTED BY AO AT THE TIME OF ASSESSMENT SUGGEST THAT ASSESSEE HAS PURCHASED THE SAID SHARES ONLY ON THE DATES MENTIONED IN THE DEMAT ACCOUNT. THEREFORE, HE REQUESTED TO UPHELD THE ACTI ON OF AO IN TREATING THE CAPITAL GAINS AS SHORT TERM CAPITAL GAIN AS AGAINST LONG TE RM CAPITAL GAIN CONSIDERED BY LD. CIT(A). 11. ON THE OTHER HAND, THE LD. COUNSEL APPEA RING ON BEHALF OF ASSESSEE RELIED ON THE ORDERS OF THE LD. CIT(A) AND FURTHER RELIED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS KEDARNATH AGARWAL WHEREIN THE HONBLE HIGH COURT HAS UPHELD THE TRIBUNALS ACTION IN THE SIMIL AR FACTS AND CIRCUMSTANCES. THEREFORE HE REQUESTED TO TAKE THE DATES MENTIONED IN THE CONTRACT NOTES AS THE ACTUAL DATE OF PURCHASE AND TREAT THE CAPITAL GAINS AS LON G TERM CAPITAL GAINS AND THUS CONFIRM THE ORDER OF LD. CIT(A) ON THIS ISSUE. 12. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREFUL MATERIAL AVAILABLE ON RECORD, RECENTLY THE HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF CIT VS KEDARNATH AGARWAL (SUPRA) HAS OBSERVED AS UNDER :- THE APPELLATE AUTHORITY FURTHER CAME TO THE CONCLU SION THAT THE ASSESSING AUTHORITY HAD DISALLOWED THE CAPITAL LOSS OF RS.15,29,049/-ON LY ON THE BASIS OF INFORMATION SUBMITTED BY THE STOCK EXCHANGE AND THE ASSESSING O FFICER HIMSELF HAD NOT BROUGHT ANYTHING ON RECORD TO PROVE THAT THE TRANSACTIONS O F PURCHASE AND SALE OF THE SHARES IN WHICH THE ASSESSEE HAD SUFFERED THE LOSS WERE NO T GENUINE TRANSACTIONS. IT IS FURTHER RECORDED BY THE APPELLATE AUTHORITY THAT THE ASSESS EE HAD SUBMITTED THE COMPLETE DOCUMENTARY EVIDENCES TO PROVE HIS TRANSACTIONS OF PURCHASE AND SALE OF THOSE SHARES AND THE ASSESSING OFFICER COULD NOT PROVE THAT THE EVIDENCE SUBMITTED BY THE ASSESSEE WAS EITHER FALSE OR FICTITIOUS. IT WAS FURTHER POIN TED OUT THAT THE ASSESSEE HAD PURCHASED AND SOLD THE SHARES THROUGH THE REGISTERE D SHARE BROKERS OF THE CSE, THE DELIVERY OF SHARES WAS RECEIVED OR GIVEN THROUGH TH E DEMAT ACCOUNT AND THE PAYMENTS WERE MADE OR RECEIVED THROUGH THE ACCOUNT PAYEE CHE QUES AND THE CORRECTNESS OF THOSE DOCUMENTS WAS BEYOND ANY DOUBT. 12.1. KEEPING IN VIEW OF THE ABOVE FACT THAT S INCE THE HONBLE HIGH COURT HAS HELD THAT WHEN ONCE THE ASSESSEE HAD SUBMITTED THE COMPL ETE DOCUMENTARY EVIDENCE TO PROVE ITS TRANSACTIONS OF PURCHASE AND SALE OF SHAR ES BY PROVIDING CONTRACT NOTES, 9 DEMAT ACCOUNT AND BANK TRANSACTIONS AND IN THE ABSE NCE OF ANY CONTRARY EVIDENCE BROUGHT ON RECORD BY AO TO TREAT THE SAID TRANSACTI ONS AS FALSE OR FICTITIOUS SIMPLY BASED ON THE INFORMATION SUBMITTED BY STOCK EXCHANG E THE REVENUE AUTHORITIES IS NOT JUSTIFIED TO DOUBT THE GENUINENESS OF THE TRANSACTI ONS. WE FIND NO INFIRMITY IN THE ORDERS OF THE LD. CIT(A) TO BE INTERFERED WITH AND WE CONFIRM THE SAME. 13. IN THE RESULT GROUND NO.2 OF THE REVENUES APP EAL IS DISMISSED. 14. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 11.11.2011. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE:.11.11.2011. '4 / -5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1. SHRI ABHISHEK AGARWAL, 2B, ROLAND ROAD, KOLKATA-700 020. 2 THE A.C.I.T.,CIRCLE-31, KOLKATA. 3. THE CIT, 4. THE CIT(A)-XIX, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA .5 -/ TRUE COPY, '4%1/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)