The ACIT, Central Circle-4, Surat V. Smt. Kantadevi G.Sarawagi, Surat

ITA 3157/AHD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50824 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained cash credit; Earning of tax free income; Non compliance; Sham transactions
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI G. D. AGARWAL, VP AND SHRI BHAVNESH SA INI, JM) ITA NO. 3232/AHD/2010 A. Y.: 2007-08 SMT. KANTADEVI SARAWAGI, V-2131, SURAT TEXTILE MARKET, RING ROAD, SURAT VS THE A. C. I. T., CENT. CIR-4 ROOM NO.508, AAYAKAR BHAVAN, MAJURA GATE, SURAT 395 001 PA NO. ACXPS 5998 Q (APPELLANT) (RESPONDENT) ITA NO. 3157/AHD/2010 A. Y.: 2007-08 THE A. C. I. T., CENT. CIR-4 ROOM NO.508, AAYAKAR BHAVAN, MAJURA GATE, SURAT 395 001 VS SMT. KANTADEVI SARAWAGI, V-2131, SURAT TEXTILE MARKET, RING ROAD, SURAT PA NO. ACXPS 5998 Q (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI RASESH SHAH, AR DEPARTMENT BY SHRI VINOD TANWANI, SR. DR DATE OF HEARING: 30-09-2011 DATE OF PRONOUNCEMENT: 14 -10-2011 O R D E R PER BHAVNESH SAINI: BOTH THE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE O RDER OF THE ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 2 LEARNED CIT(A)-II, AHMEDABAD DATED 20-09-2010 FOR A SSESSMENT YEAR 2007-08. 2. THE ASSESSEE CHALLENGED THE ADDITION OF RS.32,21 ,302/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT BEFORE THE LEARNED CIT(A). THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAIN OF RS.27,93,559/- ON SALE OF SHARES WHICH WAS CLAIMED EXEMPT. THE SHARES WERE CLAIMED TO HAVE BEEN PURCHASED FROM THE BROKER M/S. SWAN SECURITIES PVT. LTD. IN APRIL, 2005 AND SOLD T HROUGH THE BROKER M/S. MOTILAL OSWAL SECURITIES LTD. IN MARCH, 2007. THE ASSESSING OFFICER CALLED FOR VARIOUS DETAILS AND ALSO ISSUED LETTER U/S 133(6) OF THE IT ACT TO VERIFY THE CLAIM OF PURCHASE FROM M/S . SWAN SECURITIES PVT. LTD. THE BROKER M/S. SWAN SECURITIES PVT. LTD. ALTHOUGH CONFIRMED THE PURCHASE BEING MADE BY THE ASSESSEE A ND INTIMATED THAT IT WAS OFF MARKET TRANSACTION BUT DID NOT PROV IDE VARIOUS DETAILS CALLED FOR BY THE AO TO PROVE THE TRANSFER OF SHARE S TO HIS COLLEAGUE ON THE DATE OF PURCHASE AND ALSO THE NAMES OF THE P ERSONS FROM WHOM THE SHARES WERE PURCHASED WHICH WERE SOLD TO T HE ASSESSEE AND OTHER DETAILS. ALSO THE INTIMATION OF THIS OFF MARKET TRANSACTION WAS NOT SENT BY THE BROKER TO THE STOCK EXCHANGE AS PER PRESCRIBED PROCEDURE. THE AO FURTHER OBSERVED THAT THE ASSESSE E FAILED TO ESTABLISH THAT THE SHARES WERE HELD FOR MORE THAN 1 2 MONTHS. AFTER DISCUSSING THE MATTER IN DETAIL IN THE ASSESSMENT O RDER, THE AO CONCLUDED THAT AS THE ASSESSEE AND HIS SHARE BROKER HAVE NOT FILED VARIOUS DETAILS CALLED FOR AND NOT PROVED THAT THE SHARES WERE ACTUALLY PURCHASED IN APRIL, 2005 AND HELD FOR A PERIOD OF M ORE THAN 12 MONTHS. HENCE, HE TREATED THE TRANSACTION AS SHAM T RANSACTION AND ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 3 ACCORDINGLY TREATED THE AMOUNT OF RS.32,21,304/- FO UND CREDITED IN THE ASSESSEE'S BOOKS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT AND MADE THE ADDITION THEREOF. BEFORE THE LEARNED C IT(A), THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS:- (A) THE BILLS FOR SALE, OF SHARES ISSUED BY TH E BROKER M/S. MOTILAL OSWAL SECURITIES LIMITED WERE FILED TO THE ASSESSING OFFICER WHICH GIVES ALL THE DETAILS. THE PAYMENT AGAINST THE SALE OF SHARES HAS BEEN RECEIVE D THROUGH ACCOUNT PAYEE CHEQUE. THE BILLS ALSO SHOW T HAT THE SECURITY TRANSACTION TAX AND STAMP DUTY HAS BEE N PAID. (B) THE COPY OF THE BILL ISSUED BY M/S. SWAN S ECURITIES PVT. LTD. FOR PURCHASE OF SHARES WERE SUBMITTED TO THE ASSESSING OFFICER WHICH GIVES THE DETAILS PERTAIN ING TO THE BROKER ALONGWITH THE QUANTITY OF THE SHARES PUR CHASED AND THE RATE ETC. THE COPY OF THE ACCOUNT OF THE APPELLANT AS PER BROKER'S BOOKS OF ACCOUNTS (M/S. SWAN SECURITIES PV T. LTD.) WAS ALSO FILED. (D) THE SUM OF RS.32,21,304/- REPRESENTING THE SA LE CONSIDERATION RECEIVED ON SALE OF SHARES APPEARS IN THE BANK ACCOUNT AND HAS BEEN ACCEPTED BY THE ASSESSING OFFICER AS THE AMOUNT RECEIVED. UNLESS THE SHARES W ERE PURCHASED HOW THE SAME COULD BE SOLD BY THE APPELLA NT, ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 4 (E) EVEN IF SOME OF THE DETAILS SOLICITED FROM M/S. SWAN SECURITIES PVT. LTD. U/S.133(6) OF THE I.T. AC T WERE NOT SUPPLIED BY THE SAME PARTY, THE APPELLANT CANNO T BE HELD RESPONSIBLE FOR SUCH NON COMPLIANCE AND FOR TH IS NON COMPLIANCE, THE PURCHASE TRANSACTION OR SALES CANNO T BE HELD AS BOGUS. FOR THIS, RELIANCE IS PLACED ON THE JUDGMENT OF HON'BLE KOLKATA HIGH COURT IN THE CASE OF CIT VS KORLAY TRADING CO, LTD. 232 ITR 820(CAL.) (F) THE FAILURE ON THE PART OF THE BROKER TO REPORT THE OFF MARKET TRANSACTION OF THE PURCHASE OF SHARES TO THE STOCK EXCHANGE AND ALSO FAILURE TO GIVE THE ADDRESS AND N AME OF THE PERSONS WHO SOLD THE SHARES TO THE BROKERS, CANNOT BE THE BASIS FOR TREATING THE TRANSACTION AS SHAM TRANSACTION AND CANNOT CONVERT THE PROFIT EARNED ON SALE OF SHARES INTO INCOME FROM OTHER SOURCES. FOR THIS, THE RELIANCE IS PLACED ON THE DECISION OF HON'BLE ITAT, JODHPUR BENCH .IN THE CASE OF ITO VS KUSUM LATA 105 TTJ (JD) 265. (G) THE BURDEN OF PROVING THAT THE APPARENT IS NOT REAL, IS ON THE PARTY WHO CLAIMS SO AS HELD BY THE HON'BL E SUPREME COURT, HENCE, THE ONUS WAS ON THE ASSESSING OFFICER TO PROVE THAT THE TRANSACTIONS WERE BOGUS W HICH THE ASSESSING OFFICER HAS FAILED. FURTHER, THERE IS NO EVIDENCE THAT THE APPELLANT TENDERED EQUIVALENT CAS H TO THE PURCHASE OF SHARES AGAINST THE PAYMENTS MADE BY ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 5 THEM TO THE APPELLANT BY WAY OF PURCHASE CONSIDERAT ION FOR SHARES PURCHASED BY THEM. HENCE, THE ADDITION C ANNOT BE MADE FOR UNEXPLAINED CASH CREDIT TREATING THE TRANSACTION, AS SHAM AS HELD BY THE HON'BLE ITAT AG RA BENCH IN THE CASE OF SMT. MEMO 'DEY VS ACIT 7 DTR (AGRA) (TRIB)158. (H) THE BANK STATEMENT WAS FURNISHED WHICH IND ICATES THE PAYMENT OF THE PURCHASE CONSIDERATION PAID TO T HE BROKER AND THE AMOUNT RECEIVED ON THE SALE OF SHARE S THROUGH ACCOUNT PAYEE CHEQUES. (I) THE DEMAT ACCOUNT OF THE APPELLANT ALSO I NDICATES BOTH THE PURCHASE OF THE SHARES AND THE SALES OF TH E CONCERNED SHARES. 3. THE LEARNED CIT(A) CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE DIRECTED THE AO TO REDUCE THE ADDITION AS SHORT TERM CAPITAL GAIN INSTEAD OF MAKI NG ADDITION OF UNEXPLAINED CASH CREDIT. THE APPEAL OF THE ASSESSEE WAS ACCORDINGLY ALLOWED. THE FINDINGS OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER IN PARA 4.1 AND 4.2 ARE REPRODUCED AS UNDER: 4.1 I HAVE CONSIDERED THE FACTS AND THE SUBMISSI ONS. FROM THE DETAILS SUBMITTED THE APPELLANT, THE FOLLO WING FACTS ARE REVEALED:- (I) THE BANK ACCOUNT OF THE APPELLANT SHOWS T HAT THE AMOUNT OF RS.3,00,000/- WAS PAID ON 09.03.2007 THRO UGH CHEQUE NO. 143101 AGAINST THE PAYMENT MADE FOR THE PURCHASE OF SHARES AND THE AMOUNT OF RS.2,35,760/- ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 6 RS.5,66,153/- RS.4,89,541/-, RS.10,40,866/-, RS.5,83,041/-, AND RS.3,00,154/- HAVE BEEN DEPOSITE D IN THE ACCOUNT ON VARIOUS DATES MARCH,2007 IN RESPECT OF SALE OF SHARES. (II) THE DEMAT ACCOUNT SUBMITTED BY THE APPEL LANT REVEALS THAT THE OPENING BALANCE IN RESPECT OF VARI OUS SHARES CLAIMED TO HAVE BEEN PURCHASED ARE SOLD IS Z ERO AT THE BEGINNING OF MARCH,2007 AND ALSO ZERO AT. TH E END MARCH,2007. HOWEVER, DURING THE MONTH; OF MARCH,2 007, THE PURCHASE AND SALE OF VARIOUS SHARES APPEARS. FO R EXAMPLE, IN RESPECT OF SHARES ASIAN ELECTRONICS, 20 0 SHARES PURCHASED ON 14.03.2007 AND SOLD ON 15.03.20 07, PURCHASE OF 350 SHARES ON 15.03.2007 AND SALE ON 16.03.2007 THEREOF. THE PURCHASE OF 700 SHARES O N 20.03.2007 AND SALE ON 21.03.2007 THEREOF. THE PURCHASE OF 250 SHARES ON 21.03.2007 AND SALE ON 22.03.2007 THEREOF. SIMILARLY, IN RESPECT OF OTHER SHARES ALSO THE PURCHASES ARE ON VARIOUS DATES IN MARCH,20 07 AND THE SALE OF RESPECT OF SHARES ARE WITHIN ONE OR TWO DAYS FROM THE PURCHASE IN THE MONTH MARCH,2007 ITSE LF. THUS, THE DEMAT ACCOUNT SHOWS THAT ALL THE SHARE WE RE PURCHASED AND SOLD WITHIN TWO THREE DAYS ITSELF AND ALL IN THE MONTH OF MARCH,2007. THUS, THE SHARES WERE HELD ONLY FOR TWO-THREE DAYS IN THE MONTH OF MARCH,2007 AND NOT HELD FROM APRIL,2005 TO MARCH,2007. (III) THE SALE OF SHARES BY THE ASSESSEE IS CO NFIRMED BY THE BROKER M/S. MOTILAL OSWAL SECURITIES LIMITED AND THE AMOUNT IS RECEIVED IN THE BANK ACCOUNT IN MARCH.2007. (IV) THE CLAIM OF PURCHASE OF SHARES IN THE MONTH OF APRIL,2005, IS NOT PROVE AS THE PAYMENT IS MADE IN THE MONTH OF MARCH,2007 AND THE SHARES ARE APPEARING IN THE DEMAT ACCOUNT AS PURCHASE ONLY ON THE DATE OF MONTH OF MARCH,2007 AND NOT IN APRIL.2005. ALTHOUGH THE BROK ER M/S. SWAN SECURITIES PVT. LTD. CLAIMED TO HAVE SOLD THE SHARES TO THE APPELLANT IN APRIL,2005 BUT HE HAS NO T GIVEN VARIOUS DETAILS LIKE FROM WHOM THE SHARES WERE ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 7 PURCHASED AND ALSO NOT INTIMATED THE TRANSACTION TO THE STOCK EXCHANGE AS PER PRESCRIBED PROCEDURE. HENCE, THE PURCHASE DATE CANNOT BE TAKEN AS APRIL.2005. 4.2 IN VIEW OF THESE FACTS, IT IS EVIDENT THAT THE APPELLANT HAS RECEIVED THE AMOUNT ON SALE OF SHARES HENCE, IT CANNOT BE TERMED AS UNEXPLAINED CASH CREDIT. HOWEVE R, IT IS ALSO A FACT THAT THE APPELLANT HAS NOT PROVED TH AT SHARES WERE ACTUALLY PURCHASED IN APRIL,2005 BUT EVIDENCES SUGGEST THAT IT WERE PURCHASED IN MARCH, 2007. HENC E, THE APPELLANT HAS NOT BEEN ABLE TO PROVE THAT THE S HARES WERE HELD FOR MORE THAN ONE YEAR SO IT CANNOT BE TA KEN AS LONG TERM CAPITAL GAIN. THEREFORE, IN MY VIEW, THE APPELLANT'S CLAIM THAT THE GAIN SHOULD BE TREATED A S LONG TERM CAPITAL GAIN AND ALSO TO BE TREATED AS EXEMPT INCOME IS NOT ACCEPTABLE. AT THE SAME TIME, THE ASSESSING OFFICER'S TREATMENT OF RECEIPT OF AMOUNT AS INCOME FROM OTHER SOURCES U/S.68, IS ALSO NOT JUSTIFIED AS THE EVIDENCE IS THERE THAT THE AMOUNT HAS BEEN RECEIVED FROM MOT ILAL OSWAL SECURITIES. LIMITED ON SALE OF SHARES AND ALS O EVIDENT FROM THE MOVEMENT OF SHARES AS APPEARING IN THE DEMAT ACCOUNT. THEREFORE, THE CORRECT APPROACH WILL BE TO TREAT THE INCOME EARNED AS SHORT TERM CAPITAL GAIN. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO R EDUCE THE ADDITION TO RS.27,93,559/- AS SHORT TERM CAPITA L GAIN INSTEAD OF MAKING THE ADDITION OF RS.32,21,304/- AS UNEXPLAINED CASH CREDIT. 4. THE ASSESSEE IN HER APPEAL CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DIRECTING THE ADDITION AS SHORT TERM CAPI TAL GAINS INSTEAD OF LONG TERM CAPITAL GAINS. THE REVENUE IN THEIR APPEA L CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITIO N ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND DIRECTING TO MAKE ADDI TION ON ACCOUNT OF SHORT TERM CAPITAL GAINS. ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 8 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE MADE PURCHASES FROM THE BROKER M/S. SW AN SECURITIES PVT. LTD. IN APRIL, 2005 AND THE SAME HAVE BEEN SOL D THROUGH THE BROKER M/S. MOTILAL OSWAL SECURITIES LTD. IN MARCH, 2007. HE HAS SUBMITTED THAT THE AO HAS NOT DOUBTED THE SALES OF THE SHARES. HE HAS REFERRED TO THE DOCUMENTS IN THE PAPER BOOK TO SHOW THAT THE ASSESSEE ENTERED INTO GENUINE TRANSACTION OF SALES AND PURCHASE OF SHARES. PB-1 IS CONFIRMATION OF M/S. SWAN SECURITIE S PVT. LTD. THROUGH WHOM THE ASSESSEE PURCHASED THE SHARES. COPY OF THE ACCOUNT WAS FURNISHED BEFORE THE AO AND ALL THE TRANSACTIONS WE RE CARRIED OUT THROUGH ACCOUNT PAYEE CHEQUES. PB-11 TO 13 ARE THE LEDGER ACCOUNTS OF M/S. SWAN SECURITIES PVT. LTD. PB-15 IS THE DEB IT NOTE OF THE SAME PARTY CHARGING INTEREST ON THE OUTSTANDING AMOUNT A GAINST THE ASSESSEE IN ACCOUNTING YEAR 2006-07. PB-16 AND 17 A RE THE LEDGER ACCOUNT FOR THE YEAR ENDING MARCH, 2006 TO SHOW THA T THE ASSESSEE MADE PURCHASES AND OF SHARES IN APRIL, 2005 WHICH A RE ALSO RECORDED IN THE BOOKS OF ACCOUNTS PROPERLY AND SHOWING CLOSI NG BALANCE AS ON 31-03-2006. PB-18 TO 22 ARE THE DEBIT NOTES OF THE BROKER FOR THE PURCHASE OF SHARES IN APRIL, 2005. PB-27 IS THE BAL ANCE SHEET OF THE ASSESSEE AS ON 31-03-2006 SHOWING LIABILITIES ON AC COUNT OF PURCHASE OF SHARES IN THE NAME OF M/S. SWAN SECURIT IES PVT. LTD. TO PROVE THAT SHARES WERE PURCHASED IN APRIL, 2005. PB -28 IS THE ASSESSMENT ORDER U/S 143 (3) OF THE IT ACT DATED 30 -04-2008 IN THE CASE OF THE ASSESSEE IN ASSESSMENT YEAR 2006-07 WHE RE RETURNED INCOME IS ACCEPTED AFTER SCRUTINY ASSESSMENT TO SHO W THAT REVENUE DEPARTMENT HAS ACCEPTED PURCHASE OF SHARES BY THE A SSESSEE IN ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 9 PRECEDING ASSESSMENT YEAR. HE HAS SUBMITTED THAT SC RUTINY ASSESSMENT COULD NOT HAVE BEEN COMPLETED WITHOUT PR OFIT & LOSS ACCOUNT AND BALANCE SHEET ON RECORD OF THE AO. HE H AS SUBMITTED THAT LAW REQUIRES THAT THE ASSESSEE SHOULD HOLD THE SHARES ON THE DATE OF THE TRANSFER; THEREFORE, THE DOCUMENTS FILE D ON RECORD CLEARLY PROVE PURCHASE OF SHARES BY THE ASSESSEE IN APRIL, 2005. HE HAS RELIED UPON THE CBDT CIRCULAR NO.704 DATED 28-04-19 95 IN WHICH IT WAS EXPLAINED THAT IN CASE THE TRANSACTIONS TOOK PL ACE DIRECTLY BETWEEN THE PARTIES AND NOT THROUGH STOCK EXCHANGE, THE DATE OF CONTACT OF SALE AS DECLARED BY THE PARTIES WAS TO B E TREATED AS DATE OF TRANSFER PROVIDED IS IT FOLLOWED UP BY ACTUAL DELIV ERY OF SHARES AND THE TRANSFER DEEDS. COPY OF THE SAME IS PLACED ON RECOR D. HE HAS FURTHER SUBMITTED THAT SALE BILLS WERE FILED BEFORE THE AO AND ALL THE SALE TRANSACTIONS WERE CONDUCTED THROUGH ACCOUNT PAYEE C HEQUES ON WHICH SECURITY TRANSACTION TAX HAS BEEN PAID AL ONG WITH STAMP DUTY. PB-2 IS THE LEDGER ACCOUNT OF THE BROKER M/S. MOTILAL OSWAL SECURITIES LTD. TO SHOW THE TRANSACTION IN A SUM O F RS.32.21 LACS. PB-4 TO 10 ARE THE BROKERS CONTRACT NOTE TO PROVE G ENUINE SALES OF THE SHARES. HE HAS, THEREFORE, SUBMITTED THAT SINCE SALES ARE NOT IN DOUBT WOULD PROVE THAT THE ASSESSEE MADE GENUINE PU RCHASES OF THE SHARES. HE HAS RELIED UPON THE ORDER OF ITAT AHMEDA BAD BENCH IN THE GROUP CASES OF SMT. VIMLARANI BIHARILAL BATRA A ND OTHERS VS ACIT IN ITA NO.762/AHD/2009 ETC. DATED 16-09-2011 AND SU BMITTED THAT THE ISSUE IS SQUARELY COVERED BY THIS ORDER OF THE TRIBUNAL. COPY OF THE SAME IS ALSO PLACED ON RECORD. HE HAS ALSO RELI ED UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS ANUPAM KAPOOR, 299 ITR 179, ORDER OF ITAT AH MEDABAD ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 10 BENCH IN THE CASE OF MUKESHKUMAR GUPTA VS ITO IN IT A 2814/AHD/2007 AND ORDER OF ITAT, AHMEDABAD BENCH IN THE CASE OF PRAKSSHCHAND SANDH VS ACIT IN ITA NO.3270/AHD/208 D ATED 24-02-2009 IN WHICH IT WAS HELD THAT PROFIT ON SHAR ES AND SALES OF SHARES OR SECURITIES CANNOT BE TREATED AS CREDIT EN TRY AS ENVISAGED U/S 68 OF THE IT ACT. HE HAS ALSO RELIED UPON THE O RDER IN THE CASE OF KUSUMLATA, 105 TTJ 265, AS WAS RELIED UPON BEFORE T HE LEARNED CIT(A) AND IN THE CASES REPORTED IN 207 ITR 148 AND 128 ITD 24. 6. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDER OF THE AO AND SUBMITTED THAT SINCE REQUISITE DETAILS WERE NOT FILED BEFORE THE AO FOR THE PURCHASE OF THE SHARES AND NO EVIDENCE O F PURCHASE OF SHARES IN 2005 WAS FILED, THEREFORE, THE AO RIGHTLY HELD THESE TO BE SHAM TRANSACTIONS. HE HAS SUBMITTED THAT NO TRANSAC TION TOOK PLACE THROUGH STOCK EXCHANGE. SINCE THE PURCHASES WERE DO UBTFUL, THEREFORE, THE SALES WERE ALSO RIGHTLY HELD TO BE D OUBTFUL. THE LEARNED DR SUBMITTED THAT IT IS NOT CLEAR WHETHER PB- 27 I. E. BALANCE SHEET AS ON 31-03-2006 SHOWING PURCHASE OF SHARES IN EARLIER YEAR WAS FILED OR NOT BEFORE THE AO. HE HAS SUBMITTED THAT SINCE I N THE DEMAT ACCOUNT SHARES WERE HELD IN MARCH, 2007, THEREFORE, CLAIM OF THE ASSESSEE WAS RIGHTLY REJECTED BY THE LEARNED CIT(A) . 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. THE ASSESSEE CLAIMED LONG TERM CAPITAL GAIN S ON SALE OF SHARES. IT WAS CLAIMED THAT SHARES HAVE BEEN PURCHA SED FROM BROKER M/S. SWAN SECURITIES PVT. LTD. IN APRIL, 2005. THE ASSESSEE FILED CONFORMATION OF THE BROKER M/S. SWAN SECURITIES PVT . LTD. BEFORE THE ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 11 AO WHO HAS CONFIRMED PURCHASE OF SHARES BY THE ASSE SSEE THROUGH THEM IN APRIL, 2005. COPY OF THE ACCOUNT WAS ALSO F URNISHED AND THE CONSIDERATION WAS MADE THROUGH BANKING CHANNEL. PB- 11 AND 13 ARE THE LEDGER ACCOUNTS OF THE PARTY TO CONFIRM PURCHAS E OF THE SHARES THROUGH BANKING CHANNEL. PB-15 IS DEBIT NOTE OF THE BROKER CHARGING INTEREST ON THE OUTSTANDING AMOUNT AGAINST THE ASSE SSEE IN ACCOUNTING YEAR 2006-07. PB-16 IS LEDGER ACCOUNT TO SHOW THAT SHARES HAVE BEEN PURCHASED BY THE ASSESSEE IN APRIL , 2005 THROUGH THE BROKER M/S. SWAN SECURITIES PVT. LTD. PB-17 IS ALSO THE STATEMENT OF BILLS CONTAINING THE CLOSING BALANCE OF THE SHAR ES PURCHASED BY THE ASSESSEE ON 31-03-2006. PB-18 TO 22 ARE THE BROKERS DEBIT NOTE TO SUPPORT THE CONTENTION OF THE ASSESSEE THAT SHARES WERE PURCHASED IN APRIL, 2005. THE ASSESSEE ALSO FILED SALE BILLS TO SHOW THAT THE SAME SHARES WERE SOLD THROUGH THE BROKER M/S. MOTILAL OS WAL SECURITIES LTD. AND PAYMENTS HAVE BEEN RECEIVED THROUGH ACCOUN T PAYEE CHEQUES ON WHICH SECURITY TRANSACTIONS TAXES AND ST AMP DUTY HAVE BEEN PAID. THE SAME IS SUPPORTED BY PB-2 WHICH IS LEDGER ACCOUNT OF THE BROKER THROUGH WHOM SHARES WERE SOLD FOR ORS .32.21 LACS. PB- 4 TO 10 ARE THE BROKERS CONTRACT NOTE TO SHOW THAT SHARES WERE SOLD IN MARCH, 2007. COPY OF THE BANK STATEMENT WAS FILED I N SUPPORT OF THE CONTENTION. PB-27 IS THE BALANCE SHEET OF THE ASSES SEE AS ON 31-03- 2006 TO SHOW OUTSTANDING LIABILITY IN THE NAME OF M /S. SWAN SECURITIES PVT. LTD. THROUGH WHOM SHARES WERE PURCH ASED. PB-28 IS THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006-07 U/ S 143(3) OF THE IT ACT AFTER SCRUTINY IN WHICH RETURNED INCOME IS A CCEPTED ON FURNISHING THE DOCUMENTS ON THE RECORD OF THE AO. T HEREFORE, IT IS UNBELIEVABLE THAT THE ASSESSEE WOULD NOT HAVE FILED THE PROFIT & LOSS ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 12 AND BALANCE SHEET FOR THE ASSESSMENT YEAR 2006-07 B EFORE THE AO. WE MAY FURTHER NOTE THAT THE AO IN THE ASSESSMENT O RDER MERELY HOLDING THAT PURCHASES ARE NOT GENUINE PRESUMED THA T SALES OF THE SHARES ARE BOGUS. THE AO HAS NOT MENTIONED EVEN THE NAME OF THE BROKERS IN THE ASSESSMENT ORDER THROUGH WHOM THE SH ARES HAVE BEEN SOLD. THE AO IGNORED ALL THE DOCUMENTARY EVIDENCES ON RECORD IN RESPECT OF THE SALES OF THE SHARES. SINCE NOTHING I S MENTIONED IN THE ASSESSMENT ORDER WITH REGARD TO SALE OF THE SHARES BY THE ASSESSEE THROUGH BROKER, THEREFORE, SALE OF THE SHARES IS NO T DOUBTED BY THE AO. SINCE THE ASSESSEE PROVED THE SOURCES OF THE SA LE PROCEEDS OF THE SHARES THROUGH IDENTIFIED PARTY WHO HAS ALSO AC KNOWLEDGED THE SAME, THEREFORE, NO ADDITION U/S 68 COULD HAVE BEEN MADE AGAINST THE ASSESSEE UNLESS PURCHASES OF THE SHARES ARE MAD E, SALES COULD NOT BE DOUBTED BY THE AO. THEREFORE, THERE IS NO UN DISCLOSED CASH CREDIT INVOLVED IN THIS CASE AND AS SUCH THE LEARNE D CIT(A) RIGHTLY HELD THAT THE SALE PROCEEDS OF THE SHARES CANNOT BE TERMED AS UNEXPLAINED CASH CREDIT. ITAT AHMEDABAD BENCH IN TH E GROUP CASES OF SMT. VIMLABRANI BIHARILAL BATRA AND OTHERS (SUPR A) CONSIDERING THE IDENTICAL ISSUE IN THE LIGHT OF THE CASE LAWS RELIE D UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE DELETED SIMILAR ADDITION A ND HELD IN PARA 10 AND 11 OF THE ORDER DATED 16-09-2011 AS UNDER: 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE CLAIMED TO HAVE SOLD SHARES OF 3 COMPA NIES NAMELY M/S, GLOBE STOCK & SECURITIES LTD., M/S. HER ALD COMMERCE LTD. AND M/S. SILICON VALLEY INFOTECH LTD. AS PER THE DETAILS NOTED IN THE ASSESSMENT ORDER, THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS FI LED ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 13 THE EVIDENCES FOR PURCHASE AND SALES OF SHARES WHIC H ARE BROKERS CONTRACT NOTE FOR PURCHASE AND SALE OF SHAR ES, TRANSACTION STATEMENT OF DEMAT ACCOUNT IN RESPECT O F CREDIT OF SHARES ON ACCOUNT OF PURCHASE AND DEBIT O N ACCOUNT OF SALES, DELIVERY INSTRUCTIONS, NOTE FOR S ALE OF SHARES, BANK STATEMENT PROVING THE RECEIPT OF SALES CONSIDERATION AND PAYMENT OF PURCHASES, COPY OF THE BALANCE SHEET OF THE EARLIER YEAR, CONFIRMATION/LED GER ACCOUNT OF THE ASSESSEE FROM THE BROKERS BOOKS OF ACCOUNTS AND THE QUOTATION OF THE STOCK EXCHANGE, L ETTER OF THE CALCUTTA STOCK EXCHANGE (PB-8) CONFIRMING SA LES MADE ON 15-04-2004 OF M/S. HERALD COMMERCE LTD. BY THE BROKER. THE PURCHASE OF SHARES OF M/S. SILICON VALLEY INFOTECH LTD. ON 21-03-2003 WAS ALSO CONFIRMED. NO DETAILS OF M/S. GLOBE STOCK & SECURITIES LTD. ARE MENTIONED. THUS, THE FINDINGS OF THE AO WERE INCORR ECT AS REGARDS THIS FACT. THE ASSESSEE SUBMITTED THAT SINC E TRANSACTIONS WERE OFF MARKET BY THE BROKERS, THEREF ORE, INFORMATION GIVEN BY THE STOCK EXCHANGE WOULD NOT B E RELEVANT TO THE MATTER IN ISSUE. DESPITE PART OF TH E TRANSACTIONS HAVE BEEN CONFIRMED THE STOCK EXCHANGE , THE PURCHASES AND SALES OF SHARES WERE FULLY SUPPOR TED BY COPIES OF THE CONTRACT NOTE AND THE DETAILS ALON G WITH ACCOUNT AND CONFIRMATION ETC. OF THE BROKERS COPIES OF WHICH ARE FILED IN THE PAPER BOOK. THE PURCHASE OF SHARES WAS DULY RECORDED AND THUS THE TRANSACTIONS WERE MA DE OUT OF DISCLOSED FUNDS AND BILLS OF PURCHASE AND SA LES OF THE SHARES WERE DULY RECORDED AND SUPPORTED BY THE DOCUMENTS. THE BROKERS THROUGH WHOM SUCH TRANSACTIO NS WERE MADE HAVE CONFIRMED THE SAME AND THE SAME CONFIRMATIONS ARE FILED IN THE PAPER BOOK. THE ASSE SSEE HAD ALSO FILED DETAILS OF THE DEMAT ACCOUNT SHOWING THE PURCHASES AND SALES OF SHARES OF THESE 3 COMPANIES. THE DOCUMENTS FILED ON RECORD PROVE THE GENUINE TRANSAC TIONS ARE RECORDED BY THE ASSESSEE THROUGH BROKERS. SOURC ES OF THE FUNDS ARE ACCOUNT PAYEE CHEQUES AND DEMAND DRAFTS AND ALL THE PAYMENTS RECORDED IN THE BANK AC COUNT. ACCORDING TO THE ASSESSEE SINCE THE SHARES ARE LIST ED WITH THE STOCK EXCHANGE, THEREFORE, IN ORDER TO CLAIM BE NEFIT U/S 112 (1) (D) OF THE IT ACT, THE ONLY REQUIREMENT WAS ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 14 NECESSARY THAT THE SHARES SHOULD BE LISTED IN A RECOGNIZED STOCK EXCHANGE. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE IT IS NOT NECESSARY THAT T HE SHARES SHOULD BE SOLD THROUGH RECOGNIZED STOCK EXCHANGE. IT IS NOT IN DISPUTE THAT ALL THE SHARES REMAINED IN DEMAT ACCOUNT OF THE PARTIES AND GENUINENESS OF THE SAME WAS NOT DOUBTED. THE IDENTITY OF THE BROKERS H AS NOT BEEN DOUBTED. EVEN IF, THE SALE TRANSACTIONS WE RE OFF MARKET TRANSACTIONS, THEY WERE PROPERLY DOCUMENTED AND SUPPORTED BY EVIDENCES. THE PURCHASE OF SHARES IN T HE EARLIER YEAR HAVE NOT BEEN DOUBTED WHICH ACCORDING TO THE ASSESSEE HAVE BEEN REFLECTED IN THE BALANCE SHE ET IN THE FINANCIAL YEAR 2002-03. THUS, THE ABOVE EVIDENC ES AND EXPLANATIONS OF THE ASSESSEE SUPPORT THE EXPLAN ATION OF THE ASSESSEE THAT THE ASSESSEE ENTERED INTO GENU INE TRANSACTIONS. THE DETAILS WOULD SHOW THAT THE ASSES SEE PROVED THE SOURCES OF THE SALE OF THE SHARES. THERE FORE, NO ADDITION WAS REQUIRED TO BE MADE U/S 68 OF THE I T ACT. UNDER THE PROVISIONS OF SECTION 68 OF THE IT ACT, T HE ASSESSEE IS REQUIRED TO PROVE THE SOURCE OF THE SUM WHICH WAS CREDITED IN THE BOOKS OF ACCOUNT MAINTAIN ED BY THE ASSESSEE. ITAT AHMEDABAD BENCH IN THE CASE OF S HRI PRAKASH CHAND S. SANDH (SUPRA) HELD THAT PROFIT ON SHARES AND SALE OF SHARES/SECURITIES CAN NEVER BE C ASH CREDIT ENTERED AS ENVISAGED IN THE PROVISIONS OF SE CTION 68 OF THE IT ACT, BECAUSE FOR CONSIDERING A CREDIT ENTRY IN THE BOOKS OF ACCOUNTS, DETAILS OF PARTY IN WHOSE NA ME THE CREDIT ENTRY APPEARS HAS TO BE THERE. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME CIT(A) WHO PASSED THE IMPUGNED ORDER HAS CONSIDERED THE IDENTI CAL ISSUE IN THE CASE OF HITESHKUMAR BABULAL SANGHVI (S UPRA) AND DELETED THE SIMILAR ADDITION VIDE ORDER DATED 3 1-10- 2007 COPY OF WHICH IS FILED AT PAGE 17 OF THE PAPER BOOK OF THE CASE LAW. THE IDENTICAL ISSUE WAS CONSIDERED BY ITAT AHMEDABAD 'B' BENCH IN THE CASE OF MAHESH KUMA R GUIPTA VS ITO IN ITA NO. 2814/AHD/2007 AND 2828/AHD/2008 DATED 07-01-2011 IN WHICH IN PARA 16 OF THE ORDER IT WAS HELD AS UNDER: ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 15 '16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD. IT WAS SUBMITTED BY T HE ASSESSEE THAT ALL THE TRANSACTIONS WERE OFF MARKET TRANSACTIONS AND WERE NOT CONDUCTED THROUGH STOCK EXCHANGE. THEREFORE, INFORMATION FURNISHED BY THE STOCK EXCHANGES WAS IRRELEVANT. THE PURCHASE AND SALES OF SHARES WERE FULLY SUPPORTED BY THE COPIES OF CONTRACT NOTES AND BILLS ALONG WITH ACCOUNT CONFIRMATION ETC. THE PURCHASES OF SHARES WERE DULY RECORDED AND THESE WERE MADE OUT OF DISCLOSED FUNDS AND THE BILLS WERE MADE BY ACCOUNT PAYEE CHEQUES. THE BILLS OF PURCHASE AND SALES OF SHARES WERE DULY RECORDED AND SUPPORTED BY THE DOCUMENTS. THE BROKERS THROUGH WHOM SUCH TRANSACTIONS WERE MADE HAVE CONFIRMED THE SAME AND SAME CONFIRMATIONS ARE FILED IN THE PAPER BOOK. THE ASSESSEE HAD ALSO FILED COPY OF DEMAT ACCOUNT SHOWING THE PURCHASES AND SALES OF THE SHARES OF THE3 COMPANIES WITH WHOM THE ASSESSEE DEALT WITH. SAME ARE FILED AT PAGE 25 AND 26 OF THE PAPER BOOK. THE PURCHASE CONTRACTS, BILLS, SALE CONTRACTS AND CONFIRMATIONS OF THE BROKERS ARE ALSO FILED IN THE PAPER BOOK TO SHOW THAT GENUINE TRANSACTIONS ARE RECORDED BY THE ASSESSES THROUGH THE BROKERS. THE SOURCES OF THE FUNDS ARE ACCOUNT PAYEE CHEQUES AND ALL THE PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES. OUT OF THE 3 COMPANIES WHOSE SHARES WERE TRANSACTED, THE SHARES OF M/S. ELTORL LTD. AND M/S. HAZOOR MEDIA WERE LISTED ON AHMEDABAD STOCK EXCHANGE AND ON BOMBAY STOCK EXCHANGE. THE SHARES OF M/S. SARITA SOFTWARE WERE ORIGINALLY LISTED ON BOMBAY STOCK EXCHANGE AS PER EXPLANATION OF THE ASSESSEE. THEREFORE, THE TRANSACTIONS CONDUCTED BY THE ASSESSEE CANNOT BE TREATED AS ILLEGAL. THE ABOVE EVIDENCES PRODUCED BEFORE THE AUTHORITIES BELOW CLEARLY PROVE THAT THE ASSESSEE ENTERED INTO GENUINE TRANSACTIONS OF SHARES. ALL THE SHARES REMAINED IN THE DEMAT ACCOUNT OF THE PARTIES AND GENUINENESS OF WHICH IS NOT DOUBTED. THE SALES OF SHARES ARE SUPPORTED BY ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 16 THE DETAILS ISSUED BY THE BROKERS. PAYMENTS WERE ISSUED BY ACCOUNT PAYEE CHEQUES. THE IDENTITY OF THE BROKERS HAVE NOT BEEN DOUBTED. EVEN IF THE SALE TRANSACTIONS WERE OFF MARKET TRANSACTIONS, THEY WER E PROPERLY DOCUMENTED AND SUPPORTED BY THE ABOVE EVIDENCES. THE ABOVE FACTS AND EVIDENCES ON RECORD CLEARLY SUPPORT THE CASE OF THE ASSESSEE THA T THE ASSESSEE ENTERED INTO THE GENUINE TRANSACTIONS. THE DETAILS OF THE SOURCES OF THE SALE OF SHARES HAVE BEEN PROVED. THEREFORE, NO ADDITION U/S 68 OF THE IT ACT COULD BE MADE AS IS MADE BY THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME CIT(A) WHO PASSED THE IMPUGNED ORDER HAS CONSIDERED IDENTICAL ISSUE IN THE CASE OF SHRI SANJAYKUMAR AGARWAL (SUPRA) AND DELETED THE SIMILAR ADDITION VIDE ORDER DATED 29-05-2007 COPY O F WHICH IS FILED AT PAGE 23 OF THE PAPER BOOK. THE ORDER OF THE LEARNED CIT(A) IN THE CASE OF SHRI SANJAYKUMAR AGARWAL HAS BEEN CONFIRMED BY THE TRIBUNAL IN ITA NO.3142/AHD/2007 DATED 12-02- 2010 AND PARA 7 OF THE ORDER OF THE TRIBUNAL READS AS UNDER: '7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS OF THE CASE AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS CALLED FOR THE REMAND REPORT AND THE REMAND REPORT OF THE A. O. IT WAS SEEN THAT CSE VIDE THEIR LETTER HAD CLEARLY CONFIRMED THAT THE SHARES OF BOTH THE COMPANIES WERE LISTED WITH THE EXCHANGE. WE FIND THAT THE GENUINENESS OF THE TRANSACTIONS OF PURCHASE AND SALES OF SHARES. IN THE REMAND REPORT IT WAS CLEARLY MENTIONED THAT THE TRANSACTION HAS BEEN CLEARLY CONFIRMED BY THE BROKERS BUT ALSO THROUGH SEPARATE LETTER ISSUED BY THE BROKERS DT, 6.3.2006, WE FIND THAT THE CIT(A) HAS CALLED FOR THE REMAND REPORT AND THE INQUIRIES WERE CONDUCTED TO ASCERTAIN WHETHER OR NOT TRANSACTIONS EVEN THOUGH THEY WERE ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 17 CONDUCTED ON-LINE IT HAS BEEN DULY REPORTED BY EXCHANGE AS REQUIRED BY THE GUIDELINES ISSUED BY THE SEBI. THE AO HAS FURNISHED REPORT DT. 24.4.2007 WHEREIN IT HAS BEEN MENTIONED THAT THE BROKERS AND THE DEPOSITORY HAVE CONFIRMED THE SAID SHARE TRANSACTIONS. THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) IS JUSTIFIED IN DELETING THE SAME AND OUR INTERFERENCE IS NOT REQUIRED.' THE SAME DECISION IS ALSO CONSIDERED BY ANOTHER BEN CH OF THE TRIBUNAL IN THE CASE OF SHETH HEENA AKSHAY V S DCIT (SUPRA) AND ADDITION HAS BEEN DELETED (PB-5). THESE FACTS WOULD PROVE THAT THE ADDITION MADE IN T HE CASE OF SHRI SANJAYKUMAR AGARRWAL HAS BEEN DELETED BY THE LEARNED CIT(A) AND HIS APPELLATE ORDER HAS BEEN CONFIRMED BY THE TRIBUNAL. THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI SANJAYKUMAR AGA RWAL, WE DO NOT FIND IT TO BE A FIT CASE FOR CONFIRMING T HE ADDITION. THE LEARNED COUNSEL FOR THE ASSESSEE A LSO RELIED UPON THE DECISION OF THE HON'BLE PUNJAB & HA RYANA HIGH COURT IN THE CASE OF CIT VS ANUPAM KAPOOR (SUP RA) IN WHICH PURCHASE AND SALE WAS ACCEPTED BY THE DEPARTMENT AND SALE PROCEEDS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND HAVE BEEN ACCOUNTED FOR I N THE ACCOUNTS OF THE ASSESSEE. THE SHARES WERE LISTE D AND TRANSACTIONS TOOK PLACE THROUGH REGISTERED BROKERS OF THE STOCK EXCHANGE. THE DEPARTMENTAL APPEAL WAS ACCORDINGLY DISMISSED FINDING NO SUBSTANTIAL QUESTI ON OF LAW. THE ABOVE FACTS WOULD PROVE THAT THE ASSESSEE EXPLAINED GENUINE TRANSACTION OF SALE AND PURCHASE OF THE SHARES. THE SOURCES OF THE SALE OF SHARES ARE EXPLA INED THROUGH EVIDENCE AND MATERIAL ON RECORD. CONSIDERIN G THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE ABOVE DECISIONS AND EVIDENCES ON RECORD, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE WRONGLY MADE T HE ADDITION U/S 68 OF THE IT ACT. THE ORDERS OF THE AU THORITIES BELOW ARE ACCORDINGLY SET ASIDE AND THE ADDITION IS ACCORDINGLY DELETED. IN THE RESULT, GROUND NO.2 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWED.' ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 18 THE ISSUE IS, THEREFORE, COVERED BY THE ABOVE ORDER S OF THE TRIBUNAL. THE FACTS AND CIRCUMSTANCES NOTED ABO VE CLEARLY PROVE THAT THE ASSESSEE EXPLAINED GENUINE TRANSACTIONS ON SALES AND PURCHASES OF THE SHARES. THE SOURCES OF SALE OF SHARES ARE EXPLAINED THROUGH EVIDENCES AND MATERIALS ON RECORD. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE A BOVE DECISIONS AND EVIDENCES ON RECORD, WE ARE OF THE VI EW THAT THE AUTHORITIES BELOW HAVE WRONGLY MADE THE AD DITION U/S 68 OF THE IT ACT. THE TRANSACTIONS DECLARED BY THE ASSESSEE SHALL HAVE TO BE ACCEPTED BY THE REVENUE AUTHORITIES FOR CAPITAL GAINS. ORDERS OF THE AUTHOR ITIES BELOW ARE ACCORDINGLY SET ASIDE AND THE ADDITION IS DELETED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 8. THE PURCHASES AND SALES ARE, THEREFORE, FULLY SU PPORTED BY THE COPIES OF THE CONTRACT NOTE AND THE DETAILS ALONG W ITH ACCOUNTS AND CONFIRMATION ETC. OF THE BROKERS. THE SALES AND PUR CHASES OF SHARES HAVE BEEN MADE OUT OF DISCLOSED FUNDS. ACCORDING TO THE ASSESSEE THE ONLY REQUIREMENT WAS NECESSARY THAT SHARES SHOU LD HAVE BEEN LISTED IN RECOGNIZED STOCK EXCHANGE AND ACCORDING T O THE LEARNED COUNSEL FOR THE ASSESSEE IT IS NOT NECESSARY THAT S HARES SHOULD BE SOLD THROUGH RECOGNIZED STOCK EXCHANGE. ACCORDING T O PROVISO TO SECTION 2 (42A) OF THE IT ACT, THE REQUIREMENT IS T HAT ASSESSEE SHOULD HOLD THE SHARES IN COMPANY LISTED IN THE RECOGNIZED STOCK EXCHANGE WHICH IS NOT DISPUTED IN THIS CASE. THE IDENTITY OF THE BROKERS HAS NOT BEEN DOUBTED. EVEN IF THE SALE TRANSACTIONS WERE OF OFF MARKET TRANSACTIONS, THE SAME ARE PROPERLY DOCUMENTED AND SUPPORTED BY EVIDENCES. THE PURCHASE OF SHARES IN THE PRECEDING ASSESSMENT YEAR 2006-07 IS NOT DOUBTED BY THE AO EVEN WHILE FINALIZ ING THE SCRUTINY ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 19 ASSESSMENT U/S 143 (3) OF THE IT ACT. SINCE THE SHA RES HAVE BEEN REFLECTED IN THE BALANCE SHEET OF THE PRECEDING ASS ESSMENT YEAR, THEREFORE, GENUINENESS OF THE PURCHASE OF THE SHARE S IN EARLIER YEARS SHOULD NOT HAVE BEEN DOUBTED BY THE AO IN THE ASSES SMENT YEAR UNDER APPEAL PARTICULARLY WHEN IN EARLIER YEAR THE ASSESSMENT WAS MADE ON SCRUTINY. THUS, THE ABOVE EVIDENCE AND EXPL ANATION OF THE ASSESSEE SUPPORT THE CASE OF THE ASSESSEE THAT THE ASSESSEE ENTERED INTO GENUINE TRANSACTION. THE DETAILS NOTED ABOVE CLEARLY PROVE THE SOURCES OF SALES OF THE SHARES; THEREFORE , NO ADDITION WAS REQUIRED TO BE MADE U/S 68 OF THE IT ACT. THUS, THE ISSUE IS SQUARELY COVERED BY THE ORDER OF ITAT AHMEDABAD BENCH IN THE GROUP CASES OF SMT. VIMLARANI BIHARILAL BATRA AND OTHERS (SUPRA ) AND THE DECISIONS REFERRED TO IN THE SAME DECISIONS. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THE L EARNED CIT(A) RIGHTLY DELETED THE ADDITION ON ACCOUNT OF UNEXPLAI NED CASH CREDIT U/S 68 OF THE IT ACT. 9. THE ASSESSEE FURTHER CLAIMED THAT THE LEARNED CI T(A) INSTEAD OF HOLDING IT TO BE TRANSACTION OF SHORT TERM CAPITAL GAINS SHOULD HAVE HELD IT TO BE LONG TERM CAPITAL GAINS BECAUSE THE S HARES PURCHASED IN APRIL,2005 AND SOLD IN MARCH,2007 WILL DISCLOSE ONL Y AS LONG TERM CAPITAL GAINS. THE LEARNED CIT(A) ON GOING THROUGH THE DEMAT ACCOUNT HELD THAT THE SHARES WERE PURCHASED IN MARC H, 2007 INSTEAD OF APRIL, 2005 AND HELD THAT IT IS A CASE OF SHORT TERM CAPITAL GAINS. THE ASSESSEE RELIED UPON THE BOARD CIRCULAR NO.704 DATED 28-04-1995 IN WHICH ON CAPITAL GAINS U/S 2 (42A) OF THE IT ACT ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 20 CLARIFICATION WAS ISSUED ON THE DATE OF TRANSFER AN D PARA 2 PROVIDES AS UNDER: 2. WHEN THE SECURITIES ARE TRANSACTED THROUGH STOC K EXCHANGES, IT IS THE ESTABLISHED PROCEDURE THAT THE BROKERS FIRST ENTER INTO CONTRACTS FOR PURCHASE/SAL E OF SECURITIES AND THEREAFTER, FOLLOW IT UP WITH DELIVE RY OF SHARES, ACCOMPANIED BY TRANSFER DEEDS DULY SIGNED B Y THE REGISTERED HOLDERS. THE SELLER IS ENTITLED TO R ECEIVE THE CONSIDERATION AGREED TO AS ON THE DATE OF CONTRACT. THE BOARD ARE OF THE OPINION THAT IT IS THE DATE OF BRO KERS NOTE THAT SHOULD BE TREATED AS THE DATE OF TRANSFER IN C ASES OF SALE TRANSACTIONS OF SECURITIES PROVIDED SUCH TRANS ACTIONS ARE FOLLOWED UP BY DELIVERY OF SHARES AND ALSO THE TRANSFER DEEDS. SIMILARLY, IN RESPECT OF THE PURCHASERS OF T HE SECURITIES, THE HOLDING PERIOD SHALL BE RECKONED FR OM THE DATE OF THE BROKERS NOTE FOR PURCHASE ON BEHALF OF THE INVESTORS. IN CASE THE TRANSACTIONS TAKE PLACE DIRE CTLY BETWEEN THE PARTIES AND NOT THROUGH STOCK EXCHANGES THE DATE OF CONTRACT OF SALE AS DECLARED BY THE PARTIES SHALL BE TREATED AS THE DATE OF TRANSFER PROVIDED IT IS FOLL OWED UP BY ACTUAL DELIVERY OF SHARES AND THE TRANSFER DEEDS. ACCORDING TO THE ABOVE CIRCULAR, IN CASE TRANSACTIO N TAKES PLACE DIRECTLY BETWEEN THE PARTIES AND NOT THROUGH STOCK EXCHANGE, THE DATE OF CONTRACT OF SALE AS DECLARED BY THE PARTIES SHAL L BE TREATED AS DATE OF TRANSFER PROVIDED IT IS FOLLOWED UP BY ACTUAL DE LIVERY OF SHARES AND THE TRANSFER DEEDS. THE BOARD IN THEIR SUBSEQUENT CIRCULAR NO.768 DATED 24-06-1998 WHILE REFEREEING TO THE EARLIER CI RCULAR NO.704 (SUPRA) FURTHER EXPLAINED THAT THIS PRIMARY POSITIO N AS REGARDS THE DATE OF TRANSFER AND PERIOD OF HOLDING DOES NOT CHA NGE EVEN WHEN THE SECURITIES ARE HELD IN THE DEMATERIALIZE FORM. THE BROKER M/S. SWAN SECURITIES PVT. LTD. CONFIRMED THAT THE ASSESS EE PURCHASED SHARES FORM THEM IN APRIL, 2005 WHICH IS SUPPORTED BY ALL THE ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 21 DOCUMENTS REFERRED TO ABOVE AND PARTICULARLY THE BA LANCE SHEET FOR THE PRECEDING ASSESSMENT YEAR AND THE SCRUTINY ASSE SSMENT ORDER PASSED BY THE REVENUE AUTHORITIES. THEREFORE, INSTE AD OF CONSIDERING THE TRANSACTION NOTED IN THE DEMAT ACCOUNT THE REVE NUE AUTHORITIES SHOULD HAVE FOLLOWED THE ABOVE CIRCULAR OF THE BOAR D AND ACCORDING TO THE SAME THE DATE OF CONTRACT SHALL BE TREATED A S THE DATE OF TRANSFER. SINCE THE REVENUE DEPARTMENT DID NOT DISP UTE PURCHASE OF THE SHARES FROM M/S. SWAN SECURITIES PVT. LTD. IN T HE SCRUTINY ASSESSMENT OF PRECEDING ASSESSMENT YEAR 2006-07, TH EREFORE, THE ASSESSEE IS ABLE TO ESTABLISH THAT SHARES HAVE BEEN PURCHASED IN APRIL, 2005. THEREFORE, INSTEAD OF SHORT TERM CAPIT AL GAINS, THE LEARNED CIT(A) SHOULD HAVE TREATED THE GAINS AS LONG TERM C APITAL GAINS. THE ORDER OF THE LEARNED CIT(A) TO THAT EXTENT IS, THER EFORE, LIABLE TO BE SET ASIDE. THE ORDER OF THE LEARNED CIT(A) TO THAT EXTE NT HOLDING TRANSACTION TO BE SHORT TERM CAPITAL GAIN IS SET AS IDE AND WE DIRECT THE AO TO ACCEPT THE CLAIM OF THE ASSESSEE FOR LONG TER M CAPITAL GAINS. 10. IN VIEW OF THE ABOVE FINDINGS, THE APPEAL OF TH E ASSESSEE IS ALLOWED AND THE DEPARTMENTAL APPEAL IS DISMISSED. ITA NO. 3232/AHD/2010 & ITA NO.3157/AHD/2010 SMR. KANTADEVI SARAWAGI, SURAT 22 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND THE DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD