Shri Manojkumar Sarawagi,HUF, Surat V. The ACIT.,Cent.Circle-4, Surat

ITA 3233/AHD/2010

• Counselvise Citation: 323320514 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR SRDR
• Keywords: Unexplained cash credit; Earning of tax free income; Question of law; Non compliance; Sham transactions; Set aside
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH BEFORE SHRI G.C.GUPTA, VICE-PRESIDENT (AZ) AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO.3233 & 3156/AHD/2010 ASSESSMENT YEAR:2007-08 MANOJKUMAR SARAWAGI- HUF, S-538, J.J. A/C MARKET, RING ROAD, SURAT -395002 PAN NO.AAGHS8368M ACIT, CENTRAL CIRCLE-4, SURAT / V/S . / V/S . ACIT, CENTRAL CIRCLE-4, SURAT SHRI MANOJKUMAR GOVINDPRASAD SARAWAGI (HUF) 4123, J.J.A.C.MARKET, RING ROAD, SURAT / APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI HARDIK VORA, AR /BY REVENUE SHRI RAHUL KUMAR, SR-DR / DATE OF HEARING 01-03-2012 !'# / DATE OF PRONOUNCEMENT 16-03-2012 $ $ $ $ / // / ORDER PER T.R. MEENA, ACCOUNTANT MEMBER:- THESE ARE CROSS-APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARISES FROM THE ORDER OF LD. COMMISSIONER OF INCOME -TAX (APPEA LS)-VII, AHMEDABAD DATED 20- 09-2010 FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE CHALLENGED THE ADDITION OF RS.22,93 ,718/- 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.19,78,515/ - ON SALE OF SHARES WHICH WAS ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 2 CLAIMED EXEMPT. THE SHARES WERE CLAIMED TO HAVE BEE N PURCHASED FROM THE BROKER M/S. SWAN SECURITIES PVT. LTD. IN APRIL, 2005 AND S OLD THROUGH 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 A SSESSEE AND INTIMATED THAT IT WAS OFF MARKET TRANSACTION BUT DID NOT PROVIDE VARI OUS DETAILS CALLED FOR BY THE AO TO PROVE THE TRANSFER OF SHARES TO HIS COLLEAGUE ON TH E DATE OF PURCHASE AND ALSO THE NAMES OF THE PERSONS FROM WHOM THE SHARES WERE PURC HASED WHICH WERE SOLD TO THE ASSESSEE AND OTHER DETAILS. ALSO THE INTIMATION OF THIS OFF MARKET TRANSACTION WAS NOT SENT BY THE BROKER TO THE STOCK EXCHANGE AS PER PRE SCRIBED PROCEDURE. THE AO FURTHER OBSERVED THAT THE ASSESSEE FAILED TO ESTABL ISH THAT THE SHARES WERE HELD FOR MORE THAN 12 MONTHS. AFTER DISCUSSING THE MATTER IN DETAIL IN THE ASSESSMENT ORDER, THE AO CONCLUDED THAT AS THE ASSESSEE AND HIS SHARE BROKER HAVE NOT FILED VARIOUS DETAILS CALLED FOR AND NOT PROVED THAT THE SHARES W ERE ACTUALLY PURCHASED IN APRIL, 2005 AND HELD FOR A PERIOD OF MORE THAN 12 MONTHS. HENCE, HE TREATED THE TRANSACTION AS SHAM TRANSACTION AND ACCORDINGLY TRE ATED THE AMOUNT OF RS.22,93,718/- FOUND CREDITED IN THE ASSESSEE'S BOO KS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT AND MADE THE ADDITION THEREOF. BEFORE THE LEARNED CIT(A), THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS:- (A) THE BILLS FOR SALE, OF SHARES ISSUED BY THE BRO KER M/S. MOTILAL OSWAL SECURITIES LIMITED WERE FILED TO THE ASSESSING OFFI CER WHICH GIVES ALL THE DETAILS. THE PAYMENT AGAINST THE SALE OF SHARES HAS BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE BILLS ALSO SHOW T HAT THE SECURITY TRANSACTION TAX AND STAMP DUTY HAS BEEN 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 PERTAINING TO THE BROKER ALONG WI TH THE QUANTITY OF THE SHARES PURCHASED AND THE RATE ETC. THE COPY OF THE ACCOUNT OF THE APPELLANT AS PER BROKER'S BOOKS OF ACCOUNTS (M/S. SWAN SECURITIES PVT. LTD.) WAS ALSO FILED. (D) THE SUM OF RS.22,93.718/- REPRESENTING THE SA LE CONSIDERATION RECEIVED ON SALE OF SHARES APPEARS IN THE BANK ACCO UNT AND HAS BEEN ACCEPTED BY THE ASSESSING OFFICER AS THE AMOUNT REC EIVED. UNLESS THE SHARES WERE PURCHASED HOW THE SAME COULD BE SOLD BY THE APPELLANT, ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 3 (E) EVEN IF SOME OF THE DETAILS SOLICITED FROM M/S. SWAN SECURITIES PVT. LTD. U/S.133(6) OF THE I.T. ACT WERE NOT SUPPLIED B Y THE SAME PARTY, THE APPELLANT CANNOT BE HELD RESPONSIBLE FOR SUCH NON C OMPLIANCE AND FOR THIS NON COMPLIANCE, THE PURCHASE TRANSACTION OR SA LES CANNOT BE HELD AS BOGUS. FOR THIS, RELIANCE IS PLACED ON THE JUDGM ENT 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 NAME OF THE PERSONS WHO SOLD THE SHARES TO THE BROKERS, CANNOT BE THE BASIS FOR TREA TING THE TRANSACTION AS SHAM TRANSACTION AND CANNOT CONVERT THE PROFIT E ARNED ON SALE OF SHARES INTO INCOME FROM OTHER SOURCES. FOR THIS, TH E RELIANCE IS PLACED ON THE DECISION OF HON'BLE ITAT, JODHPUR BENCH .IN THE CASE OF ITO VS KUSUM LATA 105 TTJ 265 (JD). (G) THE BURDEN OF PROVING THAT THE APPARENT IS NOT REAL, IS ON THE PARTY WHO CLAIMS SO AS HELD BY THE HON'BLE SUPREME COURT, HENCE, THE ONUS WAS ON THE ASSESSING OFFICER TO PROVE THAT THE TRAN SACTIONS WERE BOGUS WHICH THE ASSESSING OFFICER HAS FAILED. FURTHER, TH ERE IS NO EVIDENCE THAT THE APPELLANT TENDERED EQUIVALENT CASH TO THE PURCHASE OF SHARES AGAINST THE PAYMENTS MADE BY THEM TO THE APPELLANT BY WAY OF PURCHASE CONSIDERATION FOR SHARES PURCHASED BY THEM . HENCE, THE ADDITION CANNOT 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 158 (AGRA) (TRIB). (H) THE BANK STATEMENT WAS FURNISHED WHICH INDICATE S THE PAYMENT OF THE PURCHASE CONSIDERATION PAID TO THE BROKER AND T HE AMOUNT RECEIVED ON THE SALE OF SHARES THROUGH ACCOUNT PAYEE CHEQUES . (I) THE DEMAT ACCOUNT OF THE APPELLANT ALSO INDICAT ES BOTH THE PURCHASE OF THE SHARES AND THE SALES OF THE CONCERNED SHARES . 3. THE LEARNED CIT(A) CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE DIRECTED THE ASSESSING OFFICER TO REDUCE THE ADDITION AS SHORT TERM CAPITAL GAIN (STCG FOR SHORT) INSTEAD OF MAKING ADDITION OF UNEXPLAINED CASH CREDIT. THE APPEAL OF THE ASSESSEE WAS ACCORDI NGLY 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 FOLLOWING FACTS ARE RE VEALED:- (I) THE BANK ACCOUNT OF THE APPELLANT SHOWS THAT T HE AMOUNT OF RS.3,50,000/- WAS PAID ON 08.03.2007 THROUGH CHEQUE AGAINST THE PAYMENT MADE FOR THE PURCHASE OF SHARES AND THE AMO UNT OF RS.1`,61,471/-, RS.3,69,503/- RS,9,85,289/- AND DRS .3,89,829/- HAVE BEEN DEPOSITED IN THE ACCOUNT ON VARIOUS DATES OF M ARCH, 2007 ION RESPECT OF SALE OF SHARES. ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 4 (II) THE DEMAT ACCOUNT SUBMITTED BY THE APPELLANT R EVEALS THAT THE OPENING BALANCE IN RESPECT OF VARIOUS SHARES CLAIME D TO HAVE BEEN PURCHASED ARE SOLD IS ZERO AT THE BEGINNING OF MARC H,2007 AND ALSO ZERO AT THE END MARCH,2007. HOWEVER, DURING THE MON TH; OF MARCH,2007, THE PURCHASE AND SALE OF VARIOUS SHARES APPEARS. FOR EXAMPLE, IN RESPECT OF SHARES ASIAN ELECTRONICS, 30 0 SHARES PURCHASED ON 23.03.2007 AND SOLD ON 26.03.2007, PURCHASE OF 500 SHARES ON 28.03.2007 AND SALE ON 29.03.2007 THEREOF. THE PU RCHASE OF 300 SHARES ON 29.03.2007 AND SALE ON 30.03.2007 AND PUR CHASE OF 150 SHARES ON 30.03.2007 AND SALE ON 31.03.20007 THEREO F. SIMILARLY, IN RESPECT OF OTHER SHARES ALSO, THE PURCHASES ARE ON VARIOUS DATES IN MARCH, 2007 AND THE SALE OF RESPECTIVE SHARES ARE W ITHIN ONE OR TWO DAYS FROM THE PURCHASES IN THE MONTH OF MARCH, 2007 ITSELF. THUS, THE DEMAT ACCOUNT SHOWS THAT ALL THE SHARES WERE PURCHA SED AND SOLD WITHIN TWO THREE DAYS ITSELF AND ALL IN THE MONTH O F 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 CONFIRM ED 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 O F 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 PURCHA SE ONLY ON THE DATE OF MONTH OF MARCH,2007 AND NOT IN APRIL.2005. ALTHOUGH THE BROKER M/S. SWAN SECURITIES PVT. LTD. CLAIMED TO HAVE SOLD THE SHARES TO THE APPELLANT IN APRIL,2005 BUT HE HAS NOT GIVEN VARIOU S DETAILS LIKE FROM WHOM THE SHARES WERE PURCHASED AND ALSO NOT INTIMAT ED THE TRANSACTION TO THE STOCK EXCHANGE AS PER PRESCRIBED PROCEDURE. HENCE, THE PURCHASE DATE CANNOT BE TAKEN AS APRIL.2 005. 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. HOWEVER, IT IS ALSO A FACT THAT THE APPELLA NT HAS NOT PROVED THAT SHARES WERE ACTUALLY PURCHASED IN APRIL,2005 BUT EVIDENCES SUGGEST THAT IT WERE PURCHASED IN MARCH, 2007. HENCE, THE APPELLANT HAS NOT BEEN ABLE TO PROVE THAT THE SHARES WERE HELD FOR MORE THAN ONE YEAR SO IT CANNOT BE TAKEN AS LONG TERM CAPITAL GAIN. THEREFORE, IN MY VIEW, THE APPELLANT'S CLAIM THAT THE GAIN SHOULD BE TREATED AS LONG TERM CAPITAL GAIN AN D 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 AMO UNT HAS BEEN RECEIVED FROM MOTILAL OSWAL SECURITIES. LIMITED ON SALE OF SHARES AND ALSO EVIDENT FROM THE MOVEMENT OF SHARES AS APPEARING IN THE DEMAT ACCOUN T. 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.19,78,515/- AS SHORT TERM CAPITAL GAIN INSTEAD O F MAKING THE ADDITION OF RS.22,93,718/- AS UNEXPLAINED CASH CREDIT. ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 5 4. THE ASSESSEE IN HIS APPEAL CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DIRECTING THE ADDITION AS SHORT TERM CAPITAL GAINS INSTEAD OF LONG TERM CAPITAL GAINS. THE REVENUE IN THEIR APPEAL CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND DIRECTING TO MAKE ADDITION ON ACCOUNT OF STCG. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE MADE PURCHASES FROM THE BROKER M/S. SWAN SECURITIES PVT. LTD. IN APRIL, 2005 AND THE SAME HAVE BEEN SOLD THROUGH THE BROKER M/S. MOTILAL OSWAL SECURITIES LT D. IN MARCH, 2007. HE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT DOUBTE D 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 SECURITIES PVT. LTD. THROUGH WHOM THE ASSESSEE PURCHASED THE SHARES. COPY OF THE ACCOUNT WAS FURNISHED BEFORE THE AO AND ALL THE TRANSACTIONS WERE CARRIED OUT THROUGH ACCOUNT PAYEE CHEQUES. PB-10 TO 11 ARE THE LEDGER ACCOUNTS OF M/S. SWAN SECURITIES PVT. LTD. PB-9 IS THE DEBIT NOTE OF THE SAME PARTY CHARGING INTEREST ON THE OUTSTANDING AMOUNT AGAINST THE ASSESSEE IN ACCOUNTI NG YEAR 2006-07. THE PB-17 THE LEDGER ACCOUNT FOR THE YEAR ENDING MARCH, 2006 TO SHOW THAT THE ASSESSEE MADE PURCHASES AND OF SHARES IN APRIL, 2005 WHICH ARE AL SO RECORDED IN THE BOOKS OF ACCOUNTS PROPERLY AND SHOWING CLOSING BALANCE AS ON 31-03-2006. PB-12 TO 16 ARE THE DEBIT NOTES OF THE BROKER FOR THE PURCHASE OF S HARES IN APRIL, 2005. PB-22 IS THE BALANCE SHEET OF THE ASSESSEE AS ON 31-03-2006 SHOW ING LIABILITIES ON ACCOUNT OF PURCHASE OF SHARES IN THE NAME OF M/S. SWAN SECURIT IES PVT. LTD. TO PROVE THAT SHARES WERE PURCHASED IN APRIL, 2005. THE ASSESSEE HAS SUBMITTED THE COPY OF ASSESSMENT ORDER U/S 143(3) OF THE IT ACT DATED 30- 12-2009 IN THE CASE OF THE ASSESSEE IN ASSESSMENT YEAR 2006-07 WHERE RETURNED INCOME IS ACCEPTED AFTER SCRUTINY ASSESSMENT TO SHOW THAT REVENUE DEPARTMENT HAS ACCEPTED PURCHASE OF SHARES BY THE ASSESSEE IN PRECEDING ASSESSMENT YEAR . HE HAS SUBMITTED THAT SCRUTINY ASSESSMENT COULD NOT HAVE BEEN COMPLETED W ITHOUT PROFIT & LOSS ACCOUNT AND BALANCE SHEET ON RECORD OF THE AO. HE HAS SUBMI TTED THAT LAW REQUIRES THAT THE ASSESSEE SHOULD HOLD THE SHARES ON THE DATE OF THE TRANSFER; THEREFORE, THE DOCUMENTS FILED ON RECORD CLEARLY PROVE PURCHASE OF SHARES BY THE ASSESSEE IN APRIL, 2005. HE HAS RELIED UPON THE CBDT CIRCULAR NO.704 DATED 28-04-1995 IN WHICH IT ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 6 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 BE TREATED AS DATE OF TRANSFER PROVI DED IS IT FOLLOWED UP BY ACTUAL DELIVERY OF SHARES AND THE TRANSFER DEEDS. COPY OF THE SAME IS PLACED ON RECORD. HE HAS FURTHER SUBMITTED THAT SALE BILLS WERE FILED BE FORE THE AO AND ALL THE SALE TRANSACTIONS WERE CONDUCTED THROUGH ACCOUNT PAYEE C HEQUES ON WHICH SECURITY TRANSACTION TAX HAS BEEN PAID ALONG WITH STAMP DUTY . PB-2 IS THE LEDGER ACCOUNT OF THE BROKER M/S. MOTILAL OSWAL SECURITIES LTD. TO SH OW THE TRANSACTION IN A SUM OF RS.16.42 LACS. PB-3 TO 7 ARE THE BROKERS CONTRACT N OTE TO PROVE GENUINE SALES OF THE SHARES. HE HAS, THEREFORE, SUBMITTED THAT SINCE SAL ES ARE NOT IN DOUBT WOULD PROVE THAT THE ASSESSEE MADE GENUINE PURCHASES OF THE SHA RES. HE HAS RELIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN THE GROUP CASES OF SMT. VIMLARANI BIHARILAL BATRA AND OTHERS VS ACIT IN ITA NO.762/AHD/2009 ORDER DATED 16-09-2011 AND IN ITA NO.3232/AHD/2010 A.Y. 2007-08 IN THE CASE OF SMT.KANTADEVI SARAWAGI ORDER DATED 14-10-2011 SUBMITTED THAT THE ISSUE IS SQUARELY COV ERED BY THIS ORDER OF THE TRIBUNAL THE COPY OF THE SAME IS ALSO PLACED ON RECORD. HE H AS ALSO RELIED UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT VS ANUPAM KAPOOR 299 ITR 179 (P&H), ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF MUKESHKUMAR GUPTA VS ITO IN ITA 2814/AHD/2007 AND IN THE CASE OF PRAKSHCHAND SANDH VS ACIT IN ITA NO.3270/AHD/2008 ORDER DATED 24-02-2009 IN WHICH IT WAS HELD THAT PROFIT ON SHARES AND SALES OF SHARES OR SECURITIES CANNOT BE TREATED AS CREDIT ENTRY AS ENVISAGED U/S 68 OF THE IT ACT. HE HAS ALSO RELIED UPON THE ORDER IN THE CASE OF ITO V. SMT. KUSUMLATA (2006) 105 TTJ 265 (JD) AS WAS RELIED UPON BEFORE THE LEARNED CIT(A) AND IN THE CASE OF CIT. V. VED PROKASH AND SONS (HUF) (1994) AS REPORTED IN 207 ITR 148 (P&H) AND IN THE CASE OF MS. NITA A PATEL V. ITO (2011) 128 ITD 24 (MUM). 6. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDER OF THE AO AND SUBMITTED THAT SINCE REQUISITE DETAILS WERE NOT FIL ED BEFORE THE AO FOR THE PURCHASE OF THE SHARES AND NO EVIDENCE OF PURCHASE OF SHARES IN 2005 WAS FILED, THEREFORE, THE AO RIGHTLY HELD THESE TO BE SHAM TRANSACTIONS. HE H AS SUBMITTED THAT NO TRANSACTION TOOK PLACE THROUGH STOCK EXCHANGE. SINCE THE PURCHA SES WERE DOUBTFUL, THEREFORE, THE SALES WERE ALSO RIGHTLY HELD TO BE DOUBTFUL. TH E LEARNED DR SUBMITTED THAT IT IS NOT CLEAR WHETHER PB- 22 I.E. BALANCE SHEET AS ON 3 1-03-2006 SHOWING PURCHASE OF ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 7 SHARES IN EARLIER YEAR WAS FILED OR NOT BEFORE THE AO. HE HAS SUBMITTED THAT SINCE IN 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 HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE CLAIMED LONG TERM CAPITAL GAIN S ON SALE OF SHARES. IT WAS CLAIMED THAT SHARES HAVE BEEN PURCHASED 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 ASSESSING OFFICER WHO HAS CONF IRMED PURCHASE OF SHARES BY THE ASSESSEE THROUGH THEM IN APRIL, 2005. COPY OF THE A CCOUNT WAS ALSO FURNISHED AND THE CONSIDERATION WAS MADE THROUGH BANKING CHANNEL. PB-17 AND IS THE LEDGER ACCOUNTS OF THE PARTY TO CONFIRM PURCHASE OF THE SH ARES THROUGH BANKING CHANNEL. PB-9 IS DEBIT NOTE OF THE BROKER CHARGING INTEREST ON THE OUTSTANDING AMOUNT AGAINST THE ASSESSEE IN ACCOUNTING YEAR 2006-07. PB-17 IS L EDGER ACCOUNT TO SHOW THAT SHARES HAVE BEEN PURCHASED BY THE ASSESSEE IN APRIL , 2005 THROUGH THE BROKER M/S. SWAN SECURITIES PVT. LTD. PB-22 IS ALSO THE STATEME NT OF BILLS CONTAINING THE CLOSING BALANCE OF THE SHARES PURCHASED BY THE ASSESSEE ON 31-03-2006. PB-12 TO 16 ARE THE BROKERS DEBIT NOTE TO SUPPORT THE CONTENTION OF THE ASSESSEE THAT SHARES WERE PURCHASED IN APRIL, 2005. THE ASSESSEE ALSO FILED S ALE 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 ACCOUNT PAYEE CHEQUES ON WHICH SECURITY TRANSACTIONS TAXES AND STAMP DUTY HAVE BEEN PAID. THE SAME IS SU PPORTED BY PB-2 WHICH IS LEDGER ACCOUNT OF THE BROKER THROUGH WHOM SHARES WE RE SOLD AT RS.16.42 LACS. PB-3 TO 7 ARE THE BROKERS CONTRACT NOTE TO SHOW THAT SHA RES WERE SOLD IN MARCH, 2007. COPY OF THE BANK STATEMENT WAS FILED IN SUPPORT OF THE CONTENTION. PB-22 IS THE BALANCE SHEET OF THE ASSESSEE AS ON 31-03-2006 TO S HOW OUTSTANDING LIABILITY IN THE NAME OF M/S. SWAN SECURITIES PVT. LTD. THROUGH WHOM SHARES WERE PURCHASED. THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006-07 U/S 14 3(3) OF THE IT ACT PASSED AFTER SCRUTINY IN WHICH RETURNED INCOME IS ACCEPTED ON FU RNISHING THE DOCUMENTS ON THE RECORD OF THE AO. THEREFORE, IT IS UNBELIEVABLE THA T THE ASSESSEE WOULD NOT HAVE FILED THE PROFIT & LOSS AND BALANCE SHEET FOR THE ASSESSM ENT YEAR 2006-07 BEFORE THE AO. WE MAY FURTHER NOTE THAT THE AO IN THE ASSESSMENT O RDER MERELY HOLDING THAT PURCHASES ARE NOT GENUINE PRESUMED THAT SALES OF TH E SHARES ARE BOGUS. THE AO HAS NOT MENTIONED EVEN THE NAME OF THE BROKERS IN T HE ASSESSMENT ORDER THROUGH ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 8 WHOM THE SHARES HAVE BEEN SOLD. THE AO IGNORED ALL THE DOCUMENTARY EVIDENCES ON RECORD IN RESPECT OF THE SALES OF THE SHARES. SINCE NOTHING IS MENTIONED IN THE ASSESSMENT ORDER WITH REGARD TO SALE OF THE SHARES BY THE ASSESSEE THROUGH BROKER, THEREFORE, SALE OF THE SHARES IS NOT DOUBTED BY THE AO. SINCE THE ASSESSEE PROVED THE SOURCES OF THE SALE PROCEEDS OF THE SHARES THRO UGH IDENTIFIED PARTY WHO HAS ALSO ACKNOWLEDGED THE SAME, THEREFORE, NO ADDITION U/S 6 8 COULD HAVE BEEN MADE AGAINST THE ASSESSEE UNLESS PURCHASES OF THE SHARES ARE MADE, SALES COULD NOT BE DOUBTED BY THE AO. THEREFORE, THERE IS NO UNDISCLOS ED CASH CREDIT INVOLVED IN THIS CASE AND AS SUCH THE LEARNED CIT(A) RIGHTLY HELD TH AT THE SALE PROCEEDS OF THE SHARES CANNOT BE TERMED AS UNEXPLAINED CASH CREDIT. THE CO O-ORDINATE BENCH IN THE GROUP CASES OF SMT. VIMLABRANI BIHARILAL BATRA AND OTHERS (SUPRA) CONSIDERING THE IDENTICAL ISSUE IN THE LIGHT OF THE CASE LAWS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE DELETED SIMILAR ADDITION AND 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 CONSIDERATION, THE AS SESSEE CLAIMED TO HAVE SOLD SHARES OF 3 COMPANIES NAMELY M/S, GLOBE S TOCK & SECURITIES LTD., M/S. HERALD COMMERCE LTD. AND M/S. SILICON VALLEY INFOTECH LTD. AS PER THE DETAILS NOTED IN THE ASSES SMENT ORDER, THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS FI LED THE EVIDENCES FOR PURCHASE AND SALES OF SHARES WHICH ARE BROKERS CONTRACT NOTE FOR PURCHASE AND SALE OF SHARES, TRANSACTION STATEMENT OF DEMAT ACCOUNT IN RESPECT OF CREDIT OF SHARES ON ACCOUNT OF PURCHA SE AND DEBIT ON ACCOUNT OF SALES, DELIVERY INSTRUCTIONS, NOTE FOR S ALE OF SHARES, BANK STATEMENT PROVING THE RECEIPT OF SALES CONSIDERATIO N AND PAYMENT OF PURCHASES, COPY OF THE BALANCE SHEET OF THE EARLIER YEAR, CONFIRMATION/LEDGER ACCOUNT OF THE ASSESSEE FROM TH E BROKERS BOOKS OF ACCOUNTS AND THE QUOTATION OF THE STOCK EXCHANGE, L ETTER OF THE CALCUTTA STOCK EXCHANGE (PB-8) CONFIRMING SALES MADE ON 15-0 4-2004 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 M ENTIONED. THUS, THE FINDINGS OF THE AO WERE INCORRECT AS REGARDS THIS F ACT. THE ASSESSEE SUBMITTED THAT SINCE TRANSACTIONS WERE OFF MARKET B Y THE BROKERS, THEREFORE, INFORMATION GIVEN BY THE STOCK EXCHANGE WOULD NOT BE RELEVANT TO THE MATTER IN ISSUE. DESPITE PART OF TH E TRANSACTIONS HAVE BEEN CONFIRMED THE STOCK EXCHANGE, THE PURCHASES AN D SALES OF SHARES WERE FULLY SUPPORTED BY COPIES OF THE CONTRACT NOTE AND THE DETAILS ALONG WITH ACCOUNT AND CONFIRMATION ETC. OF THE BRO KERS COPIES OF WHICH ARE FILED IN THE PAPER BOOK. THE PURCHASE OF SHARES WAS DULY RECORDED AND THUS THE TRANSACTIONS WERE MADE OUT OF DISCLOSE D FUNDS AND BILLS OF PURCHASE AND SALES OF THE SHARES WERE DULY RECORDED AND SUPPORTED BY THE DOCUMENTS. THE BROKERS THROUGH WHOM SUCH TRANSA CTIONS WERE ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 9 MADE HAVE CONFIRMED THE SAME AND THE SAME CONFIRMAT IONS ARE FILED IN THE PAPER BOOK. THE ASSESSEE HAD ALSO FILED DETAILS OF THE DEMAT ACCOUNT SHOWING THE PURCHASES AND SALES OF SHARES O F THESE 3 COMPANIES. THE DOCUMENTS FILED ON RECORD PROVE THE GENUINE TRANSACTIONS ARE RECORDED BY THE ASSESSEE THROUGH B ROKERS. SOURCES OF THE FUNDS ARE ACCOUNT PAYEE CHEQUES AND DEMAND DRAF TS AND ALL THE PAYMENTS RECORDED IN THE BANK ACCOUNT. ACCORDING TO THE ASSESSEE SINCE THE SHARES ARE LISTED WITH THE STOCK EXCHANGE , THEREFORE, IN ORDER TO CLAIM BENEFIT U/S 112 (1) (D) OF THE IT ACT, THE ONLY REQUIREMENT WAS NECESSARY THAT THE SHARES SHOULD BE LISTED IN A REC OGNIZED STOCK EXCHANGE. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE IT IS NOT NECESSARY THAT THE SHARES SHOULD BE SOLD THROUGH RE COGNIZED 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 HAS NOT BEEN DOUBTED. E VEN IF, THE SALE TRANSACTIONS WERE OFF MARKET TRANSACTIONS, THEY WER E PROPERLY DOCUMENTED AND SUPPORTED BY EVIDENCES. THE PURCHASE OF SHARES IN THE EARLIER YEAR HAVE NOT BEEN DOUBTED WHICH ACCORD ING TO THE ASSESSEE HAVE BEEN REFLECTED IN THE BALANCE SHEET I N THE FINANCIAL YEAR 2002-03. THUS, THE ABOVE EVIDENCES AND EXPLANATIONS OF THE ASSESSEE SUPPORT THE EXPLANATION OF THE ASSESSEE THAT THE AS SESSEE ENTERED INTO GENUINE TRANSACTIONS. THE DETAILS WOULD SHOW THAT T HE ASSESSEE PROVED THE SOURCES OF THE SALE OF THE SHARES. THERE FORE, NO ADDITION WAS REQUIRED TO BE MADE U/S 68 OF THE IT ACT. UNDER THE PROVISIONS OF SECTION 68 OF THE IT ACT, THE ASSESSEE IS REQUIRED TO PROVE THE SOURCE OF THE SUM WHICH WAS CREDITED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. ITAT AHMEDABAD BENCH IN THE CASE OF SHRI PRAKASH CHAND S. SANDH (SUPRA) HELD THAT PROFIT ON SHARES AND SALE OF SHARES/SECURITIES CAN NEVER BE CASH CREDIT ENTERED AS ENVISAGED IN THE PROVISIONS OF SECTION 68 OF THE IT ACT, BECAUSE FOR CONSIDERING A CREDIT ENTRY IN THE BOOKS OF ACCOUNTS, DETAILS OF PARTY IN WHOSE NAME 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 IDENTICAL ISSUE IN THE CAS E OF HITESHKUMAR BABULAL SANGHVI (SUPRA) AND DELETED THE SIMILAR ADDITION VIDE ORDE R DATED 31-10-2007 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 KUMAR 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: '16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND M ATERIAL AVAILABLE ON RECORD. IT WAS SUBMITTED BY THE ASSESS EE THAT ALL THE TRANSACTIONS WERE OFF MARKET TRANSACTIONS AND W ERE NOT CONDUCTED THROUGH STOCK EXCHANGE. THEREFORE, INFORM ATION FURNISHED BY THE STOCK EXCHANGES WAS IRRELEVANT. TH E PURCHASE AND SALES OF SHARES WERE FULLY SUPPORTED BY THE COP IES OF CONTRACT NOTES AND BILLS ALONG WITH ACCOUNT CONFIRM ATION ETC. THE PURCHASES OF SHARES WERE DULY RECORDED AND THESE WE RE MADE OUT OF DISCLOSED FUNDS AND THE BILLS WERE MADE BY A CCOUNT ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 10 PAYEE CHEQUES. THE BILLS OF PURCHASE AND SALES OF S HARES WERE DULY RECORDED AND SUPPORTED BY THE DOCUMENTS. THE B ROKERS THROUGH WHOM SUCH TRANSACTIONS WERE MADE HAVE CONFI RMED THE SAME AND SAME CONFIRMATIONS ARE FILED IN THE PAPER BOOK. THE ASSESSEE HAD ALSO FILED COPY OF DEMAT ACCOUNT SHOWI NG THE PURCHASES AND SALES OF THE SHARES OF THE 3 COMPANIE S WITH WHOM THE ASSESSEE DEALT WITH. SAME ARE FILED AT PAG E 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 RE CORDED BY THE ASSESSES THROUGH THE BROKERS. THE SOURCES OF TH E FUNDS ARE ACCOUNT PAYEE CHEQUES AND ALL THE PAYMENTS HAVE BEE N MADE THROUGH ACCOUNT PAYEE CHEQUES. OUT OF THE 3 COMPANI ES WHOSE SHARES WERE TRANSACTED, THE SHARES OF M/S. ELTORL L TD. AND M/S. HAZOOR MEDIA WERE LISTED ON AHMEDABAD STOCK EXCHANG E 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 TRANSAC TIONS CONDUCTED BY THE ASSESSEE CANNOT BE TREATED AS ILLE GAL. THE ABOVE EVIDENCES PRODUCED BEFORE THE AUTHORITIES BEL OW CLEARLY PROVE THAT THE ASSESSEE ENTERED INTO GENUINE TRANSA CTIONS OF SHARES. ALL THE SHARES REMAINED IN THE DEMAT ACCOUN T OF THE PARTIES AND GENUINENESS OF WHICH IS NOT DOUBTED. TH E SALES OF SHARES ARE SUPPORTED BY THE DETAILS ISSUED BY THE B ROKERS. PAYMENTS WERE ISSUED BY ACCOUNT PAYEE CHEQUES. THE IDENTITY OF THE BROKERS HAVE NOT BEEN DOUBTED. EVEN IF THE S ALE TRANSACTIONS WERE OFF MARKET TRANSACTIONS, THEY WER E PROPERLY DOCUMENTED AND SUPPORTED BY THE ABOVE EVIDENCES. TH E ABOVE FACTS AND EVIDENCES ON RECORD CLEARLY SUPPORT THE C ASE OF THE ASSESSEE THAT THE ASSESSEE ENTERED INTO THE GENUINE TRANSACTIONS. THE DETAILS OF THE SOURCES OF THE SAL E 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 COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME CIT(A) WHO PAS SED THE IMPUGNED ORDER HAS CONSIDERED IDENTICAL ISSUE IN TH E CASE OF SHRI SANJAYKUMAR AGARWAL (SUPRA) AND DELETED THE SI MILAR ADDITION VIDE ORDER DATED 29-05-2007 COPY OF 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 CONFI RMED 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 TH E PARTIES. LOOKING TO THE FACTS OF THE CASE AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS CALLED FO R THE REMAND REPORT AND THE REMAND REPORT OF THE A. O. IT WAS SEEN THAT CSE VIDE THEIR LETTER HAD CLEARLY CONFIRM ED 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 TH E ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 11 REMAND REPORT IT WAS CLEARLY MENTIONED THAT THE TRANSACTION HAS BEEN CLEARLY CONFIRMED BY THE BROKE RS BUT ALSO THROUGH SEPARATE LETTER ISSUED BY THE BROKERS DT, 6.3.2006, WE FIND THAT THE CIT(A) HAS CALLED FOR TH E REMAND REPORT AND THE INQUIRIES WERE CONDUCTED TO ASCERTAIN WHETHER OR NOT TRANSACTIONS EVEN THOUGH T HEY WERE CONDUCTED ON-LINE IT HAS BEEN DULY REPORTED BY EXCHANGE AS REQUIRED BY THE GUIDELINES ISSUED BY TH E SEBI. THE AO HAS FURNISHED REPORT DT.24.4.2007 WHER EIN IT HAS BEEN MENTIONED THAT THE BROKERS AND THE DEPOSITORY HAVE CONFIRMED THE SAID SHARE TRANSACT IONS. THEREFORE, WE ARE OF THE VIEW THAT THE CIT( A) IS JUSTIFIED IN DELETING THE SAME AND OUR INTERF ERENCE IS NOT REQUIRED.' THE SAME DECISION IS ALSO CONSIDERED BY ANOTHER BEN CH OF THE TRIBUNAL IN THE CASE OF SHETH HEENA AKSHAY VS DCIT (SUPRA) AND ADDITION HAS BEEN DELETED (PB-5). THESE FACTS WOULD PROVE THAT T HE ADDITION MADE IN THE CASE OF SHRI SANJAYKUMAR AGARRWAL HAS BEEN DELE TED BY THE LEARNED CIT(A) AND HIS APPELLATE ORDER HAS BEEN CON FIRMED BY THE TRIBUNAL. THEREFORE, FOLLOWING THE ORDER OF THE TRI BUNAL IN THE CASE OF SHRI SANJAYKUMAR AGARWAL, WE DO NOT FIND IT TO BE A FIT CASE FOR CONFIRMING THE ADDITION. THE LEARNED COUNSEL FOR TH E ASSESSEE ALSO RELIED UPON THE DECISION OF THE HON'BLE PUNJAB & HA RYANA HIGH COURT IN THE CASE OF CIT VS ANUPAM KAPOOR (SUPRA) IN WHICH P URCHASE AND SALE WAS ACCEPTED BY THE DEPARTMENT AND SALE PROCEEDS WE RE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND HAVE BEEN ACCOUNT ED FOR IN 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 FINDI NG NO SUBSTANTIAL QUESTION OF LAW. THE ABOVE FACTS WOULD PROVE THAT T HE ASSESSEE EXPLAINED GENUINE TRANSACTION OF SALE AND PURCHASE OF THE SHARES. THE SOURCES OF THE SALE OF SHARES ARE EXPLAINED THROUGH EVIDENCE AND MATERIAL ON RECORD. CONSIDERING THE FACTS AND CIRCU MSTANCES OF THE CASE IN THE LIGHT OF THE ABOVE DECISIONS AND EVIDEN CES ON RECORD, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE WRO NGLY MADE THE ADDITION U/S 68 OF THE IT ACT. THE ORDERS OF THE AU THORITIES BELOW ARE ACCORDINGLY SET ASIDE AND THE ADDITION IS ACCORDING LY DELETED. IN THE RESULT, GROUND NO.2 OF THE APPEAL OF THE ASSESSEE I S ACCORDINGLY ALLOWED.' THE ISSUE IS, THEREFORE, COVERED BY THE ABOVE ORDER S OF THE TRIBUNAL. THE FACTS AND CIRCUMSTANCES NOTED ABOVE CLEARLY PRO VE THAT THE ASSESSEE EXPLAINED GENUINE TRANSACTIONS ON SALES AN D PURCHASES OF THE SHARES. THE SOURCES OF SALE OF SHARES ARE EXPLA INED THROUGH EVIDENCES AND MATERIALS ON RECORD. CONSIDERING 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 AU THORITIES BELOW HAVE WRONGLY MADE THE ADDITION U/S 68 OF THE IT ACT. THE TRANSACTIONS DECLARED BY THE ASSESSEE SHALL HAVE TO BE ACCEPTED BY THE REVENUE ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 12 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 WITH ACCOUNTS A ND CONFIRMATION ETC. OF THE BROKERS. THE SALES AND PURCHASES OF SHARES HAVE BEE N MADE OUT OF DISCLOSED FUNDS. ACCORDING TO THE ASSESSEE THE ONLY REQUIREMENT WAS NECESSARY THAT SHARES SHOULD HAVE BEEN LISTED IN RECOGNIZED STOCK EXCHANGE AND A CCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE IT IS NOT NECESSARY THAT S HARES SHOULD BE SOLD THROUGH RECOGNIZED STOCK EXCHANGE. ACCORDING TO PROVISO TO SECTION 2 (42A) OF THE IT ACT, THE REQUIREMENT IS THAT 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 TRAN SACTIONS 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 FINALIZING THE SCRUTINY ASSESSMENT U/ S 143 (3) OF THE IT ACT. SINCE THE SHARES HAVE BEEN REFLECTED IN THE BALANCE SHEET OF THE PRECEDING ASSESSMENT YEAR, THEREFORE, GENUINENESS OF THE PURCHASE OF THE SHARE S IN EARLIER YEARS SHOULD NOT HAVE BEEN DOUBTED BY THE AO IN THE ASSESSMENT YEAR UNDER APPEAL PARTICULARLY WHEN IN EARLIER YEAR THE ASSESSMENT WAS MADE IN SCR UTINY. THUS, THE ABOVE EVIDENCE AND EXPLANATION OF THE ASSESSEE SUPPORT TH E CASE OF THE ASSESSEE THAT THE ASSESSEE ENTERED INTO GENUINE TRANSACTION. THE DETA ILS NOTED ABOVE CLEARLY PROVE THE SOURCES OF SALES OF THE SHARES; THEREFORE, NO A DDITION WAS REQUIRED TO BE MADE U/S 68 OF THE IT ACT. THUS, THE ISSUE IS SQUARELY C OVERED BY THE ORDER OF ITAT AHMEDABAD BENCH IN THE GROUP CASES OF SMT. VIMLARAN I BIHARILAL BATRA AND OTHERS (SUPRA) AND THE DECISIONS REFERRED TO IN THE SAME D ECISIONS. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW T HE LEARNED CIT(A) RIGHTLY DELETED THE ADDITION ON ACCOUNT OF UNEXPLAINED 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 H AVE HELD IT TO BE LONG TERM CAPITAL GAINS BECAUSE THE SHARES PURCHASED IN APRIL,2005 AN D SOLD IN MARCH,2007 WILL DISCLOSE ONLY AS LONG TERM CAPITAL GAINS. THE LEARN ED CIT(A) ON GOING THROUGH THE DEMAT ACCOUNT HELD THAT THE SHARES WERE PURCHASED I N MARCH, 2007 INSTEAD OF APRIL, ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 13 2005 AND HELD THAT IT IS A CASE OF SHORT TERM CAPIT AL 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 CLARIFICATION WAS ISSUED ON THE DATE OF TRANSFER AND 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/SALE OF SECURITIES AND THEREAFTER, FOL LOW IT UP WITH DELIVERY OF SHARES, ACCOMPANIED BY TRANSFER DEEDS DULY SIGNE D BY THE REGISTERED HOLDERS. THE SELLER IS ENTITLED TO RECEI VE THE CONSIDERATION AGREED TO AS ON THE DATE OF CONTRACT. THE BOARD ARE OF THE OPINION THAT IT IS THE DATE OF BROKERS NOTE THAT SHOULD BE TREA TED AS THE DATE OF TRANSFER IN CASES OF SALE TRANSACTIONS OF SECURITIE S PROVIDED SUCH TRANSACTIONS 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 FROM THE DATE OF T HE BROKERS NOTE FOR PURCHASE ON BEHALF OF THE INVESTORS. IN CASE THE TR ANSACTIONS TAKE PLACE DIRECTLY BETWEEN THE PARTIES AND NOT THROUGH STOCK EXCHANGES THE DATE OF CONTRACT OF SALE AS DECLARED BY THE PARTIES SHAL L BE TREATED AS THE DATE OF TRANSFER PROVIDED IT IS FOLLOWED UP BY ACTU AL 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 SHALL BE TREATED AS DATE OF TRANSFER PR OVIDED IT IS FOLLOWED UP BY ACTUAL DELIVERY OF SHARES AND THE TRANSFER DEEDS. THE BOA RD IN THEIR SUBSEQUENT CIRCULAR NO.768 DATED 24-06-1998 WHILE REFERRING TO THE EARLIER CI RCULAR NO.704 (SUPRA) FURTHER EXPLAINED THAT THIS PRIMARY POSITION AS REGARDS THE DATE OF TRANSFER AND PERIOD OF HOLDING DOES NOT CHANGE EVEN WHEN THE SECURITIES A RE HELD IN THE DEMATERIALIZE FORM. THE BROKER M/S. SWAN SECURITIES PVT. LTD. CON FIRMED THAT THE ASSESSEE PURCHASED SHARES FORM THEM IN APRIL, 2005 WHICH IS SUPPORTED BY ALL THE DOCUMENTS REFERRED TO ABOVE AND PARTICULARLY THE BALANCE SHEE T FOR THE PRECEDING ASSESSMENT YEAR AND THE SCRUTINY ASSESSMENT ORDER PASSED BY TH E REVENUE AUTHORITIES. THEREFORE, INSTEAD OF CONSIDERING THE TRANSACTION N OTED IN THE DEMAT ACCOUNT THE REVENUE AUTHORITIES SHOULD HAVE FOLLOWED THE ABOVE CIRCULAR OF THE BOARD AND ACCORDING TO THE SAME THE DATE OF CONTRACT SHALL BE TREATED AS THE DATE OF TRANSFER. SINCE THE REVENUE DEPARTMENT DID NOT DISPUTE PURCHA SE OF THE SHARES FROM M/S. SWAN SECURITIES PVT. LTD. IN THE SCRUTINY ASSESSMEN T OF PRECEDING ASSESSMENT YEAR 2006-07, THEREFORE, THE ASSESSEE IS ABLE TO ESTABLI SH THAT SHARES HAVE BEEN PURCHASED IN APRIL, 2005. THEREFORE, INSTEAD OF SHO RT TERM CAPITAL GAINS, THE LEARNED ITA NO.3233 & 3156/AHD/2010 A.Y.2007-08 MANOJKUMAR SARAWAGI(HUF) V. ACIT, CC-4, SRT PAGE 14 CIT(A) SHOULD HAVE TREATED THE GAINS AS LONG TERM C APITAL GAINS. THE ORDER OF THE LEARNED CIT(A) TO THAT EXTENT IS, THEREFORE, LIABLE TO BE SET ASIDE. THE ORDER OF THE LEARNED CIT(A) TO THAT EXTENT HOLDING TRANSACTION T O BE SHORT TERM CAPITAL GAIN IS SET ASIDE AND WE DIRECT THE AO TO ACCEPT THE CLAIM OF T HE ASSESSEE FOR LONG TERM CAPITAL GAINS. 10. IN VIEW OF THE ABOVE FINDINGS, THE APPEAL OF TH E ASSESSEE IS ALLOWED AND THE REVENUES APPEAL IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/03/201 2 SD/- SD/- ( G.C.GUPTA ) ( T.R. MEENA ) (VICE PRESIDENT) (ACCOUNTANT MEMBER) %&'- 16/03/2012 ) * DKP* $ $ $ $ ++, ++, ++, ++, -,' -,' -,' -,' / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. &&+2 3 / CONCERNED CIT 4. 3- / CIT (A) 5. ,67 +++2, +2#, ) / DR, ITAT, AHMEDABAD 6. 7:; <= / GUARD FILE. BY ORDER/ $ , /TRUE COPY/ >/) & +2#, ) *