M/s Sai Deepa Rock Drills P. Ltd., Hyderabad V. Income Tax Officer, Ward-3(1), Hyderabad

ITA 459/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82270 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 18-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Share purchase agreement

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A: HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.459/HYD/2014 ASSESSMENT YEAR 2004-2005 M/S. SAI DEEPA ROCK DRILLS P. LTD., HYDERABAD. PAN AAFCS-6791-L VS. ITO, WARD 3(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. A.V. RAGHURAM FOR REVENUE : MR. R. MOHAN REDDY DATE OF HEARING : 21.07.2014 DATE OF PRONOUNCEMENT : 28.08.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE O RDER OF THE A.O. AS CONFIRMED BY THE LD. CIT(A)-IV, HYDE RABAD DATED 10.01.2014 CONFIRMING THE ACTION OF THE A.O. IN TRE ATING THE SALE PROCEEDS AS INCOME FROM OTHER SOURCES TO AN EXTEN T OF RS.25,87,400. 2. BRIEFLY STATED, ASSESSEE IS IN THE BUSINESS OF MANUFACTURE AND SALE OF DRILLING, MINING, CONSTRUCT ION TOOLS AND ACCESSORIES. IT FILED RETURN OF INCOME DECLARING TO TAL INCOME OF RS.2,18,460 AND CLAIMING EXEMPTION OF LONG TERM CAP ITAL GAIN TO AN EXTENT OF RS.24,87,000. THIS AMOUNT IS UNDER DIS PUTE. 2.1. THE UNDISPUTED FACTS OF THE CASE ARE THAT ASS ESSEE HAD PURCHASED 20,000 SHARES OF M/S. AMLUCKIE INVEST MENT CO. (IN SHORT AIC) ON 12.04.2002 STATED TO BE FOR A C ONSIDERATION OF 2 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD RS.1,00,400 THROUGH A BROKER M/S. V.K. SINGHANIA & CO., KOLKATA. THE SHARE CERTIFICATES IN PHYSICAL FORM WE RE SUBMITTED TO THE SAID AIC FOR TRANSFER AND RECEIVED BACK ON 27.0 4.2002. THESE SHARES SUBSEQUENTLY, DEMATERIALIZED THROUGH THE DEP OSITORY SERVICE OF HDFC BANK ON 25.07.2003. THIS WAS SUBSEQ UENTLY SOLD THROUGH M/S. AHILYA COMMERCIALS P. LTD., KOLKA TA ON 20.02.2004 FOR A SUM OF RS.25,87,400/-. 2.3. ASSESSING OFFICER WAS OF THE OPINION THAT SEB I HAS SUSPENDED TRADING IN THE SHARES OF AIC VIDE THEIR L ETTER DATED 29.09.2005 FOR UNFAIR TRADE PRACTICES BY SOME OF TH E BROKERS AND M/S. AHILYA COMMERCIALS P. LTD., WAS ALSO ONE SUCH BROKER. A.O. WAS ALSO OF THE OPINION THAT WHILE THE SHARES WERE PURCHASED ON 12.04.2002 THE SAID BROKER M/S. V.K. SINGHANIA & CO ., KOLKATA RAISED A BILL ON 18.04.2002 AND THE PAYMENTS WERE M ADE BETWEEN 27.04.2002 TO 05.05.2002 IN CASH. A.O. WAS ALSO FUR THER NOTED THAT ASSESSEE HAS NOT INVESTED ANYWHERE EARLIER IN SHARES AND THERE IS NO PROPER REASON FOR INVESTING IN THIS COM PANY AT KOLKATA THROUGH UNKNOWN BROKERS. ON FURTHER ENQUIRY, A.O. N OTED THAT ASSESSEE HAD CLAIMED THAT THE PURCHASE AND PAYMENTS WERE DONE AT KOLKATA THROUGH THE SUPPLIER OF RAW MATERIALS BU T NEITHER THE NAME AND ADDRESS OF THE SUPPLIER HAS BEEN FURNISHED NOR AN EXPLANATION FILED FOR MAKING THE PAYMENTS TO THE KO LKATA BROKER ON SIX DIFFERENT DATES IN THE MONTH OF APRIL/MAY, 2 002. A.O. WAS ALSO OF THE OPINION THAT ASSESSEE DID NOT FURNISH T HE PERSON THROUGH WHOM THE BROKER HAD BEEN CONTACTED. DOUBTIN G THE ENTIRE TRANSACTION, A.O. TREATED THE RECEIPT OF RS. 25,87,400 ON SALE OF SHARES AS INCOME FROM OTHER SOURCES. 2.4. BEFORE THE LD. CIT(A), ASSESSEE REITERATED TH E FACTS ABOUT PURCHASE AND SALE OF SHARES. BUT LD. CIT(A) D ID NOT AGREE AND UPHELD THE ORDER OF THE A.O. BY HOLDING AS UNDE R : 3 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD 8. I HAVE CONSIDERED THE FACTS ON RECORD AND THE SUBMISSIONS OF THE A.R. THERE IS NO DENYING THAT TH E STOCK IN WHICH THE APPELLANT HAS TRANSACTED WAS NEITHER BEIN G TRADED REGULARLY NOR DID IT HAVE ANY STRONG FUNDAME NTALS. THEREFORE, ONUS WAS ON THE APPELLANT TO GIVE THE FU LL INFORMATION ABOUT THE MEDIATORS/SUPPLIERS ETC. WHO FACILITATED THE APPELLANT TO ENTER INTO TRANSACTION S IN THIS SCRIP OR THE NATURE OF THE MARKET NEWS WHICH PROMPT ED THE APPELLANT TO PURCHASE THE SHARES. THE APPELLANT FAI LED TO FURNISH ANY SUCH INFORMATION. THE APPELLANT HAS ALS O BEEN UNABLE TO EXPLAIN SATISFACTORILY THE MANNER IN WHIC H THE PAYMENT FOR THE PURCHASE OF SHARES WAS MADE OR TO E XPLAIN HOW IT CAME INTO POSSESSION OF THE SHARES EVEN BEFO RE MAKING THE PAYMENT FOR IT. 9. THESE ARE YAWNING GAPS IN THE APPELLANTS VERSIO N OF THE EVENTS WHICH FORTIFIES THE ASSESSING OFFICERS CONCLUSION ON THE BASIS OF THE SEBI ORDERS. THERE IS NO DOUBT THAT THE TRANSACTIONS ANALYSED IN SEBIS ORDER PERTAIN TO A LATER PERIOD. HOWEVER, THE ANALYSIS BY SEBI IS MERELY FOR THE PURPOSE OF ESTABLISHING THAT THE BROKER CONCERNED ( THROUGH WHOM THE SHARES HAD BEEN SOLD BY THE APPELLANT) HAD INDULGED IN UNFAIR TRADE PRACTICES. THE ORDER OF SE BI IS DEFINITELY NOT MEANT TO BE AN EXHAUSTIVE RECORD OF ALL THE UNFAIR PRACTICES INDULGED IN BY THE BROKER. THEREFO RE, THE FACT THAT THE APPELLANT SOLD THE SHARES LONG BEFORE THE PERIOD DISCUSSED BY SEBI IN ITS ORDER IS OF NO CONSEQUENCE . 10. THE DECISION OF THE ASSESSING OFFICER TREATING THE ALLEGED RECEIPTS FROM SALE OF SHARES AS INCOME FROM OTHER SOURCES IS, THEREFORE, UPHELD AND THE APPEAL IS DIS MISSED. 3. CONFRONTING THE FINDINGS OF THE AUTHORITIES, IT WAS THE SUBMISSION THAT ASSESSEE DID PURCHASE THE SHARES, S ENT THEM FOR TRANSFER AND ALSO CONVERTED THEM INTO DEMAT FORM MU CH EARLIER THAN THE PRICE INCREASE. IT WAS ALSO FURTHER SUBMIT TED THAT FROM THE TIME IT WAS DEMATERIALIZED WITH THE HDFC BANK T ILL IT IS SOLD THE SHARES ARE IN DEMAT FORM TO ASSESSEES CREDIT A ND AS PER THE ANNUAL REPORT OF THE COMPANY FOR THE YEAR ENDING MA RCH, 2003, THE SHARE VALUE IS EVEN LESS THAN THE INVESTMENT VA LUE. IT WAS FURTHER SUBMITTED THAT ASSESSEE DID TRANSACT GENUIN ELY IN 4 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD PURCHASE AND SALE AND A.O. WAS NOT CORRECT IN TREAT ING IT AS INCOME FROM OTHER SOURCES. LD. COUNSEL RELIED ON TH E DECISION OF THE COORDINATE BENCH IN THE CASE OF DCIT VS. ASHOK BHATT (HUF) VIDE ITA.NO.6909/MUM/2008 DATED 31.10.2011 AND ALSO THE DECISION OF THE COORDINATE BENCH AT HYDERABAD IN TH E CASE OF ITO, WARD 2, NIZAMABAD VS. SMT. AARTI MITTAL, ADILA BAD IN ITA.NO.165/HYD/2011 TO 169/HYD/2011, ITA.NO.877/HYD / 2011 TO ITA.NO.885/HYD/ 2011 IN SUPPORT OF THE CONTENTIO NS. 4. LD. D.R. HOWEVER, REITERATED THE CONTENTION OF THE A.O. AND LD. CIT(A) TO SUBMIT THAT THE TRANSACTION IS NOT A GENUINE TRANSACTION, HENCE RECEIPT WAS ASSESSED AS INCOME FROM OTHER SOURCES. 5. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE F ACTS ON RECORD. AS FAR AS THE FACTS OF PURCHASE AND SALE ARE CONCERNED, ASSESSEE HAS INDEED FILED NECESSARY DOCUMENTS EVIDE NCING THE PURCHASE OF SHARES AS WELL AS GETTING THEM TRANSFER RED IN ITS NAME AND LATER ON DEMATERIALIZED FORM THROUGH HDFC BANK AND SUBSEQUENT SALE THEREOF. IT IS ALSO ON RECORD THAT A.O. DID NOT DOUBT SALE OF SHARES THROUGH STOCK EXCHANGE. IT IS HIS CONTENTION THAT TRANSACTION OF PURCHASE IS A MAKE BELIEVE TRAN SACTION AS THE ASSESSEE HAS NOT PAID CONSIDERATION THROUGH CHEQUE AND PAYMENT OF CASH WAS NOT EXPLAINED PROPERLY. THIS CO NTENTION ALONE CANNOT MAKE THE TRANSACTION AS A BOGUS TRANSA CTION AS ASSESSEE GOT THE SHARES AND TRANSFERRED IN ITS NAME IMMEDIATELY. MOREOVER, THESE ARE ALSO TRANSFERRED DE-MAT FORM TH ROUGH HDFC BANK. ASSESSEE ALSO REPRESENTED THE INVESTMENT IN T HE BALANCE SHEET UNDER THE HEAD INVESTMENTS AND FOR THE YEAR ENDING MARCH, 2003 THE SHARES WERE ALSO SHOWN TO HAVE MARK ET VALUE LESS THAN THE INVESTMENT VALUE. WHY ASSESSEE HAS PU RCHASED THIS PARTICULAR SET OF SHARES AND WHY THEY ARE PURCHASED THROUGH 5 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD BROKERS AT KOLKATA ARE NOT THE CONCERN OF THE A.O. AS IT IS THE PREROGATIVE OF THE ASSESSEE TO TRANSACT ON ITS OWN. WHAT IS REQUIRED TO BE EXAMINED IS WHETHER THE TRANSACTION IS A GENUINE TRANSACTION OR NOT. THE EVIDENCE ON RECORD INDICATE THAT THERE IS NO DISPUTE WITH REFERENCE TO PURCHASE OF SHARES AND SUBSEQUENT TRANSFER IN ASSESSEES NAME. 6. NOW COMING TO THE SALE OF SHARES ALSO, THERE IS NO DISPUTE WITH REFERENCE TO SALE OF SHARES ON STOCK E XCHANGE. IN VIEW OF THESE TWO FACTS, WE ARE OF THE OPINION THAT TRANSACTION OF SALE OF SHARES RESULTS IN CAPITAL GAIN ONLY. A.O. D ID NOT DISPUTE THAT THE ASSESSEE HAS TRANSFERRED THE SHARES ATLEAS T, IN JULY, 2003 IN DEMAT FORM THROUGH HDFC BANK. EVEN IF HE DO UBTS THE PURCHASE OF SHARES IN APRIL, 2002 AND SUBSEQUENT TR ANSFER IN 2002 ITSELF IN PHYSICAL FORM, AT LEAST THE DEMAT EV IDENCE FURNISHED BY THE ASSESSEE CANNOT BE REJECTED AS THE RE MAY NOT BE ANY COLLUSION WHEN THE SHARES ARE TRANSFERRED IN DE MAT FORM THROUGH THE BANK. MOREOVER, AS SEEN FROM THE RECORD , THE SHARE PRICE HAS NEVER INCREASED TO THE ASTRONOMICAL EXTEN T AT THAT POINT OF TIME. IN FACT, THE PRICE AS ON 31.03.2003 AS PER THE ANNUAL REPORT IS LESS THAN THE INVESTMENT OF RS. 1 LAKH. T HE ANNUAL REPORT FOR THE YEAR UNDER ENDING 31.03.2003 INDICAT ES THE FOLLOWING : SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD SCHEDULE FORMING PART OF BALANCE SHEET FOR THE YEAR ENDED 31 ST MARCH, 2003 PARTICULARS AS AT 31.3.2003 RS. AS AT 31.03.2002 RS. SCHEDULE INVESTMENTS 6 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD SHARES OF AMLUCKIES INVESTMENT COMPANY LTD., (THE VALUE OF 20,000 SHARES HAVE BEEN TAKEN AT COST PRICE AND THE MARKET VALUE OF THE SAME IS RS.72,000 @ RS.3.60 PER SHARE). 1,00,400.00 TOTAL INVESTMENTS 1 , 00,400.00 6.1. THE VALUE OF 20,000 SHARES HAVE BEEN TAKEN AT COST PRICE BUT MARKET VALUE OF THE SAME WAS RS.72,000 AT RS.3.60 PER SHARE. THIS INDICATES THAT THE SHARES INVESTED IN A PRIL, 2002 AT 1,00,400 HAS IN FACT REDUCED TO RS.72,000 AS ON 31. 03.2003. IF ASSESSEE WANTED TO GAIN BY DUBIOUS MEAN, AT BEST, H E COULD HAVE SHOWN THE INVESTMENT IN MARCH, 2003 AT RS.72,000 ON LY WHEN THE SHARE PRICE WAS FURTHER REDUCED. THIS ITSELF IN DICATES ASSESSEES CONTENTION THAT SHARES ARE PURCHASED IN APRIL, 2002 CANNOT BE DOUBTED. SINCE THERE IS NO DISPUTE WITH R EFERENCE TO SUBSEQUENT SALE THEREOF IN THE STOCK EXCHANGE, THE TRANSACTION CERTAINLY RESULTS IN CAPITAL GAIN ONLY. 6.2. THE CONTENTION THAT SUBSEQUENTLY SEBI HAS BAN NED THE TRANSACTION IN THE SAID COMPANY AND THE BROKER THROUGH WHICH ASSESSEE TRANSACTED WAS ALSO SUSPENDED DOES N OT TAKE A WAY THE GENUINENESS OF THE TRANSACTIONS WHICH HAPPE NED MUCH EARLIER TO THE ABOVE EVENTS. IN FACT, ASSESSEE RECE IVED A PRICE WHICH IS MORE THAN THE INVESTMENT BUT NOT SO HIGH A S COMPARED TO SUBSEQUENT TRANSACTIONS IN THE SAME SHARE AS OBT AINED BY THE A.O. IN THE COURSE OF ENQUIRIES. IN FACT, IF ASSESS EE WANTED TO ENTER INTO DUBIOUS TRANSACTIONS HE COULD HAVE SOLD AT A LATER POINT OF TIME SO AS TO GAIN MUCH MORE AMOUNT. THESE INDICATE THAT ASSESSEE HAS INDEED PURCHASED AND SOLD AS PER ITS CONVENIENCE, SO AS TO GAIN A REASONABLE AMOUNT ON T HE INVESTMENT. 7 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD 6.3 WE FIND THAT THE COORDINATE BENCH OF HYD ERABAD TRIBUNAL IN THE CASE OF ITO, WARD 2, NIZAMABAD VS. SMT. AARTI MITTAL, ADILABAD IN ITA.NO.165/HYD/2011 TO 169/HYD/ 2011, ITA.NO.877/HYD/ 2011 TO ITA.NO.885/HYD/ 2011 HAS CO NSIDERED SIMILAR ISSUE AND HELD AS UNDER : 24. WE FIND THAT THE CASE-LAW RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE GENERALLY SUPPORTS THE CAS E OF THE ASSESSEE, AND IDENTICAL ISSUE HAS BEEN DECIDED IN F AVOUR OF THE ASSESSEE BY VARIOUS HIGH COURTS AND TRIBUNALS IN TH E CASES RELIED UPON BY THE ASSESSEE, AS NOTED ABOVE. IT IS WORTHWHILE, TO REFER, AT THIS JUNCTURE, TO THE DECISION OF HON BLE HIGH COURT OF JHARKHAND IN THE CASE OF ARUN KUMAR AGARWAL (HUF ) & OTHERS (SUPRA), WHEREIN IT HAS BEEN HELD AS UNDER : 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEAR NED COUNSEL FOR THE PARTIES AND WE ARE OF THE CONSIDERE D OPINION THAT THE LEARNED ASSESSING OFFICER WAS MUCH INFLUEN CED BY THE ENQUIRY REPORT WHICH MAY HAS BEEN BROUGHT ON RE CORD BY THE EFFORTS OF THE ASSESSING OFFICER AND THAT ENQUI RY REPORT WAS PREPARED BY THE SEBI AND FROM THE OBSERVATIONS MADE BY THE TAX APPEAL NO.4 OF 2011 WITH ANALOGOUS CASE ASSESSING OFFICER HIMSELF, IT IS CLEAR THAT AFTER G ETTING THAT ENQUIRY REPORT, THE SEBI PRIMA FACIE FOUND INVOLVEM ENT OF SOME OF THE SHARE BROKERS IN UNFAIR TRADE PRACTICES . EVEN IN A CASE WHERE THE SHARE BROKER WAS FOUND INVOLVED IN UNFAIR TRADE PRACTICE AND WAS INVOLVED IN LOWERING AND RIS ING OF THE SHARE PRICE, AND ANY PERSON, WHO HIMSELF IS NOT INV OLVED IN THAT TYPE OF TRANSACTION, IF PURCHASED THE SHARE FR OM THAT BROKER INNOCENTLY AND BONAFIDELY AND IF HE SHOW HIS BONAFIDE IN TRANSACTION BY SHOWING RELEVANT MATERIA L, FACTS AND CIRCUMSTANCES AND DOCUMENTS, THEN MERELY ON THE BASIS OF THE REASON THAT SHARE BROKER WAS INVOLVED IN DEA LING IN THE SHARE OF A PARTICULAR COMPANY IN COLLUSION WITH OTHERS OR IN THE MANNER OF UNFAIR TRADE PRACTICES AGAINST THE NORMS OF S.E.B.I AND STOCK EXCHANGE, THEN MERELY BECAUSE OF THAT FACT A PERSON WHO BONAFIDELY ENTERED INTO SHARE TRA NSACTION OF THAT COMPANY THROUGH SUCH BROKER THEN ONLY BY ME RE ASSUMPTION SUCH TRANSACTIONS CANNOT BE HELD TO BE A SHAME TRANSACTION. FACT OF TINTED BROKER MAY BE RELEVANT FOR SUSPICION BUT IT ALONE NECESSARILY DOES LEAD TO CON CLUSION OF ALL TRANSACTION OF THAT BROKER AS TINTED. IN SUCH CIRCUMSTANCES, FURTHER ENQUIRY IS NEEDED AND THAT I S FOR 8 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD INDIVIDUAL CASE. SUCH FURTHER ENQUIRY WAS NOT CONDU CTED IN THAT CASE. 11. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO MENT ION HERE THAT IT IS NOT DISPUTED BY THE REVENUE BEFORE US TH AT THE SHARES OF THESE ASSESSEES WERE ALREADY SHOWN IN THE EARLIER BALANCE SHEET SUBMITTED BY THE ASSESSEES, AND THERE FORE, IN THAT SITUATION, HOW THE REVENUE CONDEMNED THE TRANS ACTION EVEN ON THE GROUND OF STEEP RISE IN THE SHARES. IF WITHIN A PERIOD OF ONE YEAR, THE SHARE PRICE HAS RISEN FROM RS.5 TO 55 AND FROM 9 TO 160 AND ONE PERSON WAS HOLDING THE SH ARES MUCH PRIOR TO THAT START OF RISE OF THE SHARE, THEN HOW IT CAN BE INFERRED THAT SUCH PERSON ENTERED INTO SHAM TRAN SACTION FEW YEARS AGO AND PREPARED FOR GETTING THE BENEFIT TAX APPEAL NO.4 OF 2011 WITH ANALOGOUS CASE AFTER FEW Y EARS WHEN THE SHARE WILL START RISING STEEPLY. IN PRESEN T CASE EVEN THERE WAS NO REASON FOR SUCH SUSPICION WHEN THE SHA RES WERE PURCHASED YEARS BEFORE THE UNUSUAL FLUCTUATION IN THE SHARE PRICE. HERE IN THIS CASE, WE HAVE GIVEN EXAMP LE OF ONE OF THE TAX APPEAL WHEREIN THE SHARES WERE PURCHASED IN THE YEAR 2004 AND WERE SOLD IN THE YEAR 2006, WHICH IS SAID TO BE ONE OF THE CASE WHEREIN THE GAP IN THE PURCHASE AND SALE OF THE SHARES WAS NARROWEST. IN OTHER CASES AS WE H AVE NOTICED FROM THE VARIOUS ORDERS OF THE C.I.T(APPEAL S) THAT, THE SHARES OF SOME OF THE COMPANIES WERE PURCHASED BY T HE ASSESSEES EVEN FIVE YEARS AGO FROM THE TIME OF SALE AND THOSE PURCHASERS WERE ALREADY DISCLOSED IN THE BALA NCE SHEET OF THE ASSESSEE, THEN FROM ANY ANGLE, IT IS P ROVED THAT THE ASSESSEES HAD HELD THE SHARES MUCH PRIOR TO 12 MONTHS OF THE SALE OF THE SHARES. 12. HENCE, THESE APPEALS ARE DISMISSED 25. FURTHER, COORDINATE BENCH OF THE DELHI TRIBUNA L IN THE CASE OF SMT. NEELAM CHAWLA (2008) 6 DTR (DEL) (TRIB ) 141, HAS BEEN HELD AS FOLLOWS : . . . . . AFTER THE ASSESSEE FURNISHED PROOF FOR P URCHASE, SALE, REGISTRATION OF SHARES IN HER NAME DULY SUPPORTED B Y MARKET QUOTATIONS ETC. AND AO IGNORED THE SAME ON THE BASI S OF THE STATEMENT OF THE SHARE BROKER THROUGH WHOM THE ASSE SSEE HAS SOLD THE SHARES, THE PURCHASE OF SHARES MADE IN EARLIER YEARS CANNOT BE DOUBTED. WE FIND THAT THE CIT(A) HA S CONSIDERED THE FACTUAL MATRIX OF THE CASE IN DETAIL AND THE PROPOSITIONS OF THE ASSESSEE ARE SUPPORTED BY THE L EGAL PRECEDENTS CITED SUPRA. IN VIEW OF THE SAME, WE DO NOT SEE 9 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A ) AND THE REVENUES APPEAL IS DISMISSED. 26. SIMILARLY, THE COORDINATE BENCH OF THE AHMEDABA D TRIBUNAL IN THE CASE OF MEENA DEVI N. GUPTA (SUPRA) HELD AS UNDER : 5. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BEL OW IN THE LIGHT OF THE COMPILATION FILED AND CASE LAWS CITED. ACCORDING TO US, THERE ARE CERTAIN COGENT EVIDENCES WHICH OTH ERWISE CORROBORATE THE CLAIM OF THE ASSESSEE. ACCORDING TO US, EVEN IN THE ABSENCE OF THE CONFIRMATION BY THOSE SHARE B ROKERS ONE HAS TO EXAMINE THAT WHETHER THE SHARES HAVE BEE N PURCHASED AND AFTER RETAINING THEM FOR A CERTAIN PE RIOD THOSE SHARES HAVE ACTUALLY BEEN SOLD BY THE ASSESSE E. IN THE PRESENT CASE, FACTS HAVE REVEALED THAT THE SHARES O F SARANG CHEMICALS WERE DULY DEMATED AND THEREUPON THE SALES WERE MADE THROUGH BANKING TRANSACTIONS. THE DEMAT ACCOUN T MAINTAINED WITH ICICI BANK HAS REVEALED THE SHARES NUMBERS, ETC. FROM THE SIDE OF THE ASSESSEE, IT IS VEHEMENTLY CONTESTED THAT THERE WAS A REASON OF DENIAL OF TRAN SACTION BY THOSE SHARE-BROKERS BECAUSE THEY HAVE NOT INTIMATED THE TRANSACTION TO THE SEBI AND THAT ONE OF THEM HAS AL SO MADE THE PURCHASE TRANSACTION IN CASH WHICH WAS AGAINST THE SEBI GUIDELINES. APARTMENT FROM THESE EVIDENCES, OU R ATTENTION HAS ALSO BEEN DRAWN ON A CERTIFICATE ISSU ED BY 'SHARE TRANSFER AGENT' THAT THE TRANSFER OF THOSE S HARES IN THE NAME OF THE ASSESSEE WAS DULY APPROVED. THE AS SESSEE HAS EXPRESSED TO HOLD THOSE SHARES IN 'DEMATERIALIZ ED FORM' THEREFORE THE ASSESSEE WAS ASKED TO FILL UP THE 'DEMATERIALIZATION REQUEST FORM'. THIS INFORMATION IS VERY VITAL AND PROVES THE FACT THAT THE ASSESSEE HAD IN FACT PURCHASED THE SHARES OF SARANG CHEMICALS LTD. IT IS ALSO DIFFICULT TO IGNORE AN ANOTHER FACTUAL POSITION THA T THE ASSESSEE IS IN THE PAST ASSESSMENT YEAR HAD DULY DI SCLOSED IN THE BALANCE-SHEET THE PURCHASE OF THOSE SHARES. ALTHOUGH, IT WAS AN OFF MARKET TRANSACTION BUT IT WAS PROPERL Y DOCUMENTED AND DULY SUPPORTED BY RELEVANT EVIDENCES . WE HAVE EXAMINED FEW CASE-LAWS, WHEREIN THE RESPECTED CO- ORDINATE BENCHES HAVE ALSO TAKEN A VIEW THAT ONCE T HE PURCHASE OF SHARES HAVE DULY BEEN RECORDED IN THE B ALANCE- SHEET IN ONE FINANCIAL YEAR AND LATER ON, THOSE VER Y SHARES HAVE BEEN SOLD IN ANOTHER FINANCIAL YEAR, THEN THE PURCHASE OF SHARES SHOULD NOT HAVE BEEN DOUBTED, IF DULY REC OGNIZED BY THE SAID COMPANY AND LATER ON TRANSACTED THROUGH 10 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD BANKING CHANNEL. TO KEEP BREVITY IN MIND, WE ARE NO T DISCUSSING ALL THOSE CASE-LAWS OR CITED DECISION OF THE TRIBUNAL, WHEREIN ALMOST ON IDENTICAL FACTS WHEN TH E PURCHASES WERE DOUBTED BY THE REVENUE DEPARTMENT, B UT CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE A CONSCIOUS VIEW HAVE BEEN TAKEN THAT ONCE THE SHARES WERE IN RESPECT OF A LISTED COMPANY AND TRANSACTION WAS THROUGH DEMAT ACCOUNT WHICH WAS AS PER THE RECOGNIZ ED STOCK EXCHANGE QUOTED PRICE, THEN THERE WAS NO REAS ON TO HOLD SUCH NATURE OF TRANSACTION AS NON-GENUINE. RES PECTFULLY FOLLOWING THESE DECISIONS AND OTHER CASE LAWS, WE H EREBY REVERSE THE FACTUAL AS ALSO LEGAL FINDINGS OF THE A UTHORITIES BELOW AND DIRECT TO ASSESS THE IMPUGNED TRANSACTION UNDER THE HEAD LONG TERM CAPITAL GAIN. 27. THE FACTS WHICH WERE PECULIAR TO THE CASE OF SUMATI DAYAL (SUPRA), RELIED UPON BY THE ASSESSING OFFICER AS WELL AS THE LEARNED DEPARTMENTAL REPRESENTATIVE, ARE ABSENT IN THE CASES OF THESE ASSESSEES. THE ASSESSEES WERE REGULA R INVESTORS IN SHARES. IN THE FACTS OF THE PRESENT CA SES, THE TRANSACTIONS WERE ENTERED IN THE BOOKS; AND INVESTM ENT IN SHARES DOES NOT REQUIRE THE EXPERTISE AS IN CASE OF HORSE RACES AND THE SAME ARE DONE THROUGH BROKERS DULY EVIDENCE D BY DOCUMENT. IN THE CIRCUMSTANCES THEREFORE, THE CASE OF SUMATI DAYAL, WHICH IS BASED ON THE THEORY OF HUMAN PROBAB ILITY, HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. TH E RATIO LAID DOWN IN THE CASE OF DURGA PRASAD MORE (SUPRA), ALSO RELIED UPON BY THE LEARNED ASSESSING OFFICER AND THE LEARN ED DEPARTMENTAL REPRESENTATIVE BEFORE US, HAS NO APPLI CATION TO THE FACTS OF THE CASE, AS BROUGHT OUT BY THE LEARNE D COUNSEL FOR THE ASSESSEES. 28. IN THE LIGHT OF THE FOREGOING DISCUSSION, RESP ECTFULLY FOLLOWING THE DECISION OF THE JHARKHAND HIGH COURT IN THE CASE OF ARUN KUMAR AGARWAL(HUF) (SUPRA), BESIDES OTHER D ECISIONS OF THE TRIBUNAL REFERRED TO ABOVE, WE FIND NO INFIR MITY IN THE IMPUGNED ORDERS OF THE CIT(A). THE SAME ARE ACCORDI NGLY CONFIRMED AND THE GROUNDS OF THE REVENUE IN THESE A PPEALS ARE REJECTED. 6.3. SIMILAR VIEW WAS ALSO EXPRESSED BY THE COORDI NATE BENCH IN THE CASE OF SHRI ASHOK BHATT (HUF) (SUPRA) WHEREIN ALSO ASSESSEES TRANSACTIONS WERE HELD TO BE GENUINE TRA NSACTIONS. BOTH ON PRINCIPLES OF LAW AND ON FACTS, WE ARE OF T HE OPINION THAT 11 ITA.NO.459/HYD/2014 M/S. SAI DEEPA ROCK DRILLS P. LTD. HYDERABAD ASSESSEES TRANSACTIONS CAN BE CONSIDERED GENUINE. IN THE ABSENCE OF ANY EVIDENCE ON RECORD THAT ASSESSEE HAS INDULGED IN MAKING ADJUSTMENT ENTRIES THE CONTENTIONS OF THE A. O. WHICH IS BASED ON PRESUMPTIONS AND CONJECTURES CANNOT BE ACC EPTED. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE HIGH COURT OF JHARKHAND IN THE CASE OF ARUN KUMAR AGARWAL (HUF) & OTHERS (ORDER DATED 13.7.2012 IN TAX APPEAL NO.4 OF 2011) AND OTHER COORDINATE BENCH DECISIONS QUOTED ABOVE, WE ARE OF THE OPINION THAT CAPITAL GAINS EARNED BY THE ASSESSEE IS TO BE TAXED AS SUCH AND A.O. ERRED IN CONSIDERING THE ENTIRE SALE PROCE EDS AS INCOME FROM OTHER SOURCES. IN VIEW OF THIS, ASSESSEES CON TENTIONS ARE ACCEPTED. AO IS DIRECTED TO ACCEPT THE GAIN AS LONG TERM CAPITAL GAIN. THE ADDITION STANDS DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 28.08.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 28 TH AUGUST, 2014 VBP/- COPY TO 1. M/S. SAI DEEPA ROCK DRILLS P. LTD., HYDERABAD. C/O. MR. K. VASANTKUMAR & MR. A.V. RAGHURAM ADVOCATES, 610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD-1. 2. THE INCOME TAX OFFICER, WARD 3(1), HYDERABAD 3. CIT(A)-IV, HYDERABAD 4. CIT-III, HYDERABAD 5. D.R. A BENCH, ITAT, HYDERABAD.