Anita Agarwal , Kolkata V. ITO, Ward - 34(3) , Kolkata

ITA 70/KOL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9378 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-06-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 14-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYAJIT MONDAL
• Keywords: Unexplained expenditure; Capital asset; Earning of tax free income; Accommodation entries; Penny stocks; TDS
• Section: 69C; 142(1); 68

Judgement Text

1 ITA NO. 70/KOL/2019 SMT. ANITA AGARWAL, AY 2014-15 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 70/KOL/2019 ASSESSMENT YEAR: 2014-15 SMT. ANITA AGARWAL (PAN: AEQPA 8009 M) VS. ITO, WARD 34(3), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 10.06.2019 DATE OF PRONOUNCEMENT 03.07.2019 FOR THE APPELLANT SHRI SUBASH AGARWAL, ADVOCATE FOR THE RESPONDENT SHRI SATYAJIT MONDAL, ADDL. CIT , SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS IS APPEAL PREFERRED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A) 10, KOLKATA DATED 26.12.2018 FOR ASSESSMENT YEAR 2014-15. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 15,25,000/- MADE BY THE AO INVOKING SECTION 68 IN RESPECT OF SALE PROCEEDS RELATING TO SALE SCRIPS OF M/S. KA ILASH AUTO FINANCE LTD. (KAFL) AS WELL AS AGAINST THE CONFIRMATION OF ADDITION OF RS. 45,750/ - MADE BY AO ON ACCOUNT OF ALLEGED COMMISSION EXPENSES FOR EARNING THE BOGUS LONG TERM CAPITAL GAIN. 3. BRIEF FACTS OF THE CASE AS NOTED BY THE AO IS TH AT THE ASSESSEE HAS CLAIMED EXEMPT INCOME U/S 10(38) BY WAY OF LONG TERM CAPITAL GAIN FROM SALE OF SHARES NAMED M/S. KAILASH AUTO FINANCE LTD. (KAFL) THROUGH STOCK EXCH ANGE. THE AO IN ORDER TO VERIFY THE GENUINENESS OF THE CLAIM, ISSUED STATUTORY NOTICES U/S 142(1) ETC. ON THE ASSESSEE PURSUANT TO THE SAME, THE AR OF THE ASSESSEE APPEARED AND FILED COPIES OF UNAUDITED ACCOUNT, COPY OF BILL OF PURCHASE OF SHARES, CONTRACT NOTES FOR SALE OF SHARES, BANK STATEMENTS AND THE DETAILS 2 ITA NO. 70/KOL/2019 SMT. ANITA AGARWAL, AY 2014-15 OF INCOME FROM LONG TERM CAPITAL GAIN. THE AO AFTER ACKNOWLEDGING RECEIPT OF THE AFORESAID DOCUMENTS, HOWEVER, TOOK AID OF THE REPOR T OF THE INVESTIGATION WING OF THE DEPARTMENT RELATING TO CERTAIN BROKERS MISUSE OF ST OCK EXCHANGE PLATFORM FOR SALE OF PENNY STOCKS TO AVOID LEGITIMATE TAXES. THE AO THEREAFTER DISCUSSED ABOUT THE INVESTIGATION REPORT WHEREIN THE NAME OF 84 PENNY STOCK HAVE BEEN IDENTI FIED AND DEALT WITH. THE AO DISCUSSED THE MODUS OPERANDI AND STATES HOW THE STOCKS AFTER BEING BOUGHT FOR A VERY LOW PRICE AFTER BEING HELD FOR 12 MONTHS AND THEREAFTER THE PRICES ARE ARTIFICIALLY JACKED UP AND SOLD WITH THE ASSISTANCE OF CERTAIN UNSCRUPULOUS BROKERS IN STOCK EXCHANGE IN A PRE PLANNED MANNER. ACCORDING TO THE AO THE SEBI AFTER ENQUIRY HAVE TAK EN NOTE OF THIS NEFARIOUS PRACTICE. THEREAFTER THE AO ISSUED A NOTICE TO THE ASSESSEE D ATED 24.08.2016 THEREIN THE AO BRINGS TO THE NOTICE OF THE ASSESSEE HIS APPREHENSIONS ABOUT THE ASSESSEES CLAIM OF LTCG AND ASKED 21 QUESTIONS WHICH IS REPRODUCED IN PAGE 3 TO 5 OF HIS ORDER. THE AO ACKNOWLEDGES THAT THE ASSESSEE REPLIED TO HIS QUESTIONS BUT HAS ANSWERED IN A GENERAL WAY TO HIS 21 QUESTIONS. THE ANSWER OF THE ASSESSEE HAS ALSO BEEN REPRODUCED AT PAGE 5 OF HIS ORDER WHICH IS AS UNDER: WE ARE SUBMITTING THE FOLLOWING: 1.BANK STATEMENT OF HDFC BANK ACCOUNT FOR THE F.Y. 2013-14, SAVINGS ACCOUNT 00181000092536. 1. TRANSACTION STATEMENT OF DEPOSITORY ACCOUNT FOR F.Y . 2013-14 HDFC BANK LTD. IN301549 CLIENT ID 15999677. 2. DETAILS OF LEDGER OF THE SHARE BROKER FOR THE F.Y. 2013-14 OF BALJIT SECURITIES PVT. LTD. 3. TRANSACTION STATEMENT OF DEPOSITORY ACCOUNT AT SHAR E BROKER FOR F.Y. 2013-14 CDSL CLIENT ID 120430000002820. 4. ALL THE CONTRACT NOTES RELATING TO THE F.Y. 2013-14 OF THE SHARE BROKER BALJIT SECURITIES PVT. LTD. 5. PROFIT & LOSS ACCOUNT & BALANCE SHEET FOR THE F.Y. 2013-14. 6. A DETAILED SCRIP WISE PROFIT AND LOSS FOR F.Y. 2013 -14 BOTH SHORT TERM & LONG TERM CAPITAL GAIN IS PROVIDED. 4. THEREAFTER, THE AO TOOK NOTE OF THE FACTS THAT T HE ASSESSEE HAD PURCHASED 40000 SHARES OF M/S. PANCHSHUL MARKETING LTD. FOR RS. 40, 000/- AS ON 07.06.2012 AND THEREAFTER THE SHARES OF M/S. KAILASH AUTO FINANCE LTD. WAS DE MERGED WITH M/S. PANCHSHUL MARKETING LTD. ACCORDING TO THE AO AFTER COMING INTO EFFECT T HE SCHEME OF ARRANGEMENT, THE ASSESSEE RECEIVED 40000 SHARES OF THE DEMERGED COMPANY WERE CONVERTED TO 40000 SHARES OF M/S. 3 ITA NO. 70/KOL/2019 SMT. ANITA AGARWAL, AY 2014-15 KAILASH AUTO FINANCE LTD. (KAFL) AND THE SAID 40000 SHARES WERE SOLD FOR RS. 15,25,000/- DURING THE PERIOD FROM 16.08.2013 TO 28.08.2013 IN 3 PHASES GIVING RISE TO PROFIT OF RS. 14,81,950/- WHICH THE ASSESSEE CLAIMED AS EXEMPT FR OM TAX U/S 10(38) OF THE ACT. HOWEVER, THE AO NOTES THAT THE SCRIP OF M/S. KAILASH AUTO FI NANCE LTD. WAS SUSPENDED BY SEBI FOR IRREGULARLY COMMITTED DURING TRANSACTIONS AND THERE AFTER THE AO AGAIN ISSUED A NOTICE DATED 15.11.2016 WHICH HAS BEEN REPRODUCED FROM PAGE 6 TO 9 OF THE ASSESSMENT ORDER. ACCORDING TO THE AO, THE ASSESSEE DID NOT CARE TO REPLY FOR H IS LAST NOTICE AND, THEREFORE, TAKING INTO CONSIDERATION THE DEPARTMENTS INVESTIGATION REPORT , SEBI ACTION AND LACK OF CREDENTIALS OF M/S. KAILASH AUTO FINANCE LTD. WAS PLEASED TO DISAL LOW THE LTCG CLAIM OF THE ASSESSEE AND MADE AN ADDITION OF RS. 14,81,950/- AND AN AMOUNT O F RS. 45,750/- I.E. 3% OF RS. 15,25,000/- WAS ADDED AS UNDISCLOSED COMMISSION EXP ENSES U/S 69C OF THE ACT. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) WHO WAS PLEASED TO CONFIRM THE SAME. AGGRIEVED THE ASSESSEE IS BEFORE US. 5. THE LD. AR ASSAILING THE DECISION OF THE LD. CIT (A) BROUGHT TO OUR NOTICE THAT THE ISSUE WHETHER THE SCRIP OF M/S. KAILASH AUTO FINANC E LTD. WAS BOGUS OR NOT WAS TESTED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN SEVERAL CA SES AND HAS BEEN HELD TO BE A GENUINE TRANSACTION AND DREW OUR ATTENTION TO THE COORDINAT E BENCH OF THIS TRIBUNAL IN THE CASE OF MANISH KUMAR BAID AND MAHENDRA KUMAR BAID VS ACIT I TA NO. 1236/KOL/2017 DATED 18.08.2007 AND CONTENDED THAT THE ISSUE IS NO LONGE R RES INTEGRA. ACCORDING TO THE LD. AR, THE AO HAS MADE THE ADDITION BASED ON SUSPICION AND CONJECTURES. ACCORDING TO THE LD. AR, THE ASSESSEE HAS DISCHARGED ITS ONUS BY PRODUCING A LL THE DOCUMENTS TO PROVE THE TRANSACTIONS TO BE GENUINE AND THE AO HAS NOT BEEN ABLE TO POINT OUT ANY MISTAKE IN THE DOCUMENTS AND WITHOUT DOING SO, HE CANNOT BASED ON A GENERAL REPORT OF THE INVESTIGATION WING CANNOT MAKE THE DISALLOWANCE. IT WAS ALSO BROU GHT TO OUR NOTICE THAT THE SEBI ORDER SUSPENDING M/S. KAILASH AUTO FINANCE LTD. FROM TRAD ING HAS ALSO BEEN LIFTED WHICH HAS ALSO BEEN TAKEN NOTE OF BY THE TRIBUNAL IN VARIOUS DECIS IONS. THEREFORE, HE WANT US TO ALLOW THE ASSESSEES CLAIM OF LTCG ON SALE OF SHARES OF M/S. KAILASH AUTO FINANCE LTD. AND ALSO TO DELETE THE ADDITION BASED ON NOTIONAL COMMISSION PA ID PURPORTEDLY TO THE BROKERS. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A) AND DREW OUR ATTENTION TO THE INVESTIGATION REPORT OF THE DEPARTMENT AND THE FACT THAT THE SEBI HAS SUSPENDED THE 4 ITA NO. 70/KOL/2019 SMT. ANITA AGARWAL, AY 2014-15 TRANSACTION OF M/S. KAILASH AUTO FINANCE LTD. AND A CCORDING TO HIM THE CLAIM WAS BOGUS AND THE AO RIGHTLY HELD TO BE BOGUS TRANSACTION AND DENIED THE CLAIM AND ADDED THE COMMISSION GIVEN TO THE BROKER AND HE DOES NOT WANT US TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE RECORDS. THE FACT NARRATED ABOVE IS NOT REPORTED FOR THE SAKE OF BREVITY. HOWEVER, W E NOTE THAT THE ASSESSEE IN ORDER TO CLAIM THE LTCG ON SALE OF SHARES OF M/S. KAILASH AUTO FIN ANCE LTD. HAS PRODUCED THE FOLLOWING DOCUMENTS FROM WHICH WE FIND THE FOLLOWING FACTS: I. FROM A PERUSAL OF THE PURCHASE BILL ISSUED BY M/ S. SANSKRIT VINCOM PVT. LTD. DATED 30.03.2012 TO ASSESSEE IN RESPECT OF SALE OF 40000 SHARES OF M/S. PUNCHSHUL MARKETING PVT. LTD. @ RS. 1 PER SHARE WHICH IS FOUND PLACED A T PAGE 8 OF THE PAPER BOOK, WE NOTE THAT ASSESSEE PURCHASED THIS SCRIPS ON 30.03.2012 A ND NOT AS STATTED BY AO AS 07.06.2012. II. FROM A PERUSAL OF BANK STATEMENT SHOWING PURCHA SE OF SHARES IS FOUND PLACED AT PAGE 9 OF THE PAPER BOOK FROM WHICH WE FIND THAT ON 30.0 3.2012 AN AMOUNT OF RS. 40,000/- WAS PAID BY CHEQUE TO M/S. SANSKRIT VINCOM PVT. LTD . III. WE ALSO NOTE THAT LETTER OF AMALGAMATION IS FO UND PLACED AT PAGE 10 OF THE PAPER BOOK INFORMING THE ASSESSEE ABOUT THE SCHEME OF ARR ANGEMENT AND MERGER OF PANCHSHUL MARKETING PVT. LTD. WITH THE M/S. KAILASH AUTO FINA NCE LTD. DATED 06.08.2013 WHEREIN ASSESSEE WAS ALLOTTED 40000 SHARES OF M/S. KAFL. IV. OUR ATTENTION WAS DRAWN TO DEMAT STATEMENT PLAC ED AT PAGE 15 AND 16 OF THE PAPER BOOK FROM WHICH WE NOTE THAT THE M/S. KAFL SHARES A FTER THE SCHEME OF ARRANGEMENT HAS BEEN DEPOSITED WITH THE HDFC BANK DEPOSITORY FR OM 22.07.2013 AND LATER SOLD ON 13.08.2013, 19.08.2013 AND 26.08.2013 TOTAL 40000 S HARES. V. WE NOTE FROM PERUSAL OF THE CONTRACT NOTES IN CO NNECTION WITH THE SALE OF SHARES IS FOUND PLACED AT PAGE 11 TO 13 OF THE PAPER BOOK THA T SCRIPS OF M/S. KAFL WAS SOLD ON 13.08.2013, 19.08.2013 AND ON 26.08.2013 WHICH FACT IS CORROBORATED FROM THE DEMAT STATEMENT OF HDFC DEPOSITORY DETAILS FOUND PLACED A T PAGE 15 OF PAPER BOOK. VI. BANK STATEMENT IS FOUND PLACED AT PAGE 14 OF TH E PAPER BOOK WHICH REVEALS THAT SALE CONSIDERATION WAS RECEIVED THROUGH BANKING CHANNEL. WITH THE AFORESAID DOCUMENTS, THE ASSESSEE CLAIMED TO HAVE SOLD THE SCRIP OF M/S. KAFL THROUGH BOMBAY STOCK EXCHANGE AFTER PAYING STT. 7. WE NOTE THAT THE AO / CIT(A) HAS NOT MADE ANY NEGAT IVE/ADVERSE REMARKS OR FINDING AGAINST THE AFORESAID DOCUMENTS PRODUCED BEFORE THE AO. HOWEVER, THEY HAVE BRUSHED ASIDE 5 ITA NO. 70/KOL/2019 SMT. ANITA AGARWAL, AY 2014-15 THESE DOCUMENTS AND HAS RELIED HEAVILY UPON THE GEN ERAL INVESTIGATION REPORT OF THE DEPARTMENT, WHICH HAS NOT FOUND ANY WRONG DOING ON THE PART OF THE ASSESSEE OR HER BROKER WHO SOLD THE SHARES. WE NOTE THAT THE SUSPENSION BY SEBI OF TRANSACTION OF SCRIPS OF M/S. KAFL HAS BEEN LATER LIFTED. THEREFORE, IN THE LIGHT OF THE ABOVE SUPPORTING DOCUMENTS REFERRED TO IN PARA 6 (SUPRA) THE ASSESSEES CLAIM FOR LTCG HAS TO BE ALLOWED. FOR DOING SO, WE ALSO RELY ON THE DECISION OF THE COORDINATE BENC H IN THE CASE OF MANISH KUMAR BAID (SUPRA) WHEREIN THE TRIBUNAL HELD AS UNDER: 6. WE HAVE HEARD BOTH THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LD AR THAT THE LD AO WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, AND PREPONDERANCE OF PROBABILITY WITHOUT BRINGING ON RECORD ANY LEGAL EVIDENCE AGAINST THE ASSESSEE. WE RELY ON THE JUDGEMENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTR IES LTD. (SUPRA) FOR THIS PROPOSITION. THE VARIOUS FACETS OF THE ARGUMENTS O F THE LD AR SUPRA, WITH REGARD TO IMPLEADING THE ASSESSEE FOR DRAWING ADVERSE INFEREN CES WHICH REMAIN UNPROVED BASED ON THE EVIDENCES AVAILABLE ON RECORD, ARE NOT REITE RATED FOR THE SAKE OF BREVITY. THE PRINCIPLES LAID DOWN IN VARIOUS CASE LAWS RELIED UP ON BY THE LD AR ARE ALSO NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND THAT T HE AMALGAMATION OF CPAL WITH KAFL HAS BEEN APPROVED BY THE ORDER OF HONBLE HIGH COUR T. THE LD AO OUGHT NOT TO HAVE QUESTIONED THE VALIDITY OF THE AMALGAMATION SCHEME APPROVED BY THE HONBLE HIGH COURT IN MAY 2013 MERELY BASED ON A STATEMENT GIVE N BY A THIRD PARTY WHICH HAS NOT BEEN SUBJECT TO CROSS EXAMINATION. MOROEVER, IT I S ALSO PERTINENT TO NOTE THAT THE ASSESSEE AND / OR THE STOCK BROKER ASHITA STOCK BRO KING LTD NAME IS NEITHER MENTIONED IN THE SAID STATEMENT AS A PERSON WHO HAD ALLEGEDLY DEALT WITH SUSPICIOUS TRANSACTIONS NOR THEY HAD BEEN THE BENEFICIARIES OF THE TRANSACT IONS OF SHARES OF KAFL. HENCE WE HOLD THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL T O IMPLICATE THE ASSESSEE TO THE ENTIRE GAMUT OF UNWARRANTED ALLEGATIONS LEVELED BY THE LD AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION, HAS NO LEGS TO STAND IN TH E EYES OF LAW. WE FIND THAT THE LD DR COULD NOT CONTROVERT THE AR GUMENTS OF THE LD AR WITH CONTRARY MATERIAL EVIDENCES ON RECORD AND MERELY RELIED ON T HE ORDERS OF THE LOWER AUTHORITIES APART FROM PLACING THE COPY OF SEBIS INTERIM ORDER SUPRA. WE FIND THAT THE SEBIS ORDERS RELIED ON BY THE LD AO AND REFERRED TO HIM A S DIRECT EVIDENCE AGAINST THE ASSESSEE DID NOT CONTAIN THE NAME OF THE ASSESSEE A ND/OR THE NAME OF ASHIKA STOCK BROKING LTD. THROUGH WHOM THE ASSESSEE SOLD THE SHA RES OF KAFL AS A BENEFICIARY TO THE ALLEGED ACCOMMODATION ENTRIES PROVIDED BY THE RELAT ED ENTITIES / PROMOTERS / BROKERS / ENTRY OPERATORS. IN THE INSTANT CASE, THE SHARES OF CPAL WERE PURCHASED BY THE ASSESSEE WAY BACK ON 20.12.2011 AND PURSUANT TO MER GER OF CPAL WITH KAFL, THE ASSESSEE WAS ALLOTTED EQUAL NUMBER OF SHARES IN KAF L, WHICH WAS SOLD BY THE ASSESSEE BY EXITING AT THE MOST OPPORTUNE MOMENT BY MAKING G OOD PROFITS IN RODER TO HAVE A 6 ITA NO. 70/KOL/2019 SMT. ANITA AGARWAL, AY 2014-15 GOOD RETURN ON HIS INVESTMENT. WE FIND THAT THE A SSESSEE AND / OR THE BROKER ASHITA STOCK BROKING LTD WAS NOT THE PRIMARY ALLOTTEES OF SHARES EITHER IN CPAL OR IN KAFL AS COULD BE EVIDENT FROM THE SEBIS ORDER. WE FIND T HAT THE SEBI ORDER DID MENTION THE LIST OF 246 BENEFICIARIES OF PERSONS TRADING IN SHA RES OF KAFL, WHEREIN, THE ASSESSEE AND / OR ASHITA STOCK BROKING LTDS NAME IS NOT REF LECTED AT ALL. HENCE THE ALLEGATION THAT THE ASSESSEE AND / OR ASHITA STOCK BROKING LTD GETTING INVOLVED IN PRICE RIGGING OF KAFL SHARES FAILS. WE ALSO FIND THAT EVEN THE SEBI S ORDER HEAVILY RELIED UPON BY THE LD AO CLEARLY STATES THAT THE COMPANY KAFL HAD PERF ORMED VERY WELL DURING THE YEAR UNDER APPEAL AND THE P/E RATIO HAD INCREASED SUBSTA NTIALLY. THUS WE HOLD THAT THE SAID ORDERS OF SEBI IS NO EVIDENCE AGAINST THE ASSESSEE, MUCH LESS TO SPEAK OF DIRECT EVIDENCE. THE ENQUIRY BY THE INVESTIGATION WING AND /OR THE STATEMENTS OF SEVERAL PERSONS RECORDED BY THE INVESTIGATION WING IN CONN ECTION WITH THE ALLEGED BOGUS TRANSACTIONS IN THE SHARES OF KAFL ALSO DID NOT IMP LICATE THE ASSESSEE AND/OR HIS BROKER. IT IS ALSO A MATTER OF RECORD THAT THE ASSE SSEE FURNISHED ALL EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENTS AND THE BANK ACCOUNTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO PURCHAS E AND SALE OF SHARES RESULTING IN LTCG. THESE EVIDENCES WERE NEITHER FOUND BY THE LD AO TO BE FALSE OR FABRICATED. THE FACTS OF THE CASE AND THE EVIDENCES IN SUPPORT OF T HE ASSESSEES CASE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE BONAFIDE AND GENUINE AND THEREFORE THE LD AO WAS NOT JUSTIFIED IN REJECT ING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. WE ALSO FIND THAT THE VARIOUS CASE LAWS OF HONBLE JURISDICTIONAL HIGH COURT RELIED UPON BY THE LD AR AND FINDINGS GIVEN THEREON WOULD APPLY TO THE FACTS OF THE INSTANT CASE. THE LD DR WAS NOT ABLE TO FURNISH ANY CONTRARY CASES TO THIS EFFECT. HENCE WE HOLD THAT THE LD A O WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES OF KAFL AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE ACCORDINGLY HOLD THAT THE REFRAMED QUESTION NO. 1 R AISED HEREINABOVE IS DECIDED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. 7. THE NEXT COMMON ISSUE IN THE APPEALS IS AGAINST THE ADDITION OF UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT ON THE GROUND THAT T HE ASSESSEE MUST HAVE INCURRED COMMISSION EXPENSES @ 5% OF THE LTCG. THE LD. AR SU BMITTED THAT THERE IS NO EVIDENCE OF INCURRING SUCH EXPENDITURE. IT WAS PLEA DED THAT NO ADDITION U/S 69C OF THE ACT COULD BE MADE UNLESS IT IS FOUND THAT THE ASSES SEE INCURRED SOME EXPENDITURE WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE FAILED TO SUBSTANTIATE THE SOURCE OF SUCH EXPENDITURE. 7.1. WE HAVE ALREADY HELD THAT THE TRANSACTIONS REL ATING TO LTCG WERE GENUINE AND NOT THE ACCOMMODATION ENTRIES AS ALLEGED BY THE LD AO. CONSEQUENTLY THE ADDITION U/S 69C OF THE ACT IS HEREBY DIRECTED TO BE DELETED. W E ACCORDINGLY HOLD THAT THE REFRAMED QUESTION NO. 2 RAISED HEREINABOVE IS DECIDED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. 7 ITA NO. 70/KOL/2019 SMT. ANITA AGARWAL, AY 2014-15 RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH DECISION AND THE DOCUMENTS FILED BY THE ASSESSEE AT PARA 6 (SUPRA), WE ALLOW T HE CLAIM OF LTCG OF THE ASSESSEE AND DELETE THE ADDITION MADE U/S 69C OF COMMISSION EXPE NSES. 8. BEFORE PARTING WE WOULD LIKE TO ADDRESS THE QUESTIO N WHICH WAS RAISED BY THE LD. DR WHETHER ASSESSEE HELD THE SCRIP FOR A PERIOD OF 12 MONTHS, THE LD. AR DREW OUR ATTENTION TO THE CIRCULAR OF CBDT NO. 704 DATED 28.04.1995 WH ICH IS FOUND PLACED AT PAGE 42 OF THE PAPER BOOK WHICH IS AS UNDER: 1. UNDER THE PROVISIONS OF CLAUSE (42A) OF SECTION 2 OF THE INCOME-TAX ACT, 1961, THE SHARE HELD IN A COMPANY OR ANY OTHER SECURITY LISTE D IN A RECOGNISED STOCK EXCHANGE IN INDIA OR UNITS OF THE UNIT TRUST OF INDIA OR UNITS OF A MUTUAL FUND SPECIFIED U/S 10(23D) SHALL BE REGARDED AS SHORT-TERM CAPITAL ASSETS IF T HEY ARE HELD BY AN ASSESSEE FOR NOT MORE THAN 12 MONTHS IMMEDIATELY PRECEDING THE DATE OF ITS TRANSFER. CLARIFICATIONS HAVE BEEN SOUGHT AS TO WHICH DATE SHOULD BE REGARDED AS THE DATE OF TRANSFER AND ALSO ABOUT THE DATE FROM WHICH THE HOLDING PERIOD OF THE SECUR ITIES SHOULD BE RECKONED. CLARIFICATIONS HAVE ALSO BEEN SOUGHT AS TO HOW THE HOLDING PERIODS WILL BE COMPUTED FOR THE PURPOSES OF CAPITAL GAINS WHEN THE SECURITIES, PURCHASED IN SEVERAL LOTS AT DIFFERENT POINTS OF TIME AND WHICH ARE TAKEN DELIVERY OF IN O NE LOT, ARE SUBSEQUENTLY SOLD IN PARTS AND NO CORRELATION OF THE DATES OF PURCHASE AND SAL E IS AVAILABLE. 2. WHEN THE SECURITIES ARE TRANSACTED THROUGH STOCK EXCHANGES, IT IS THE ESTABLISHED PROCEDURE THAT THE BROKERS FIRST ENTER INTO CONTRAC TS FOR PURCHASE/SALE OF SECURITIES AND THEREAFTER, FOLLOW IT UP WITH DELIVERY OF SHARES, A CCOMPANIES BY TRANSFER DEEDS DULY SIGNED BY THE REGISTERED HOLDERS. THE SELLER IS ENT ITLED TO RECEIVE 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 TREATED AS THE DATE OF TRANSFER IN CASES OF SALE TRANSACTIONS OF SECURITIES PROVIDED SUCH TRANSACTIONS ARE FOLLOW ED UP BY DELIVERY OF SHARES AND ALSO THE TRANSFER DEEDS. SIMILARLY, IN RESPECT OF THE PU RCHASERS OF THE SECURITIES, THE HOLDING PERIOD SHALL BE RECKONED FROM THE DATE OF THE BROKE RS NOTE FOR PURCHASE ON BEHALF OF THE INVESTORS. 9. WE NOTE IN THE PRESENT CASE THE TRANSACTION OF P URCHASE OF SHARES OF M/S. PANCHSHUL MARKETING LTD. TOOK PLACE DIRECTLY BETWEEN THE PART IES AND NOT THROUGH STOCK EXCHANGE. THEREFORE, THE DATE OF CONTRACT OF SALE AS DECLARE D BY THE PARTIES SHALL BE TREATED AS THE DATE OF TRANSFER PROVIDED IT IS FOLLOWED UP BY ACTUAL DE LIVERY OF SHARES AND THE TRANSFER DEEDS. ACCORDING TO THE DOCUMENTS FILED BEFORE US SINCE TH E ACTUAL DELIVERY OF SHARES TOOK PLACE ALONG WITH TRANSFER DEEDS/CONTRACT BILLS, SO THAT D ATE SHOULD BE CONSIDERED THE DATE OF TRANSFER. THUS, WE NOTE THAT ASSESSEE HELD THE SHA RES OF M/S. PANCHSHUL ON 30.03.2012 (PAGE 8 ITA NO. 70/KOL/2019 SMT. ANITA AGARWAL, AY 2014-15 8 & 9 OF PAPER BOOK) WHICH WAS LATER MERGED WITH M/ S. KAFL AND SCRIPS OF M/S KAFL WAS SOLD ON 16.08.2013 28.08.2013, SO THE ASSESSEE WA S HOLDING THE SHARES IN QUESTION FOR MORE THAN 12 MONTHS. THEREFORE, THE CLAIM OF ASSESS EE FOR LTCG IS VALID IN THE EYES OF LAW. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JULY, 2019 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3RD JULY, 2019 BISWAJIT (SR. PS) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT SMT. ANITA AGARWAL, C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE 213, 2 ND FLOOR, KOLKATA 700 069. 2 RESPONDENT ITO, WARD34(3), KOLKATA. 3 4 5 CIT(A) , KOLKATA. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O. ITAT, KOLKATA BENCHES