Anjanikumar b. Mundhra, Jalgaon V. ITO,Wd.-1(3), Jalgaon

ITA 892/PUN/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72094 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 22-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Question of law; Wrong claim; Corroborative evidences; Benefit of exemption; Penny stocks
• Section: 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 810/ P N/ 20 11 ASSESSMENT YEAR : 2005 - 06 PRAKASH G. MUNDHRA, V - 12, MIDC, JALGA ON VS. ITO, WARD - 1(3), JALGAON (APPELLANT) (RESPONDENT) PAN NO. AFDPM7266G ITA NO. 811/ PN/20 11 ASSESSMENT YEAR : 2005 - 06 SUREKHA B. MUNDHRA, V - 12, MIDC, JALGAON VS. ITO, WARD - 1(3), JALGAON (APPELLANT) (RESPONDENT) PAN NO. AEMPM9871K ITA NO . 812/ PN/20 11 ASSESSMENT YEAR : 2005 - 06 G.B. EXTRUSION PVT. LTD., V - 12, MIDC, JALGAON VS. ITO, WARD - 1(3), JALGAON (APPELLANT) (RESPONDENT) PAN NO. AABCG5011H ITA NO. 892/ PN/20 11 ASSESSMENT YEAR : 2005 - 06 ANJANIKUMAR B. MUNDHRA, V - 12, MIDC, JA LGAON VS. ITO, WARD - 1(3), JALGAON (APPELLANT) (RESPONDENT) PAN NO. AAUPM2729A APPELLANT BY: SMT. DEEPA KHARE RESPONDENT BY: SHRI ADARSH KUMAR MODI/SMT. SUNITA RAO DATE OF HEARING : 28 - 08 - 2013 DATE OF PRONOUNCEMENT : 30 - 08 - 2013 ORDER P ER R .S. PADVEKAR , JM : - IN THIS BATCH OF FOUR APPEALS BY THE DIFFERENT ASSESSEES THE RESPECTIVE IMPUGNED ORDERS OF THE LD. CIT(A) - II, NASHIK DATED 27 - 04 - 2011 FOR THE A.Y. 2005 - 06 ARE CHALLENGED , IN WHICH THE PENALT IES LEVIED BY THE ASSESSING OFFICER U/S. 271( 1)(C) ON ALL THESE FOUR ASSESSEES HA VE 2 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON BEEN CONFIRMED. THE GROUNDS TAKEN BY THE ASSESSEES , WHICH ARE COMMON IN ALL THE APPEALS ARE AS UNDER: 1. THE LEARNED C1T(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY U/S 271(L)(C) IN RESPECT OF THE INCOME ASS ESSED AS INCOME FROM SHORT TERM CAPITAL GAIN FROM SALE OF SHARES AS AGAINST LONG TERM CAPITAL GAIN WHICH WAS FURTHER CLAIMED TO BE EXEMPT U/S 10(38) AS CLAIMED BY THE APPELLANT. 2. THE LEARNED C1T(A) FAILED TO APPRECIATE THAT HAVING ACCEPTED THE GENUINE PURC HASE AND SALE OF SHARES SO AS TAX THE INCOME AS INCOME FROM CAPITAL GAIN, THE CLAIM MADE BY THE APPELLANT WAS REJECTED MERELY BY TAKING A DIFFERENT VIEW AS TO THE HEAD OF INCOME ON THE FACTS OF THE CASE AND IT THEREFORE WOULD NOT AMOUNT TO ANY CONCEALMENT OF ANY PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE APPELLANT. 3. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE CLAIM OF LONG TERM CAPITAL GAIN WAS NOT ALLOWED BECAUSE THE EXPLANATION OF THE APPELLANT WAS NOT ACCEPTED. THE EXPLANATION OF THE APPELLANT WAS HOWEVER A PLAUSIBLE AND BONAFIDE EXPLANATION ON FACTS AS WELL AS IN LAW AND ALL THE RELEVANT FACTS WERE PROPERLY AND FULLY DISCLOSED BY THE APPELLANT. 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS U NDER. IN THE A.Y. 2005 - 06 ALL THESE ASSESSEES HAVE SHOWN LONG TERM CAPITAL GAINS (LTCG) ON THE SALE OF THE SHARES AND THE SAME WAS CLAIMED AS EXEMPT U/S. 10(38) OF THE INCOME - TAX ACT AND THE DETAILS ARE AS UNDER: SL. NO. NAME OF THE ASSESSEE LONG TERM CA PITAL GAINS CLAIM EXEMPT 1 PRAKASH G. MUNDHRA RS.9,26,544/ - RS.9,26,544/ - 2 SUREKHA B. MUNDHRA RS.27,28,005/ - RS.27,28,005/ - 3 G.B. EXTRUSION PVT. LTD. (GITESH PIPES (P) LTD.) RS.58,89,356/ - RS.58,89,356/ - 4 ANJANIKUMAR B. MUNDHRA RS.11,43,285/ - RS.11, 43,285/ - 3. THE CLAIM OF ALL THESE ASSESSEES IN RESPECT OF THE LONG TERM CAPITAL GAINS ON THE SALE OF THE SHARES WAS EXAMINED AND INVESTIGATED BY THE ASSESSING OFFICER. IT IS SEEN THAT THESE ASSESSEES CLAIM ED THAT THEY HAVE PURCHASED SHARES IN THE OFF - M ARKET DEAL THROUGH ONE BROKER 3 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON NAMELY SHRI RAJENDRA PRASAD SHAH WHICH WERE DE - MATERIALIZE D OR CREDITED TO THE DEMAT ACCOUNT AFTER A GAP OF APPROXIMATELY 18 MONTHS. THE ASSESSING OFFICER QUESTIONED THE GENUINENESS OF THE OFF - MARKET TRANSACTION CLAIMED BY TH E ASSESSEE AND ALSO GENUINENESS OF THE CONTRACT NOTES ISSUED BY THE BROKERS SHRI SHAH. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS STATEMENT OF ONE OF THE ASSESSEE S MT. BHAGWATI PRASAD MUNDHRA WAS RECORDED. AS NOTED BY THE ASSESSING OFFICER THESE ASS ESSEES MADE THE SHARE TRANSACTIONS THROUGH SHRI R.P. SHAH, WHO WAS CALCUTTA BASE BROKER. THE PURCHASES OF THE SHARES WERE SHOWN IN THE F.Y. 2003 - 04 AND THE SALE OF THE SHARES WAS SHOWN IN THE F.Y. 2004 - 05. THE SHARES CLAIMED TO HAVE BEEN PURCHASED IN THE F.Y. 2003 - 04 IN THE PHYSICAL FORM WERE CREDITED TO THE DEMAT ACCOUNT AFTER A GAP OF 18 MONTHS. THE ASSESSEE CLAIMED THE LONG TERM CAPITAL GAINS ON THE BASIS OF THE CONTRACT NOTES. THE ASSESSING OFFICER HAS MADE THE DETAILED DISCUSSION IN THE ASSESSMENT ORDER TO DISBELIEVE THE CLAIM OF THE ASSESSEE S THAT THOSE WERE THE GENUINE SHARE TRANSACTION S . 4. IT APPEARS THAT THE INFORMATION FROM SHRI RAJENDRA PRASAD SHAH THE BROKER WAS ALSO CALLED INITIALLY . T HE BROKER DID NOT RESPONSE INITIALLY BUT A S NOTED BY THE ASSESSING OFFICER , SHRI SHAH SENT A RE PLY DATED 24 - 07 - 2007 IN WHICH HE CONFIRMED HAVING ISSUED THE CONTRACT NOTES IN QUESTION TO THE ASSESSEE S . THE LETTER OF CONFIRMATION SENT BY THE BROKER SHRI SHAH WAS SENT TO THE STOCK EXCHANGES TO MAKE THE CRO SS VERIFICATION. THE ASSESSING OFFICER DID NOT BELIEVE THE TRANSACTION BEING GENUINE O N THE REASON THAT AFTER A GAP OF MORE THAN 18 MONTHS FROM THE DATE OF CONTRACT NOTES , T HE SHARES WERE CON VERTED INTO ELECTRONIC FORM AND CREDITED TO DEMAT ACCOUNT. THE ASSESSING OFFICER ALSO TOOK THE NOTE OF THE FACT THAT COST ON THE DATE OF PURCHASE CLAIMED BY THE ASSESSEE WAS VERY MEAGER BUT WHEN THOSE SHARES WERE CREDITED TO DEMAT ACCOUNT , T HE PRICES ON THE QUOTATION WERE ABNORMALLY HIGH AND IN THE OPINION OF THE ASSE SSING OFFICER THERE WAS SIGNIFICANT RISE IN THE PRICES OF THE SHARES RANGING FROM 109 % TO 200 %. THE ASSESSING OFFICER , THEREFORE, CO NCLUDED 4 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON THAT THE SHARE TRANSACTIONS SHOWN BY THE ASSESSEES WERE PART OF THE MANIPULATION AND THOSE WERE NOT GENUINE SHARE T RANSACTIONS. HE, THEREFORE, REJECTED THE CLAIM OF EXEMPTION U/S. 10(38) MADE BY THE ASSESSEE S ON THE SHARE TRANSACTIONS AND ENTIRE AMOUNT OF CAPITAL GAIN CLAIMED AS EXEMPT WAS BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES IN ALL THESE CASES. 5 . THE MATTER WAS CARRIED BEFORE THE CIT(A) BY THE ASSESSEE S . HE ACCEPTED THE CLAIM OF THE ASSESSEE S THAT THE SHARE TRANSACTIONS WERE GENU INE BUT TREATED THE GAIN DECLARED BY THE ASSESSEE AS A SHORT TERM CAPITAL GAIN (STCG) AND DECLINED TO GIVE RELIEF U/S . 10(38) OF THE ACT. THE MATTER WAS FURTHER CARRIED BEFORE THE ITAT, PUNE BY RAISING THE GRIEVANCE THAT THE CONTRACT NOTES WERE GENUINE ONE AND THERE WAS NO JUSTIFICATION ON THE PART OF THE CIT(A) TO DENY THE BENEFIT OF EXEMPTION U/S. 10(38) TO THE ASSESS EE. THE T RIBUNAL CONFIRMED THE ORDER OF THE LD. CIT(A) TREATING THE CAPITAL GAINS DECLARED BY THE ASSESSEE AS A SHORT TERM CAPITAL GAINS AS THE ASSESSEE COULD NOT PRODUCE THE ORIGINAL CONTRACT NOTES AND OBSERVED THAT DUPLICATE NOTES WERE NOT DEPENDABLE FO R ALLOWING EXEMPTION U/S. 10(38) OF THE INCOME - TAX ACT TREATING THE GAINS DECLARED BY THE ASSESSEE ON THE SALE OF THE SHARES AS A LONG TERM CAPITAL GAINS (LTCG) . THE RELEVANT DISCUSSION AND FINDINGS OF THE TRIBUNAL ARE AS UNDER: 18. DISCUSSION : WE HAVE H EARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE ALONG WITH THE PAPER BOOKS FILED BEFORE US. BEFORE THE CONCLUSIONS ARE GIVEN, WE FIND IT NECESSARY TO DISCUSS VARIOUS IMPORTANT ISSUES RAISED IN THE APPEAL. THEY ARE AS FOLLOWS: (A) GENUINENESS OF THE PURCHASE TRANSACTION OF IMPUGNED SHARES VALIDITY OF THE CONTRACT NOTES AND THE ENTRIES IN THE BOOKS OF ACCOUNTS, (B) CREDIBILITY OF THE BROKER AND PROCEEDINGS U/S 11B AND 11(4) OF SEBI ACT 1992 IN RESPECT OF THE BROKER, (D) WHETHER TRANSACTED THROUG H THE EXCHANGE OR OFF MARKET TRANSACTION, (E) EXEMPTION CLAIMED U/S 10(38) OF THE ACT AND THEREFORE, ONUS IS ON THE ASSESSEE, (F) CIRCULAR NO 704 DT 8/4/95 - ITS APPLICABILITY, (G) EXAMINING THE LEGAL POSITION AND CASE LAWS, ETC. WE PROCEED TO DISCUSS THE SAME IN THE SUCCEEDING PARAGRAPHS. 5 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON (A) GENUINENESS OF THE PURCHASE TRANSACTION OF IMPUGNED SHARES VALIDITY OF THE CONTRACT NOTES & ENTRIES IN BOOKS OF ACCOUNTS: (I) CONTRACT NOTE & VALIDITY OF THE CONTENTS SUCH AS SETTLEMENT NO, DATE ETC : AS DISCUSSED ABO VE, THERE IS DISPUTE BETWEEN THE PARTIES ON THE GENUINENESS OF THE PURCHASE TRANSACTIONS IN GENERAL AND THE SETTLEMENT NUMBERS, ACCEPTIBILITY OF THE DATE OF SAID PURCHASE TRANSACTION AS APPEARING ON THE SAID CONTRACT NOTES FOR THE PURPOSE OF COMPUTING THE HOLDING PERIOD OF THE SAID SHARES. ASSESSEE DESIRES THAT THE SAID DATE AS PER THE CONTRACT NOTES HAVE TO BE CONSIDERED FOR COMPUTING THE HOLDING PERIOD OF THE SHARES IN VIEW OF THE CIRCULAR ISSUED BY THE CBDT. PER CONTRA, THE AO IS OF THE VIEW THAT THE CON TRACT NOTES AND THE DATES MENTIONED THEREIN HAVE TO BE IGNORED AS PURCHASE TRANSACTION IS A BOGUS ONE AND NON GENUINENESS ONE. AS RESULT OF ELABORATE INVESTIGATIONS WITH THE EXCHANGE U/S 133(6) AND U/S 131 OF THE ACT, THE AO HAS CONCLUSIVELY DEMONSTRATED T HAT THE CONTENTS OF THE SAID NOTES ARE NOT CREDIBLE AS THE SETTLEMENT NUMBERS DID NOT TALLY WITH THE DATA GATHERED FROM THE EXCHANGE AND THEREFORE, THEY ARE FOUND TO BE NON GENUINE ON COMPARING THE DATA FROM THE CULCUTTA STOCK EXCHANGE. IT IS CONCLUSIVELY DEMONSTRATED THAT THE IMPUGNED TRANSACTIONS ARE NOT DONE INVOLVING THE EXCHANGE. DURING THE PROCEEDING BEFORE, LD COUNSEL FILED A WRITTEN NOTE ADMITTED THAT THE TRANSACTIONS IN QUESTION ARE OFF MARKET ONES AND THEREFORE, THE TERMINOLOGY OF SETTLEMENT ET C APPEARING ON THE SAME NOTES HAVE TO IRRELEVANT AND BOGUS AS THEY ARE THE PHRASEOLOGY OF THE EXCHANGES. CONSEQUENTLY, THE DATES MENTIONED THEREIN ARE NEITHER CREDIBLE NOR RELIABLE. IT IS NOW OFFICIAL THAT THE BROKER IN QUESTION IS INVOLVED IN THE DEFAULT OF CROSS DEALS , OF COURSE, INVOLVING OTHER SCRIPS U/S 11B AND 11(4) OF SEBI ACT 1992 VIDE THE ORDER DATED 29.9.2005 (PARA 2.9 IS RELEVANT FOR THIS BROKER). COPY OF THIS ORDER IS PART OF THE ASSESSMENT ORDER OF THE AO. CONSIDERING THE FACT THAT (I) THE SC RIPS INVOLVED IN THE INSTANT CASE ALSO BELONG TO PENNY STOCKS, (II) MOST OF THE OTHER CLIENTS OF THE BROKER HAVE REVISED THEIR RETURNED INCOME ADMITTED THE ADDITIONAL INCOME RELATABLE TO THIS KIND OF TRANSACTIONS FROM THE SAME LOCATION OF THE ASSESSEE, T HE DOUBTS THE REVENUE RAISED IN THIS CASE GETS THE CREDIBILITY. IT IS AN ADMITTED POSITION THAT THE BROKER AND THE ASSESSEES FAMILY ARE CONNECTED THROUGH HER FATHER - IN - LAW AND 6 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON THEREFORE, IT IS POSSIBLE THAT THEY HAVE ENTERED INTO THESE TRANSACTIONS TO THE MUTUAL BENEFIT OF THE BROKER AND THE ASSESSEE. THE CONTRACT NOTE CONTAINING THE DETAILS OF SETTLEMENT NUMBER, ETC. IS SPECIFIC TO STOCK EXCHANGE AND NO SUCH DOCUMENT IS NECESSARY IN THE CASE OF OFF - MARKET TRANSACTIONS. THE ASSESSEE CANNOT SUBMIT THESE EV IDENCES TO EVIDENCE THE STOCK EXCHANGE TRANSACTION AND NOW DEVELOP ITS CASE INTO THE CASE OF OFF MARKET TRANSACTION. THEREFORE, THE ARGUMENTS OF THE COUNSEL ARE NOT ENTERTAINED. IF IT IS INDEPENDENT AND ARMS LENGTH TRANSACTION, WHY THE ASSESSEE DID NOT TAKE POSSESSION OF THE SHARES AND WHY THE BROKER DID NOT ENFORCE OF THE TRANSFER OF THE SAME AND WHY THE CLIENT DID NOT MAKE PAYMENT TO THE BROKER IN REASONABLE TIME PERIOD OR IN ACCORDANCE WITH THE RULES OR GUIDELINES OF THE SEBI. THE EXPLANATIONS OF THE ASSESSEE IS NOT CONVINCING TO THE AO. THE TAINTED NATURE OF THE BROKER AND ABSENCE OF ORIGINAL CONTRACT / BROKER NOTES CEMENTED THE SAID OPINION. IN SUCH CIRCUMSTANCES, WE ALSO HAVE NO DIFFICULTY IN JOINING THE REVENUE AUTHORITIES IN GIVING A FINDING THAT THE TRANSACTIONS OF ACQUISITION OF SHARES IS NOT FREE FROM DOUBT AND THE CONTRACT NOTES ARE NOT GENUINE FOR THE SAID REASONS. (II) ENTRIES IN THE BOOKS OF THE ASSESSEE: IT IS ARGUED THAT THE THAT THE IMPUGNED TRANSACTIONS ARE REFLECTED IN THE BOOKS OF T HE ASSESSEE AS INVESTMENTS IN THE RELEVANT YEAR AND THEREFORE THE SHARES HELD ARE LONGTERM ASSETS AND THEREFORE THE GAINS ARE LONG TERM GAINS ELIGIBLE FOR EXEMPTION U/S 10(38) OF THE ACT. THIS ARGUMENT OF THE ASSESSEE HAS TO BE CONSIDERED UNDER THE OVERALL FACTS AND CIRCUMSTANCES OF THE FACTS. IT IS TRUE THAT THE ENTRIES IN THE BOOKS OF ACCOUNTS HAVE VALIDITY SO LONG AS THEY ARE CREDIBLE AND THE SAID ENTRIES ARE VERIFIABLE AND ENJOY THE SUPPORT OF THE THIRD PARTY EVIDENCE. IT IS FOR THE REASON THAT THE BOOK S OF ACCOUNTS ARE MAINTAINED AND REGULATED BY THE ASSESSEE, WHO HAPPENED TO BE AN INDIVIDUAL IN THIS CASE. IN ANY CASE, IT IS THE CASE OF ONE EVENT TRANSACTIONS THE ASSESSEE NEVER UNDERTAKEN ANY OTHER TRANSACTION INVOLVING SRI R P SHAH. THEREFORE, THIS PA RT OF THE ARGUMENT IS REJECTED. B. CREDIBILITY OF THE BROKER AND PROCEEDINGS U/S 11B AND 11(4) OF SEBI ACT 1992 IN RESPECT OF THE BROKER: THE BROKER IS HELD FOR INVOLVING IN THE CROSS DEALS (WHERE THE SELLER AND PURCHASE OF THE SHARES IS THE SAME) AND THE BROKER ACTED AS COUNTER PARTY OF HIS 7 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON OWN TRANSACTION VIDE THE ORDER DATED 29.9.2005 - PARA 2.9 IS RELEVANT FOR THIS BROKER. THEREFORE, THE BROKERS OPERATIONS, HIS TRANSACTIONS, BOOKS OF ACCOUNTS SUFFER FROM AUTHENTICITY AND CREDIBILITY. IN THE INSTANT CASE, THE ASSESSEE HAS NOT DEMONSTRATED SUCCESSFULLY AS TO HOW THE EVIDENCES FURNISHED BY THE TAINTED BROKER IN SUPPORT OF THE ASSESSEES ASSERTION ENJOY THE CREDIBILITY. C. WHETHER TRANSACTED THROUGH THE EXCHANGE OR OFF MARKET TRANSACTION: AO HAS DEMONS TRATED CONCLUSIVELY THAT THE IMPUGNED PURCHASE TRANSACTIONS ARE NOT DONE THROUGH THE EXCHANGE. TO THAT EXTENT THE DOCUMENTS FURNISHED AND ENTRIES MADE IN THE DOCUMENTS ARE FOUND INCORRECT. WITH THESE FACTS AND THE DECISIONS, DURING THE PROCEEDINGS, LD COUN SEL FILED A WRITTEN NOTE AND ATTEMPTED TO MAKE OUT THE SAID PURCHASE TRANSACTIONS AS A CASE OF OFF MARKET TRANSACTION . ON DUE CONSIDERATION, WE DO NOT WANT TO ENTERTAIN THE SAME AT THIS STAGE AS IT INVOLVES FRESH SERIES OF INVESTIGATIONS INTO THE CLAIMS IE (A) WHO IS THE SELLER, (B) IF THE BROKER IS THE SELLER WHETHER THE SELLER HAS MANDATE OF THE SEBI TO SELL, (C) WHAT ARE THE ENTRIES IN THE RECORDS OF THE CONCERNED COMPANIES, (D) WHAT ARE THE TERMS AND CONDITIONS OF THE SUCH OFF MARKET TRANSACTIONS, ( E) WHETHER THE SHARES ARE SOLD DIRECTLY TO THE ASSESSEE OR AGAIN THROUGH OTHER BROKER, (F) WHY THE ASSESSEE IS CHANGING THE STANDS WITH TIME, (G) BETWEEN THE EXCHANGED BASED PURCHASE AND THE OFF MARKET BASED, WHAT IS THE ACTUAL TRUTH IN THIS CASE, AND (G) WHY THE ASSESSEE SHIFTING THE ARGUMENTS WITH THE PROGRESS OF THE PROCEEDINGS. WITH SOME MANY UNANSWERED QUARRIES IN MIND, WE HAVE NO REASON TO ENTERTAIN THIS ARGUMENT AT THIS POINT OF TIME. ACCORDINGLY, THE DECISION OF CALCUTTA BENCH TRIBUNAL CITED ABOVE IE IN THE CASE OF ACCHYALAL SHAW (SUPRA), IS ALSO NOT ENTERTAINED ALONG WITH OTHERS CITED BY THE LD COUNSEL. THEREFORE, WITH THIS CHANGE OF POSITIONS ON THE SAME POINT ON THE PURCHASE TRANSACTIONS OF SHARES, WE FIND THAT EVERYTHING IS NOT WELL WITH THE IMP UGNED PURCHASE TRANSACTION OF THE SHARES. FURTHER, WE FIND THAT BARRING THE SELF CONTROLLED AND MAINTAINED BOOKS, THE ASSESSEE IS NOT BLESSED WITH EITHER ANY OTHER INDEPENDENT OR THIRD PARTY EVIDENCES IN THIS REGARD. THEREFORE, COUNSEL'S ARGUMENTS THAT THE PURCHASE TRANSACTION IN QUESTION MUST BE TREATED AS OFF - MARKET TRANSACTION AND IN SUCH CASE, THE TRIBUNAL'S ORDER IN THE CASE OF ACCHYALAL SHAW (SUPRA) HAS DIRECT APPLICATION TO THE FACTS OF THE CASE HAS TO BE REJECTED FOR THE REASON THAT THE SAID ARGUMEN T WAS TAKEN FOR THE FIRST TIME BEFORE US AND THE SAID ARGUMENT GOES 8 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON AGAINST THE ASSESSEE'S ORIGINAL CONTENTION THAT THE TRANSITIONS ARE MADE INVOLVING REGISTERED BROKER AND THE STOCK EXCHANGE. IF THE CHANGED VERSIONS ARE ENTERTAINED, WHAT SHALL HAPPEN TO T HE MATERIAL AND ARGUMENTS INITIALLY MADE BY THE ASSESSEE STATING THAT THE IMPUGNED TRANSACTIONS ARE EXCHANGE BASED. THEREFORE, THERE IS AN AMBIGUITY ON THE FACTS RELATING TO WHETHER THE SAID PURCHASE TRANSACTION DONE THROUGH THE CULCUTTA STOCK EXCHANGE OR THROUGH THE OTHER CHANNELS AND IT HAS TO BE EITHER OF THE TWO. THERE CANNOT BE TWO ARGUMENTS ON THIS BASIC FACT. IN THAT SENSE, THE ASSESSEE FAILED TO DEMONSTRATE THE CLAIM WITH EVIDENCES. IN FACT, THE ARGUMENT INDIRECTLY SUPPORT THE ALLEGATION OF THE AO THAT THE IMPUGNED CONTRACT NOTES ARE BONA FIDE AND ACCORDINGLY, THE PURCHASE TRANSACTIONS SUFFER FROM CREDIBILITY. D. DEDUCTION IS CLAIMED U/S 10(38) OF THE ACT AND THEREFORE, ONUS IS ON THE ASSESSEE: THIS IS THE CASE, WHERE THE ASSESSEE MADE A CLAIM OF EXEMPTION U/S 10(38) OF THE ACT IN RESPECT OF THE LONG TERM CAPITAL GAINS AND THEREFORE, THE ONUS IS ON THE ASSESSEE TO DEMONSTRATE THE SAME. IN CASE OF OFF MARKET TRANSACTIONS, THE DATE SHOULD BE THE ONE AS AGREED BETWEEN THE PARTIES. IN THE ABSENCE OF D ISCHARGE OF ONUS, THE REVENUE AUTHORITIES ARE JUSTIFIED IN COMING TO THE CONCLUSION THAT SAID PURCHASE TRANSACTIONS CLAIMED BY THE ASSESSEE ARE NOT GENUINE. E. CIRCULAR NO 704 DT 8/4/95: REGARDING THE DATE FOR COMPUTING THE PERIOD OF HOLDING OF THE SHA RES , THE CASE OF THE ASSESSEE IS THAT THE RELEVANT DATE MUST BE THE DATE APPEARING ON THE CONTRACT NOTE AND NOT THE DATE OF DELIVERY OF SHARES AND NOT THE DATE OF PAYMENT OF PURCHASE CONSIDERATION. IN THIS REGARD, HE RELIED ON CIRCULAR NO. 704. THE RELEVA NT PORTION OF THE CIRCULAR READS AS UNDER: TRANSACTIONS IN SECURITIES DETERMINATION OF THE DATE OF TRANSFER AND HOLDING PERIOD FOR THE PURPOSE OF CAPITAL GAINS - INSTRUCTIONS REGARDING. UNDER THE PROVISION OF SUB - SECTION (42A) OF SECTION 2 OF THE INCOME - TAX ACT, 1961, THE SHARES HELD IN A COMPANY OR ANY OTHER SECURITY LISTED IN A RECOGNIZED STOCK EXCHANGE IN INDIA OR UNITS OF THE UNIT TRUST OF INDIA OR UNITS OF A MUTUAL FUND SPECIFIED UNDER SECTION 10(23D) SHALL BE REGARDED AS SHORT - TERM CAPITAL ASSETS I F THEY ARE HELD BY AN ASSESSEE FOR NOT MORE THAN 12 MONTHS IMMEDIATELY 9 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON 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 SECURITIES 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 ARE TAKEN DELIVERY OF IN ONE LOT, ARE SUBSEQUENTLY SOLD IN PARTS AND NO CORRELATION OF THE DATES OF PURCHASE AND SALE IS AVAILABLE. 2. WHEN THE SECURITIES ARE TRANSACTED THROUGH STOCK EXCHANGES, IT IS THE ESTABLISHED PROCEDURE THAT THE BROKERS FIRST ENTER INTO CONTRACTS FOR PURC HASE/SALE OF SECURITIES AND THEREAFTER, FOLLOW IT UP WITH DELIVERY OF SHARES, ACCOMPANIED BY TRANSFER DEEDS DULY SIGNED BY THE REGISTERED HOLDERS. THE SELLER IS ENTITLED TO RECEIVE THE CONSIDERATION AGREED TO AS ON THE DATE OF CONTRACT. THE BOARD IS 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 FOLLOWED UP BY DELIVERY OF SHARES AND ALSO THE TRANSFER DEEDS. SIMILARLY, IN RESPECT OF THE PURCHASERS OF THE SECURITIES, THE HOLDING PERIOD SHALL BE RECKONED FROM THE DATE OF THE BROKERS NOTE FOR PURCHASE ON BEHALF OF THE INVESTORS. IN CASE THE TRANSACTIONS TAKE PLACE DIRECTLY 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 FOLLOWED UP BY ACTUAL DELIVERY OF SHARES AND THE TRANSFER DEEDS. 3. AS REGARDS THE SECOND ISSUE, WHERE SECURITIES ARE ACQUIRED IN SEVERAL LOTS AT DIFFEREN T POINTS OF TIME, THE FIRST - IN - FIRST - OUT (FIFO) METHOD SHALL BE ADOPTED TO RECKON THE PERIOD OF THE HOLDING OF THE SECURITY, IN CASES WHERE THE DATES OF PURCHASE AND SALE COULD NOT BE CORRELATED THROUGH SPECIFIC NUMBERS OF THE SCRIPS. IN OTHER WORDS, THE A SSETS ACQUIRED LAST WILL BE TAKEN TO BE REMAINING WITH THE ASSESSEE WHILE ASSETS ACQUIRED FIRST WILL BE TREATED AS SOLD. INDEXATION, WHEREVER APPLICABLE, FOR LONG - TERM ASSETS WILL BE REGULATED ON THE BASIS OF THE HOLDING PERIOD DETERMINED IN THIS MANNER . FROM THE ABOVE, IT IS EVIDENT THAT THE DELIVERY OF SHARES AND ALSO THE TRANSFER DEED MUST FOLLOW THE CONTRACT NOTES. IN THE INSTANT CASE, THE DELIVERY OF SHARES EFFECTED AFTER LAPSE OF 18 MONTHS, CANNOT BE 10 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON INTERPRETED TO HAVE MET THE REQUIREMENT OF THE SAID CLAUSE. THEREFORE, IN THE CASE OF ASSESSEE, THE CIRCULAR CANNOT HELP THE ASSESSEE. FURTHER, CONTENTS OF CIRCULAR NO. 768 DOES NOT CHANGE THE POSITION WITH REGARD TO THE DATE OF TRANSFER AND PERIOD OF HOLDING EVEN IN RESPECT OF SECURITIES HELD IN THE FORM OF DMAT. CONSIDERING ABOVE, TOGETHER WITH THE SUPREME COURT JUDGMENT IN THE CASE OF PRANLAL JAYANAND THAKAR (SUPRA) RELIED UPON BY THE CIT(A) FOR THE PROPOSITION THAT TRANSFER OF SHARES IS COMPLETE ONLY AFTER THE ACTUAL DELIVERY OF SHARES. WE F IND NO REASON TO INTERFERE WITH THE FINDING OF THE CIT(A) ON THE ISSUE THAT THE DATE OF PURCHASE SHOULD BE RECKONED FROM THE DATE OF ACTUAL DELIVERY AND NOT THE DATE APPEARING ON THE IMPUGNED CONTRACT NOTE IN THIS CASE. CONSIDERING THE AMBIGUITY OR THE DU ALITY IS THE ARGUMENTS, THIS CIRCULAR CANNOT HELP THE ASSESSEE WHEN THE ASSESSEE FAILED TO DEMONSTRATE THE ACTUAL NATURE OF THE IMPUGNED PURCHASE TRANSACTIONS. IN THIS CASE, THE ARGUMENT OF OFF MARKET TRANSACTION IS EVIDENTLY AN AFTER THOUGHT FOR THE ABOVE MENTIONED REASONS. 19. EXAMINING THE LEGAL POSITION AND CASE LAWS: THE CASE LAWS RELIED ON BY LD COUNSEL ARE ACCYALAL SHAW (SUPRA) AND MUKESH R MAROLIA (6 SOT 237)(MUM) AND THEY RELATE TO THE CASES OF OFF - MARKET TRANSACTIONS. THEY ARE NOT APPLICABL E TO THE FACTS OF THE CASES WHERE WE HAVE ALREADY HELD THAT THE ARGUMENTS OF LD COUNSEL DESERVES TO BE DISMISSED IN VIEW OF THE DETAILED REASONING GIVEN WHILE DEALING THE WHETHER TRANSACTED THROUGH THE EXCHANGE OR OFF MARKET TRANSACTION IN THE ABOVE PARA GRAPHS. PER CONTRA, LD DR RELIED ON THE DECISION OF THE BANGALORE BENCH IN THE CASE OF SHANTHILAL MUNNILAL (SUPRA). THE CONCLUSION OF THIS DECISION IS RELEVANT TO THE FACTS OF THE CASE AND THE SAME READS AS FOLLOWS. ASSESSEE HAVING EARNED SUBSTANTIAL G AINS FROM PURCHASE AND SALE OF SHARES OF A COMPANY IN THE SOLITARY TRANSACTION BUT SHOWED TOTAL IGNORANCE ABOUT THE COMPANY OR ITS PROMOTERS AND FILED NO EVIDENCE OF RATES AT WHICH THE SHARE WERE LISTED AT THE TIME OF PURCHASE OR SALE AND THE DATABASE OF T HE INVESTIGATION DIRECTORATE HAVING REVEALED THAT THE SAID COMPANY WAS LARGELY USED FOR GIVING BOGUS CAPITAL GAINS ENTRIES BY CERTAIN TAINTED BROKERS, THE TRANSACTION CANNOT BE ACCEPTED AS GENUINE; 11 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON FROM THE ABOVE DECISION, IT IS EVIDENT THAT THE TRANSAC TIONS INVOLVING THE TAINTED BROKER SHOULD NOT BE ACCEPTED IN ITS FACE VALUE MORE SO, WHEN THE ASSESSES PLEAD NO KNOWLEDGE OF THE SCRIPS IN QUESTION AND WHEN THERE ARE SOLITARY OR FEW TRANSACTIONS. HOWEVER, THIS DECISION IS NOT RELEVANT FOR ANY PROPOSITION ON THE CHARGEABILITY OF THE IMPUGNED GAINS UNDER A PARTICULAR HEAD OF INCOME. 20. TO SUM UP , THE ASSESSEE CLAIMS THAT SHE EARNED LONG TERM CAPITAL GAIN WHIH ARE EXEMPT U/S 10(38) OF THE ACT. AS PER THE ASSESSEE, THE AO ERRONEOUSLY HELD THE SAME AS INCOM E FROM OTHER SOURCES AND THE CIT(A) GRANTED PART RELIEF HOLDING THAT THE SAID GAINS CONSTITUTES SHORT TERM CAPITAL GAINS AND IN THE PROCESS, HE CONSIDERED THE DATE OF TRANSFER OF IMPUGNED SHARE TO THE DMAT ACCOUNT OF THE ASSESSEE AS THE DATE FOR COUNTIN G THE PERIOD OF HOLDING OF THE SHARES. OTHERWISE, THE ASSESSEE ARGUES FOR REVERSAL OF THE ORDERS OF THE REVENUE AND PRAY FOR GRANT OF EXEMPTION U/S 10(38) IN RESPECT OF THE IMPUGNED CAPITAL GAINS. REVENUE CONTENDS FOR TAXATION OF THE SAID GAINS UNDER THE H EAD INCOME FROM OTHER SOURCES. 21. THE PARTIES HAVE ADVANCED THEIR COMMON ARGUMENTS IN RESPECT OF THE ABOVE REFERRED TWELVE APPEALS OF SIX EACH BELONGING TO ASSESSEE AND THE REVENUE. ON CONSIDERATION OF THE ARGUMENTS AND OUR DISCUSSION, WE UPHELD THE IN VALIDITY OF THE CONTRACT NOTES AND THE UNSUPPORTED ENTRIES IN THE BOOKS OF ACCOUNTS IN THIS REGARD. THE PROCEEDINGS U/S 11B AND 11(4) OF SEBI ACT 1992 IN RESPECT OF THE BROKER CONTRIBUTES TO THE LACK OF CREDIBILITY TO THE ASSERTIONS MADE BY SRI R P SHAH TH E BROKER AND THE CONFIRMATION GIVEN BY HIM. FURTHER ON THE ISSUE IF THE PURCHASE TRANSACTIONS IN QUESTION ARE EITHER THE CALCUTTA EXCHANGE OR OFF MARKET TRANSACTIONS, IT IS NOW THE CHANGED POSITION THAT THE ASSESSEES COUNSEL ATTEMPTED TO MAKE IT A CASE OF OFF MARKET TRANSACTIONS AND IN OUR OPINION, THE SAME CONSTITUTES AN AFTERTHOUGHT WHICH IS NOT ENTERTAINED AT THIS STAGE WITH OUT SUPPORTING EVIDENCES. IT IS A SETTLED POSITION THAT WHEN DEDUCTION IS CLAIMED U/S 10(38) OF THE ACT BY THE ASSESSEE AND THEREF ORE, THE ONUS IS ON THE ASSESSEE AND THE SAME IS NOT DISCHARGED. INSOFAR AS THE CIRCULAR NO 704 DT 8/4/95 - IS CONCERNED, THAT IT HAS NOT APPLICATION TO THE CASE OF THE ASSESSEE WHERE THERE IS NO CLARITY ON IF THE TRANSACTIONS ARE OFF MARKET OR OTHERWISE. T HE LACK OF CREDIBILITY TO THE BROKERS DEALS, THE DATE APPEARING IN THE ALLEGED CONTRACT NOTE HAVE TO BE IGNORED. FURTHER, WE FIND THAT THE IN THE 12 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON CASES LIKE THIS, THE ONUS IS ON THE ASSESSEE AS HELD IN THE CASE OF SHANTHILAL MUNNALAL (SUPRA). THIS DECISI ON ALSO PROPOSES THAT THE IMPUGNED PURCHASE TRANSACTIONS MUST BE TREATED AS NON GENUINE TRANSACTIONS UNDER THE FACTUAL MATRIX OF TAINTED BROKER, SOLITARY TRANSACTION AND ALSO THE PENNY STOCK. 22. EVEN WE ARE NOT PRIVY TO SUCH ORIGINALS OF THE CONTRACT N OTES AS THEY ARE NOT PART OF THE PAPER BOOK FILED BEFORE US. IN ANY CASE, WE HAVE GIVEN OUR FINDING ON THE CREDIBILITY OF THESE CONTRACTS NOTES AND THE SAME IS AGAINST THE ASSESSEE, HAVE ALSO EXAMINED THE FOLLOW UP ACTION CONSEQUENT TO THE SAID CONTRACT NO TE AND FOUND THE SHARES WERE NEITHER TRANSFERRED TO THE ASSESSEE NOR THE PAYMENTS OF CONSIDERATION WAS MADE BY THE ASSESSEE TO THE BROKER IN A REASONABLE TIME PERIOD. THERE IS NO EVIDENCE TO SUBSTANTIATE THAT THERE IS SOME UNDERSTANDING BETWEEN THE BROK ER AND THE ASSESSEE FOR SUCH INACTION TO GIVE EFFECT TO THE SAID CONTRACT NOTES. THAT MEANS THESE CONTRACT NOTES ARE AS GOOD AS DEAD ONES. IN ANY CASE, NOW THE ASSESSEE HAS DECIDED TO RESORT TO THE NEW LINE OF ARGUMENT, I.E. OFF MARKET TRANSACTION. IN EFFECT, IN OUR OPINION, IT IS AS GOOD AS THE ASSESSEE STOPPED RELYING ON THE CONTRACT NOTES . FURTHER, WE CONSIDERING THE FACT THAT THE ASSESSEES FAMILY IS FAIRLY ACQUAINTED WITH THE BROKER, WHO ENTERTAINED THE TELEPHONIC ORDERS OF THE ASSESSEE, TH E ALLEGATION OF PROXIMITY OF SRI RAJENDRA P SHAH, THE BROKER TO THE ASSESSEES FAMILY SHOULD BE ENTERTAINED AND THEREFORE, THERE MUST SOMETHING MORE THAN WHAT MEETS THE EYES AND MORE THAN WHAT APPEARS IN THE BOOKS OF ACCOUNTS OF THE BROKER AND THE ASSESSEE . THEREFORE, THE RATIO DECIDENDI OF THE APEX COURT IN THE CASE OF SUMATI DAYAL (SUPRA) HAS SOME RELEVANCE TO THIS CASE. DURING THE HEARING, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE IMPUGNED PURCHASE TRANSACTIONS ARE ENTERED IN HER BOOKS AS INVESTMENT S AND IN OUR OPINION, THE SAME CANNOT BE CONCLUSIVE PROOF CONSIDERING VARIOUS ABNORMALITIES AND ALLEGATIONS INVOLVING THE SCRIP, BROKER, THE ASSESSEE AND THE ACT OF OTHER ASSESSEES WITH COMPARABLE PURCHASE TRANSACTIONS THROUGH THE SAME BROKER AND REVISING OF THEIR INCOME OFFERING THEIR PROFITS ALLEGEDLY EARNED ON SALE OF SHARES. IT IS OBVIOUS THAT THE SAID BOOKS ARE WRITTEN UNDER THE GUIDANCE OF THE ASSESSEE AND THE ENTRIES ARE NOT ADEQUATELY SUBSTANTIATED BY WAY OF PROPER CONTRACT NOTES AND THE CONTRACT NO TES THEMSELVES SUFFER FORM CREDIBILITY IN VIEW OF THE ABOVE DISCREDITS TOO. FURTHER, WE HAVE OBSERVED THAT ORIGINALLY, THE CLAIM OF THE ASSESSEE /BROKER IS THAT THE IMPUGNED TRANSACTIONS ARE 13 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON EFFECTED THROUGH THE EXCHANGE, WHICH WAS FOUND TO BE FALSE BY THE AO THROUGH HIS DIRECT ENQUIRIES WITH THE CALCUTTA EXCHANGE. A.O GATHERED RELEVANT DETAILS FROM THE EXCHANGE TO DEMONSTRATE THAT THE PURCHASE TRANSACTION WAS NOT A RECORDED TRANSACTION IN THE CALCUTTA STOCK EXCHANGE. THIS IS SUPPORTED BY THE FACT THAT THE SHARES ARE NEITHER TRANSFERRED TO THE ASSESSEE NOR THE RELEVANT PAYMENTS ARE MADE BY THE ASSESSEE TO THE BROKER IMMEDIATELY AFTER PLACING THE ORDER FOR PURCHASE OF SHARES AND TILL THE EXPIRY OF 18 MONTHS. THUS, IT IS AN UNDISPUTED FACT THAT THE ASSESSEE R ECEIVED SALE CONSIDERATION AND THE SAME IS ENTERED THE BANK ACCOUNTS OF THE ASSESSEES AND THE SAME IS RECEIVED INCIDENTAL TO THE INVESTMENT IN THE SHARES, CAPITAL ASSETS. THEREFORE, INCOME IF ANY GENERATED OUT THE SAME HAS TO BE CAPITAL GAINS MAY BE LONG TERM OR SHORT TERM AND IT CERTAINLY IS NOT INCOME FROM OTHER SOURCES. CONSIDERING THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE IMPUGNED GAINS ARE RIGHTLY TREATED AS SHORT TERM CAPITAL GAINS AND THEREFORE, THE ASSESSEE IS NOT ENTITLED TO EXEMPTI ON U/S 10(38) OF THE ACT AS THE EXEMPTION IS AVAILABLE ONLY TO THE LONG TERM CAPITAL GAINS. THEREFORE, THE ORDER OF THE CIT(A) DOES NOT CALL FOR INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED . 6. THE TRIBUNAL FINALLY HELD TH AT THE GAINS ARE RIGHTLY TREATED AS A SHORT TERM CAPITAL GAINS BY THE CIT(A) AND THE ASSESSE ES ARE NOT ENTITLED FOR EXEMPTION U/S. 10(38) AND THE LD. CIT(A) DOES NOT CALL FOR INTERFERENCE. SO FAR AS THE REVENUES APPEAL ARE CON CERNED THOSE WERE ALSO DISMI SSED IN WHICH THE REVENUES HAS CHALLENGED THE TREATMENT GIVEN BY THE LD. CIT(A) TO THE GAIN AS A SHORT TERM CAPITAL GAINS DISSENTING WITH THE ASSESSING OFFICER S V IEW THAT ALL THE SHARE TRANSACTIONS ARE BOGUS AND CAMOUFLAGE. NOW BOTH THE PARTIES HAVE GON E TO THE HIGH COURT AGAINST THE ORDER OF THE CIT(A) IN QUANTUM PROCEEDINGS. 7. THE ASSESSING OFFICER ALSO INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AGAINST ALL THESE ASSESSEES ON THE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INC OME AND LEVIED THE FOLLOWING PENALTIES 14 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON (I) PRAKASH G. MUNDHRA RS.1,05,939/ - . (II) SUREKHA B. MUNDHRA RS.2,65,888/ - . (III) G.B. EXTRUSION PVT. LTD. RS.21,55,064/ - . (IV) ANJANIKUMAR B. MUNDHRA RS.1,30,156/ - . ALL THESE ASSESSEES CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT(A) BUT WITHOUT SUCCESS AS THE PENALT IES LEVIED BY THE ASSESSING OFFICER W AS CONFIRMED. THE LD. CIT(A) HAS HELD THAT THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF THE SALE OF SHARES ON THE BASIS OF THE CONTRACT NOTES AS A LONG TERM CAPITAL GAINS WAS NOT A BONAFIDE CLAIM AND HENCE, THE ASSESSEES HAS DELIBERATELY FURNISHED INACCURATE PARTICULAR OF INCOME . T HE REASONS GIVEN BY THE LD. CIT(A) ARE AS UNDER: 18. IN THE FACTS AND CIRCUMSTANCES MENTIONED ABOVE, I AM OF THE VIEW THAT THE APP ELLANT'S CLAIM FOR EXEMPTION U/S 10(38) OF THE ITACT WAS NOT A BONOFIDE CLAIM. THE APPELLANT DID NOT FURNISH THE FULL DETAILS AND NOT ONLY CONCEALED PARTICULARS OF INCOME BUT ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. THE APPELLANT FILED A FABRICATE D PURCHASE CONTRACT NOTE AND ITS CLAIM FOR EXEMPTION U/S 10(38) ON ACCOUNT OF LONG TERM CAPITAL GAINS WAS BASED ON A CONCOCTED TRANSACTION OF PURCHASE AND SALE OF PENNY STOCK. THE DIRECTOR OF THE COMPANY WAS EVASIVE IN HIS REPLIES IN REGARD TO DETAILS OF T HE TRANSACTION INVOLVING PURCHASE AND SALE OF SHARES (STATEMENT RECORDED BY ITO ON 04/07/2007). AO'S INVESTIGATIONS HAVE PROVED BEYOND DOUBT THAT THE APPELLANT MANIPULATED THE RECORDS TO FALSELY CLAIM LONG TERM CAPITAL GAIN TO EVADE TAX. THE INTENTION OF T HE APPELLANT IN MY VIEW WAS MALAFIDE SINCE BEGINNING AS IT FURNISHED INACCURATE PARTICULARS AND BOGUS CONTRACT NOTE WITH AN OVERALL OBJECTIVE TO EVADE TAX. I AM ALSO OF THE VIEW THAT THERE WAS A CONSCIOUS BREACH OF LAW AND LEVY OF PENALTY WAS RIGHTLY IMPOS ED. THE APPELLANT NOT ONLY DELIBERATELY WITHHELD INFORMATION REGARDING THE TRANSACTION DETAILS BUT ALSO FURNISHED INCORRECT PARTICULARS OF THE SAME. THERE IS NO DOUBT THAT, THERE IS SOME ELEMENT OF DELIBERATE DEFAULT ON THE PART OF THE APPELLANT AND NOT A MERE MISTAKE IN CLAIMING EXEMPTION U/S 10(38) OF THE IT ACT - THOUGH WILLFUL CONCEALMENT IS NOT AN ESSENTIAL REQUIREMENT FOR LEVY OF PENALTY U/S. 271(L)(C) OF THE ACT AS HELD BY THE HON'BLE SC IN DHARMENDRA TEXTILE PROCESSORS & OTHERS [( 2008) 219 CTR (SC) 617], I HAVE ABSOLUTELY NO HESITATION IN WRITING THAT THE APPELLANT WILLFULLY CONCEALED INCOME BY DELIBERATELY FURNISHING INACCURATE PARTICULARS OF INCOME. IN MY VIEW THERE WAS A DIRECT ATTEMPT ON THE PART OF THE APPELLANT TO HIDE AN ITEM OF INCOME FROM TH E KNOWLEDGE OF THE INCOME TAX AUTHORITIES. THE APPELLANT HAS COMMITTED BREACH OF HIS DUTY NOT ONLY BY FURNISHING INACCURATE PARTICULARS OF INCOME BUT ALSO BY HIDING COMPLETE PARTICULARS FROM THE DEPARTMENT. IN VIEW OF THE ABOVE I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS CONCEALED INCOME BY FURNISHING INACCURATE PARTICULARS OF THE SAME. IN VIEW OF 15 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON THE ABOVE AO WAS JUSTIFIED IN LEVYING PENALTY U/S 271(1)(C). AO IN HIS ORDER HAS BROUGHT OUT IN GREAT DETAIL THE ENTIRE FACTS OF THE CASE AND ALSO THE COND UCT OF THE APPELLANT. THE LEVY OF PENALTY IS THEREFORE, NOT BASED ON ROUTINE AND GENERAL PRESUMPTION. AS PER THE PROVISIONS OF EXPLANATION 1, THE ONUS TO ESTABLISH THAT THE EXPLANATION OFFERED WAS BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME HAVE BEEN DISCLOSED BY HIM WILL BE ON THE PERSON CHARGED WITH CONCEALMENT. AS REGARDS APPELLANT'S CONTENTION THAT DISALLOWANCE OF CLAIM WILL NOT AMOUNT TO LEVY OF PENALTY, THE HON'BLE SC IN THE CASE OF OT VS RELIANCE PETROPRO DUCTS (P) LTD. (2010) 322ITR 158/189 TAXMAN 322 HAS HELD THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1 )(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. HOWEV ER, IN THE PRESENT CASE THE APPELLA N T HAS DELIBERATELY FURNISHED INACCURATE, PARTICULARS OF INCOME AND HAMIPD AN EXEMPTION U/S 10(38) OF THE IT ACT WHICH WAS NOT A BONA FIDE CLAIM. IT IS NOT A CASE OF MERELY DISALLOWING A CLAIM. HERE THE AO HAS PROVED TH E MENSREA OF THE APPELLANT IN MAKING A BOGUS CLAIM TO EVADE TAX. THE APPELLANT HAD MADE A CLAIM WHICH IT KNEW SINCE BEGINNING, WAS A BOGUS CLAIM. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND IT A FIT CASE FOR LEVY OF PENALTY FOR CONCEALMENT. ACTIO N OF THE AO IS UPHELD. BEING AGGRIEVED THE ASSESSEES ARE IN APPEAL BEFORE US. 8 . THE LEARNED COUNSEL SUBMITTED THAT THE DECISION OF THE TRIBUNAL REJECTING THE CLAIM OF THE ASSESSEE AS A LONG TERM CAPITAL GAINS HAS BEEN CHALLENGED BEFORE THE HON'BLE HIG H COURT OF BOMBAY, AURANGABAD BENCH BY FILING THE APPEALS U/S. 26 0A OF THE INCOME - TAX ACT AND THE HON'BLE HIGH COURT HAS ADMITTED ALL THE APPEALS AND FRAMED THE SUBSTANTIAL QUESTION OF LAW. SHE SUBMITS THAT ONCE THE HON'BLE HIGH COURT HAS FRAMED THE SUBST ANTIAL QUESTION OF LAW WHEN THE ASSESSEES HAVE CHALLENGED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE TRIBUNAL FOR NOT CONSIDERING THE CBDT CIRCULAR IN WHICH THE CBDT HAS LAID DOWN THE GUIDELINES THAT DATES SHOWN ON THE CONTRACT NOTES SHOULD BE ACCE PTED. SHE SUBMITS THAT ONCE THE CHARGE OF THE REVENUE IN RESPECT OF THE BONAFIDE NESS OF THE CONTRACT NOTES I S ADMITTED BY THE HON'BLE HIGH COURT , IN SUCH A SITUATION THE PRESUMPTION WOULD BE THAT THE REVENUES ALLEGATION IS NOT ABSOLUTE BUT IS UNDER THE J UDICIAL SCRUTINY OF THE HON'BLE 16 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON HIGH COURT. SHE ALSO TOOK US TO THE SUBMISSIONS MORE PARTICULARLY , WHICH ARE AT PAGE NO. 4 OF THE PAPER BOOK AND TRY TO JUSTIFY THAT IN THE CIRCULAR NO. 768 DATED 24 - 06 - 1998 T HE CBDT HAS LAID DOWN THE GUIDELINES TO THE ASSE SSING OFFICER THAT THE DATE GIVEN OF THE CONTRACT NOTES SHOULD BE A CCEPTED. SHE PLEADED FOR DELETING THE PENALTIES BY STATING THAT AS MATTER IS SUBJUDICED AND HENCE, ISSUE IS DEBATABLE . PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW . 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND EXAMINED THE FACTS WHICH LED TO LEVY OF PENALTIES. IN THIS CASE, BOTH THE PARTIES HAVE CHALLENGED THE ORDER OF THE TRIBUNAL IN THE QUANTUM PROCEEDINGS BEFORE HON'BLE HIGH COURT AND THEIR APPEALS ARE ADMITTED. IN RESPECT OF PENALTY PROCEEDINGS WE HAVE TO CONSIDER THE FACTS WHICH HAVE REACHED FINALITY IN THIS CASE. SO FAR AS THE APPEALS FILED IN THE HON'BLE HIGH COURT ARE CONCERNED , W E ARE AWARE THAT SUBSTANTIAL QUESTION OF LAWS HAVE BEEN FRAMED BY ADMITTING APPEALS FILED BY BOTH THE ASSESSEES BUT WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LEARNED COUNSEL THAT IN ALL CASES ONCE THE MATTER IS ADMITTED BY THE HON'BLE HIGH COURT BY FRAMING THE SUBSTANTIAL QUESTION OF LAW HENCE, THE ISSUE BECOME DE BATABLE. 10. WE MAKE IT CLEAR THAT THE REVENUE HAS ALSO CHALLENGED THE ORDER OF THE TRIBUNAL BY FILING THE APPEAL TO THE HON'BLE HIGH COURT . M ERELY BECAUSE THE MATTER HAS BEEN CARRIED BY THE PARTIES BEFORE THE HON'BLE HIGH COURT AND THE SAME HAS BEEN A DMITTED THEN EACH AND EVERY CASE PENALTY CANNOT BE DELETED ON THE REASON THAT ISSUE IS A DEBATABLE ONE. THE P ENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS FROM THE ASSESSMENT PROCEEDINGS. A DEBATABLE ISSUE CONTEMPLATES THAT THERE ARE TWO VIEWS POSSIBLE ON SAID ISSUE. T HERE IS A SERIOUS CHARGE ON THE ASSESSEE THAT THE DATE OF PURCHASE OF THE SHARES DECLARED BY THE ASSESSEE BY PRODUCING THE DEBATABLE NOTE FROM THE BROKERS IS A MANIPULATED DATE TO TAKE THE BENEFIT OF SEC. 10(38) OF THE ACT CLAIMING THE GAIN O N SALE OF THE SHARES AS 17 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON A LONG TERM CAPITAL GAIN . IN THIS CASE, THE TRIBUNAL HAS ALSO GIVEN A CATEGORICAL FINDING OF FACT THAT ORIGINAL BROKER S NOTES WERE NEVER PRODUCED BY THE ASSESSEE EVEN BEFORE THE TRIBUNAL. THERE ARE CERTAIN IMPORTANT FACTS WHICH A LSO HAVE BEEN CONSIDERED BY THE TRIBUNAL . I NITIALLY THE ASSESSEE CLAIM ED THAT ALL THE SHARES IN QUESTION WERE PURCHASE D THROUGH THE STOCK EXCHANGE BUT S UBSEQUENTLY T HE ASSESSEE CHANGED THE STAND AND CLAIM ED THAT ALL THE SHARE ARE PURCHASED IN OFF - MARKET T RANSACTIONS. IN THIS CASE, IT IS NOT DISPUTED THAT THERE WAS ALMOST 18 MONTHS DELAY IN DELIVERY OF THE SHARES . E VEN THE PAYMENTS TO THE B ROKER ARE MADE ONLY AFTER THE SALE OF THE SHARES AFTER THE LONG GAP OF TIME. THERE WERE CONTRADICTIONS IN THE DETAIL S OF THE BROKERS NOTES AND THOSE IN THE STOCK EXCHANGE I.E. IN RESPECT OF SETTLEMENT NO. ETC. THE TRIBUNAL HA S HELD THAT THE CONTRACT NOTES PRODUCED BY THE ASSESSEE ARE NOT GENUINE . THE SAID FINDING IS GIVEN ON THE APPRECIATION OF THE EVIDENCE AS WELL A S THE FACTS . W E ARE AWARE THAT EVEN IF THE ASSESSING OFFICER HAS TREATED THE ENTIRE CAPITAL GAIN DECLARED BY THE ASSESSEE AS INCOME FROM THE OTHER SOURCES BUT THE LD. CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE TO THE EXTENT THAT AT LEAST THE SALE OF THE SHA RES IS A GENUINE ONE BECAUSE THE SAME WAS ROUTED THROUGH D - MAT ACCOUNT. THE LD. CIT(A) HELD THAT AT THE MOST IT CAN BE SAID THE SHARES WERE PURCHASED ON THE DATE ON WHICH THOSE WERE CREDITED TO THE D - MAT ACCOUNT HENCE, THE PERIOD OF HOLDING WAS LESS THAN 12 MONTHS. HE , THEREFORE, HELD THAT EVEN IF THE TRANSACTIONS OF THE SALE OF THE SHARES IS TREATED AS A GENUINE ONE BUT THE SHARES WERE HELD FOR THE LESS THAN THE 12 MONTHS AND HENCE, THE CAPITAL G AIN DECLARED BY THE ASSESSEE S IS TO BE ASSESSED AS A SHORT TERM CAPITAL GAIN. 11. IN CONSEQUENCE , THE ASSESSEE S CLAIM OF EXEMPTION OF THE GAIN U/S. 10(38) WAS REJECTED AND THIS IS PRECISELY THE CASE OF THE ASSESSING OFFICER THAT BY USING THE BOGUS BROKERS NOTES T HE ASSESSEE SHOWN THE PERIOD OF HOLDING MORE TH AN 12 MONTHS AND ACCORDINGLY FURNISHED INACCURATE 18 ITA NOS. 810, 811, 812 & 892/PN/2011, PRAKASH G. MUNDHRA, SUREKHA B. MUNDHRA, G.B. EXTRUSION PVT. LTD. & ANJANIKUMAR B. MUNDHRA, JALGAON PARTICULARS OF HIS INCOME. IN OUR OPINION, IF THE CHARGE OF DELIBERATE ATTEMPT TO EVADE TAX BY MANIPULATION IS MADE WHICH ALSO COULD NOT BE DISPROVED BEFORE US , TH E ASSESSEE CANNOT G ET IMMUNITY FROM PENALT Y. THOUGH THE LEARNED COUNSEL REITERATED THE ARGUMENT S MADE IN THE QUANTUM PROCEEDINGS TO MAKE OUT A CASE THAT THE BROKERS NOTES ARE GENUINE BUT AS ALL THE ARGUMENTS ON THE SAME FACTS AND THE EVIDENCE S HAVE ALREADY BEEN CONSIDERED IN THE QUANTUM PROCEEDIN GS , WE CANNOT SIT AS A REVIEWING AUTHORITY ON THE FINDINGS GIVEN BY THE TRIBUNAL ON THE GENUINENESS OF THE BROKERS NOTES. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A) IN ALL THESE CASES AND GROUNDS TAKEN BY THESE ASSESSEES ARE DISMISSED. 1 2 . IN THE RESULT, ALL THE APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30 - 08 - 20 1 3 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 30 TH AUGUST, 20 1 3 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II, NASHIK 4 THE CIT - II, NASHIK 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE