2006-VIL-351-ITAT-JDP
Equivalent Citation: TTJ 105, 265, [2007] 13 SOT 61 (JODH.) (URO)
Income Tax Appellate Tribunal JODHPUR
IT APPEAL NO. 387 (JODH.) OF 2001
Date: 11.08.2006
INCOME-TAX OFFICER.
Vs
SMT. KUSUMLATA.
BENCH
Member(s) : R. S. SYAL., HARI OM MARATHA.
JUDGMENT
This appeal of the Revenue arises from the CIT(A) order dt. 30th May, 2001 for asst. yr. 1997-98.
2. The only ground raised by the Revenue in this appeal reads as under:
"On the facts and in the circumstances of the case the learned CIT(A) has erred in deleting on the basis of unsubstantiated claims of the assessee, addition of Rs. 4,99,062 made under s. 69 whereas the AO had made the addition on the basis of information/evidence available with him."
3. Briefly stated, the facts of the case are that the assessee filed her return declaring income of Rs. 1,07,358 on 29th Oct., 1997, showing profit on sale of shares and LIC commission. The assessee has shown long-term capital gain of Rs. 4,99,062 on the sale of 9000 shares of Kalyani Commercial Ltd. and the entire capital gain has been claimed to be exempted under s. 54F of the Act. The learned AO required the assessee to furnish the following informations.
1. No. of shares purchased with distinctive numbers, date and rate as on the date of purchase with proof, complete name and address of the company, date of sale of shares with proof of rate on the date of sale.
2. Proof of making orders to purchase the shares to the Dalal, details of amount remitted to the broker for purchase of shares with source and commission paid along with other expenses incurred thereon.
3. Details of construction and investment made thereon with sources.
4. Copy of capital account, balance sheet etc., for the last three years.
4. In response to the above, the assessee tendered the following details:
1. Chart showing the details of shares purchased and sold according to which she has purchased 9000 shares of the above company on 24th May, 1995 and the said shares bear the distinctive numbers staring from 700001 to 709000. The purchase price of the shares was claimed to be at Rs. 32,490 being Rs. 361 per share as against the quoted price of Rs. 350 per share.
2. The deal for purchasing the above shares were claimed to be finalised through telephone and therefore, there is no proof of making any orders to the share broker. The amounts of purchase of shares were claimed to be remitted to the share broker through DD purchased from SBBJ, Burmees Colony, Jaipur. As regards, the expenses incurred for purchase of the shares, it was claimed that the amount remitted to the shares (sic-brokers) include all the expenses.
3. As regards filing of capital account, balance sheet etc. it was submitted before the AO since the appellant did not maintain any books of account, no such details can be furnished.
5. The learned AO after considering the above explanation of the assessee still required the following other informations.
1. Copy of transfer certificates of shares.
2. Details of commission charged by Maheswari Sons and J.K Jain Co., through which the shares were claimed to be sold along with expenses such as service-tax etc. with confirmation.
3. Copy of bank book of the appellant for the relevant period.
4. Date of delivery of shares from M/s Maheswari Sons, Delhi.
5. Details of shares purchased in the previous years.
6. Mode of payments received from the share broker on sale of shares.
7. Complete name and address of the persons (who) purchased the shares through the share broker and date of delivery.
6. The learned AO also recorded the statement of the assessee on 27th Dec., 1999. In her statement she stated that any further information with regard to date of receipt of shares and the name and address of the persons who purchased the shares along with date of delivery can be enquired from the broker M/s M.K. Jain & Co., Jaipur. The learned AO made independent enquiries from the share brokers M/s J.K. Jain and Co., Jaipur Stock Exchange, Delhi Stock Exchange, Bank of Punjab, Delhi etc. It was stated on behalf of the broker by Shri KK Jain vide his letter dt. 22nd Dec., 1999 that while going to Delhi to attend a tax hearing, his suitcase containing records of share transactions relating to financial years 1995-96, 1996-97 and 1997-98 was stolen on 17th Nov., 1997 and for which an FIR No. 115/97-IPC, under s. 379 dt. 17th Nov., 1997 was lodged. A copy of FIR was also filed. Shri J.K. Jain confirmed that Smt. Kusum Lata W/o Rajendra Kumar had been dealing with him during the year 1996-97. The AO did not accept the above version and taking into account the information collected from Jaipur Stock Exchange that Shri J.K. Jain, member of Jaipur Stock Exchange, is the purchaser and seller of Kalyani Commercial Ltd. for 100 shares @ 59.60 per share on 18th July, 1996, only, but the details of deliveries of such traded shares has been reflected in the total transaction record of the share broker available with the stock exchange, came to the conclusion that these transactions shown by the assessee are only an attempt to introduce her unexplained income in the construction/purchase of house property with a view to get a benefit of the provisions of s. 54 of the Act and therefore, there was no capital earned by the assessee and the investment of Rs. 4,99,062 claimed in the purchase/construction of residential house is the unexplained investment made by her out of unexplained income and thus, he added the same under s. 69 of that Act.
7. The learned CIT(A), on the contrary, deleted the impugned addition referring to details/materials and evidences available on record which according to him clearly suggested that these transactions cannot be held bogus. He has further held that the assessee earned profit of Rs. 4,99,062 as per sale of shares through broker which has been invested in the property. He also held that no addition can be made under s. 69 of the Act in the hands of this assessee. Now the Department is aggrieved.
8. We have heard the rival submissions and have perused the evidence available on record.
9. The assessee has claimed that she sold 9000 shares of Kalyani Commercial Ltd. @ 59.15 per share on 18th July, 1996. After deducting expenses etc. the total long-term capital gain earned by the assessee is stated to be Rs. 4,99,062 which is utilised in the construction of a residential house and for that she has claimed exemption under s. 54 of the Act. It is an undeniable fact that the assessee has co-operated with the Department and has furnished numerous informations as and when required by the AO. She has appeared before the AO and her statement was also recorded. She is a housewife and she invested in shares through her father-in-law. There is nothing unnatural and unusual for a housewife who purchased shares through any male member of the family and in such circumstances the minute details are naturally available with the male member of the family only. In this case, the assessee has produced before the AO the following documents:
(i) Contract note dt. 24th May, 1995 and bill dt. 31st May, 1995 of Maheshwari Sons confirming purchase of 9000 shares of Kalyani Commercial Ltd. for Rs. 32,492.
(ii) Copy of Delhi Stock Exchange quotation dt. 27th May, 1995 indicating quoted rate of said shares at Rs. 3.50 per share.
(iii) Copy of DD No. 763232 indicating payment of Rs. 32,400 towards cost of share.
(iv) Letter dt. 10th June, 1995 from Kalyani Commercials Ltd. regarding transfer of share certificates in the name of assessee along with the photocopy of the transferred share certificate in the name of assessee.
(v) Contract note dt. 18th July, 1996 and bill dt. 25th July, 1996 from J.K. Jain and Co., confirming sale of above shares @ 59.15 per share amounting to Rs. 5,32,350.
(vi) Copy of Jaipur Stock Exchange quotation rate dt. 18th July, 1996 indicating the quoted rate of share at Rs. 59.60.
(vii) Copy of DD No. 052411 for Rs. 5,31,552 indicating receipt of payment against the sale of the said shares.
10. For making addition under s. 69 of the Act, the Department is required to prove to the hilt that the impugned transactions are bogus. The burden cast on the Department under s. 69C (sic-69) of the Act is very high which is required to be discharged conclusively in this case; there is no such evidence. The assessee has purchased shares from M/s Maheswari Sons. These purchases are evidenced from the contract note. The payment was made by cheque. These shares were transferred in the name of the assessee. The assessee held these shares for more than one year. She sold these shares to the member of stock exchange Shri J.K. Jain. Shri J.K. Jain in his letter dt. 22nd Dec., 1999 has confirmed the transaction and the payment was made through cheque. The assessee has provided all the requisite evidences in support of all transactions. Simply because Shri J.K. Jain could not produce his books of account or the quoted rate of shares in Delhi Stock Exchange being less or the transactions being not reported by Shri J.K. Jain to the stock exchange, would not make a transaction bogus. The Jaipur Stock Exchange has intimated the AO that they are only having information of the transactions between two members of the stock exchange and not otherwise. In the present case, the transaction was between a member and a non-member and therefore, such transactions were not reported in the stock exchange. Further, the credit in the bank account of Shri J.K. Jain is by clearance. Therefore, the allegation of the AO that the amount was deposited in cash has no basis. The assessee has accepted having invested her funds on the advice of her father-in-law. The burden of proving a transaction is always on the person asserting it to be bogus and this burden has to be strictly discharged by adducing legal evidence of a character which would either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect.
11. The assessee made payment for the purchase from her own sources through banking channel. The shares were transferred in the name of the assessee and were held by her for more than one year. There is no relationship between the party from whom the assessee purchased the shares and the party to whom these were sold. The shares were delivered after its sale and the assessee did not remain in possession of those shares. From the above facts, it is established that the assessee acquired the shares to earn profit. There is no evidence except speculation that this profit is not from the sale of shares. The AO has failed to establish his case and to discharge the requisite burden cast on him.
12. The learned Authorised Representative was directed by this Bench to produce a certificate with regard to sale of these shares @ Rs. 59.60. The learned Authorised Representative has filed the requisite quotation of 18th July, 1996 along with the requisite proof of transactions of 9000 shares of M/s Kalyani Commercial along with transfer of share certificate. Therefore, in the given facts and circumstances of the case, we are of the considered opinion that the learned CIT(A) has correctly come to the conclusion that the assessee has dealt in these shares and these transactions cannot be held bogus. We confirm the findings of the learned CIT(A) and confirm the deletion of an addition of Rs. 4,99,062. This conclusion results in rejecting ground of appeal raised by the Revenue.
13. In the result, the appeal of the Revenue stands dismissed.
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