DILIPKUMAR SOHANLAL MAHESHWARI,AHMEDABAD vs. THE DY.CIT, CIRCLE-1(1)(1), AHMEDABAD

The brief facts of the case are that the assessee had filed his return of income for the A.Y. 2015-16 on 29.09.2015 declaring income of ITO vs. Ramlal Manekchand HUF Page 2 of 5

Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.

Now, the assessee is in second appal before the us. The following grounds have been taken in this appeal: -

The Officer is required to make "Inquiries” under section 142 of the Act before passing order under section 143, making addition of Rs.15,22,776/- under section 68. It is evident from the records that the order of assessment is passed without inquiry. The order passed by CIT Appeal is cryptic, non-speaking and without reasons. Thus it is a defective order and required to be struck down.

The Learned Assessing Officer has Assessing has acted upon the so called Information as an "Evidence" against the Assessee, without corroborating the same with other information and or evidences. The AO remained in his chair with folded hands. The Learned AO rejected all the cogent and material evidences and explanations without discussions and passed the order.

The Learned AO has considered entire sale consideration of Rs.15,22,776/- as un-explained cash credit during the previous year 2014-15. It is an undisputed fact that the Assessee has invested Rs.6,55,015/- in shares during the previous year 2012-13. The AO wrongly considered entire sale consideration as un-explained under section 68.”

Shri Kalpesh Shah, Ld. AR of the assessee explained that all the transactions of purchases and sales of shares of M/s. Vandana Knitwear were carried through recognised Stock Exchange and there was no reason for the Assessing Officer to treat these transactions as bogus. He explained that the assessee is a regular investor in shares and the evidences in the form of contract note, payment details, copy of bank account, de-mat account etc. were brought on record to prove the authenticity of the transactions. He further submitted that the Assessing assessee were bogus. The Ld. AR explained that these share transactions were made through Edelweiss Financial Advisors Limited, a registered Broker with SEBI, BSE and NSE. Further that the scrip of M/s. Vandana Knitwear was not blacklisted by SEBI during the relevant period or even afterwards. Therefore, the addition as made by the Assessing Officer was not on based any material fact but was on presumption only.

Per contra, Shri Sudhakar Verma, the Ld. Sr. DR supported the orders of the Assessing Officer as well as the Ld. CIT(A).

We have considered the submissions of the assessee. In the return of income for the A.Y. 2015-16, the assessee had claimed LTCG of Rs.14,83,036/- as exempt under Section 10(38) of the Act. It is found that this LTCG was derived on trading of various shares such as Rubfila, GHCL, RIL, Idea, Vandana, JSW Ispat, Abbot India Limited, Reliance, Bajaj Hindustan etc. The assessee had disclosed exempt LTCG in respect of 17 scrips and the LTCG pertaining to Vandana Knitwear was Rs.8,67,671/- only. It is apparent from the facts brought on record that the assessee was a regular investor in shares and the transactions in the shares of Vandana Knitwear was not a one-off transaction. It is further found that the shares of Vandana Knitwear were purchased through a registered broker in the month of December 2012 and sold in November 2014 and no off-market transaction was involved. The purchases as well as sales of shares of Vandana Knitwear are also found duly reflected in the de-mat account statement of the assessee. Further, the purchases as well as the sales proceeds of these transactions were duly reflected in the bank account of the assessee. In view of the evidences as brought on record by the assessee in the course of assessment proceedings, Knitwear as bogus or unexplained. The Assessing Officer has not discussed about any material evidence which could prove that the transactions were bogus. Neither the scrip of Vandana Knitwear was blacklisted by the SEBI nor any evidence of assessee’s involvement in the price fluctuation of the shares has been brought on record. We, therefore, do not find any justification to treat the transactions of the assessee in the shares of Vandana Knitwear, which was duly explained with supporting evidences, as bogus or unaccounted. Therefore, the addition of Rs.15,22,776/- made by the Assessing Officer under Section 68 of the Act in respect of bogus share transactions in respect of scrip of Vandana Knitwear, is deleted. 8. In the result, the appeal of the assessee is allowed.