ALMATH TEXTILES P. LTD,MUMBAI vs. DCIT 6(1), MUMBAI

This appeal u/s 253 of the Income-tax Act is directed by the assessee against the order of CIT(A)-12, Mumbai dated 04.08.2015 for Assessment Year (AY) 2007-08. Though, the assessee has raised as many as three grounds of appeal

We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. Ld. AR of the assessee argued that in the assessment, the assessee claimed LTCG of Rs. 45,45,853/- on the sales of shares of Reliance Industries and Alok Industries Ltd. The AO asked the assessee to file copy of contract note and copy of DMAT A/c. Assessee has explained that shares were sold in physical form and not in DMAT form. The AO seeks information from the stock exchange as well as from broker despite confirmation from exchange and broker, the AO made the addition which was confirmed in the appeal by ld. CIT(A) and the assessee filed appeal before this Tribunal which was registered as ITA No. 04/Mum/2010 and the same was restored to the file of AO for passing the fresh order after necessary examination of the sales bills, delivery challan, certificate number of the shares sold. The ld. AR of the assessee argued that he has supplied the AO the contract note (page no. 14 to 16) debit note (page no. 17 to 17A and 18), copy of S.T.T. (page no. 17). Copy of order of Registrar of companies dated 11.02.2011 about striking the name of Garari Impex Pvt. Ltd., copy of Ledger A/c of share broker, copy of cheque(s) in respect of consideration of the sale transaction along with the statement of account of assessee for the year ending on 31.03.1998, 31.03.2002, 31.03.2003, 31.03.2004 & 31.03.2005 showing the investment in Alok Textile and Reliance Industries. The AR of the assessee argued that the assessee is not having distinctive number of share and no such record was kept by assessee. The assessee transacted the sale through broker registered with BSE. The AO sent the notice to BSE and the broker, and broker as well as the BSE confirmed the sale transaction of the shares. The ld. DR for the Revenue supported the order of authorities below.

We have considered the rival contention of the parties and gone through the orders of authorities below including the order of the Co-ordinate Bench of this Tribunal in ITA No. 04/Mum/2010 dated 16.11.2011. In the direction, the Co-ordinate Bench observed that it is possible to sale the shares in the physical forms in market trade, however, in such case, the assessee is required to issue sales bill and delivery challans, giving the certificate number and distinctive number of share sold. However, the AO in the remand proceeding passed the similar order sustaining the addition made earlier. The ld. CIT(A) while considering the case of the assessee observed that assessee has sold the capital asset i.e. equity share in BSE and paid the S.T.T, this fact was duly crossed confirmed by the BSE as well as by the broker namely Kamal Kumar Jalan. However, the ld. CIT(A) concluded that the assessee has not proved the genuineness of the transaction. As we have noticed that the ld. AR of the assessee had argued that the assessee is not having distinctive number of shares as copy of those share certificates were not kept. We have seen that assessee has placed on record contract note, sales bill, proof of S.T.T. paid, confirmation of broker and the verification by BSE, copy of all those record are available in the form of PB before us. The sale was transacted through registered broker Shri Kamal Kumar Jalan Securities Pvt. Ltd. The consideration of sale transaction was paid through cheque(s) copies of which are available on record. As per our considered opinion, the assessee has discharged his onus to prove the genuinenity of the transaction. With these observations, the appeal of the assessee is allowed.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on this 19th October, 2016.