Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Mahavir Singh, JM & Shri M. Balaganesh, AM]
ORDER Per Shri Mahavir Singh, JM:
All these three appeals by revenue are arising out of separate orders of CIT(A)- VIII, Kolkata in Appeal Nos.416, 415 & 417/CIT(A)-VIII/Kol/2009-10 all dated 22.12.2010. Assessments were framed by ITO, Ward-9(2), Kolkata u/s. 147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Years 2004-05 and 2005-06 vide his separate orders dated 23.12.2009.
The only common issue in these three appeals of revenue is against the order of CIT(A) deleting the addition made by AO on account of profit arising out of sale of shares as income from undisclosed sources as against disclosed by the assessee as capital gains. The facts and circumstances are exactly identical in all the three appeals and hence, we will take the facts from for AY 2004-05 and adjudicate the issue. The grounds raised
in ITA No. 624/K/2011 by the revenue read as under: “1. That the Ld. CIT(A) erred in law and in fact in deleting the addition of Rs.48,44,000I- made on account of disallowance of assessee's claim of long term capital gain by treating the same as assessee's income from undisclosed source.
2. That Ld. CIT(A) while deciding the issue in favour of the assessee failed to appreciate the fact that the alleged transactions were made with a broker involved in creating an artificial 2 625 & 635/K/2011 Smt. Bijaya Ganguly. AY 2004-05 & 2005-06 market of the scripts. The companies in which investments were made were devoid of fundamentals and the assessee had no such prior experience or back ground in trading of shares.
3. That the Ld. C.I.T.(A) erred in law and in fact in deciding the issue in favour of the assessee mere relying on the decision of his predecessor in the case of Kumari Shreyashi Ganguly, the daughter of the assessee and ignored the fact that the order of his predecessor has already been contested by the department in appeal before the Hon'ble ITAT and the same is still pending.”
Briefly stated facts are that the assessee during the year under consideration claimed long term capital gain arising out of sale of shares at Rs.48.44 lacs. The assessee’s portfolio of investment comprised of shares of PSL finance Ltd. and Sangotri Construction Ltd. According to AO, he has received a report from ADIT (Inv.), Durgapur wherein while disposing of tax evasion petition necessary enquiries were conducted with Calcutta Stock Exchange Association Ltd. and as per his report dated 04.08.2008 vide no. ADIT(Inv)/DGP/2008-09/23 stated that the Calcutta Stock Exchange Association Ltd. vide their letter No.CSE/MSD/ITAX/1372-0806/3297 dated 17.06.2008 admitted that no such transaction of PSL Finance Ltd. was executed by M/s. Badri Prasad & Sons, the broker. Similar is the position in respect to Sangotri Construction Ltd. that the assessee claimed to have made purchases through stock broker M/s. V. K. Singhania & Co. of Calcutta Stock Exchange Association Ltd. and in turn they intimated that no such transaction was executed by M/s. V. K. Singhania & Co. According to AO, both the transactions were found to be incorrect and accordingly, he treated the profit arising out of shares as income from other sources instead of capital gains. Aggrieved, assessee preferred appeal before CIT(A), who relying on the order in the case of Smt. Shreyashi Ganguly, the daughter of the assessee deleted the addition made by AO as income from other sources and treated the profit arising out sale of shares as capital gains. Aggrieved against the action of CIT(A) in deleting the addition, revenue came in second appeal before Tribunal.
We have heard rival submissions and gone through facts and circumstances of the case. We find from the facts of the case and paper book that the shares were transacted through the share broker, who are registered members of Stock Exchange. The assessee has also filed copy of contract notes issued by brokers. The contract notes contained contract note number, date of transaction, settlement number, settlement period, name and quantity of shares transacted on behalf of the assessee and also payments are made by 3 625 & 635/K/2011 Smt. Bijaya Ganguly. AY 2004-05 & 2005-06 cheques directly to the share brokers’ accounts. We have gone through the contract notes and found that the observations of the AO that the contract notes are devoid of I D card of client but this is factually incorrect whereas the contract note contained complete I D card of clients and which is mandatory in view of SEBI regulations. From the above facts, we are of the view that transactions of shares entered into by the assessee are evidenced by contract note of the share broker and these brokers are duly registered with SEBI and their registration number is mentioned on the contract notes. The complete name of the client, ID of the assessee, date of transaction, settlement numbers and settlement period is mentioned on the contract notes. We further find that Hon’ble Calcutta High Court in assessee’s daughter’s case in the case of CIT Vs. Smt. Shreyashi Ganguly, GA No. 2281 of 2012, ITAT No. 196 of 2012 dated 05.09.2012 has held as under: “The Assessing Officer has doubted the transaction since the selling broker was subjected to SEBI’s action. However, the d-mat account given the statement of transactions from 1.4.04 to 31.3.2005 i.e.relevant for the assessment year under appeal [2005-06] are before us. There cannot be any doubt about the transaction as has been observed by the Assessing Officer. The transactions were as per norms under controlled by the Securities Transaction Tax, brokerage service tax and cess, which were already paid. They were complied with. All the transactions were through bank. There is no iota of evidence over the above transactions as it were through d-mat format. Hence, we agree with the given findings of the learned Commissioner of the Income-tax (Appeals) in accepting the transactions as genuine toto.” In view of the fact findings we cannot re-appreciate, recording is such, cannot be said to be perverse as it is not fact finding of the learned Tribunal alone. The Commissioner of Income Tax came to the same fact finding. Concurrent fact finding itself make the story of perversity, unbelievable. And the appeal was preferred on the same point. That was dismissed in view of the decisions rendered in the first mentioned appeal on the identical point.” In view of the above facts and circumstances, we are of the view that the CIT(A) has rightly treated the transactions as genuine and profit arising out of the same, i.e. out of sale and purchase of shares is rightly treated as capital gains. Hence, we confirm the order of CIT(A) on this issue. All these three appeals of revenue are identical on facts and circumstances. Hence, all the three appeals of revenue are dismissed.
In the result, all the appeals of revenue are dismissed.