ACIT CEN CIR 22, MUMBAI vs. PADMADEVI KAINYA, MUMBAI

“That in the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.11,31,160/- made u/s. 68 of the IT Act as unexplained cash credit and Rs.56,558/- as expenditure incurred for the arrangement, without appreciating the facts of the case and Smt. Padmadevi Kainya evidences on record proving that purchase and sale of shares were arranged transactions. 2. Assessee claimed long term capital gain of `11,31,160/- which has been claimed as exempt. Assessing Officer held the said gain as unexplained cash credit under section 68 of the Act and also added back `56,558/- considering the same as expenditure towards commission for the said arrangement. The matter was carried before the first Appellate Authority wherein various contentions were raised on behalf of the assessee and having considered the same the CIT(A) granted relief to the assessee. The same has been opposed before us on behalf of Revenue, inter alia, submitting that CIT(A) erred in deleting the addition of `11,31,160/- made under section 68 of the Act as unexplained cash credit and `56,558/- as expenditure incurred for the arrangement of the same. Accordingly the order of the CIT(A) be set aside and that of the AO be restored. On the other hand the learned counsel of the assessee supported the order of the CIT(A).

After going through the rival submissions and material on record we find that Assessing Officer has held that the transaction resulting into long term capital gain arising from sale of 4000 shares was not genuine. In this regard the stand of the assessee for making transaction genuine is as under: -

From the above it is clear that requisite material to evidence genuineness of the transaction has been placed on record on behalf of assessee. The said evidence has not been demolished by concerned Assessing Officer. When assessee has submitted copies of contract note, shown that money has been received in bank account, from sale of shares, purchase of which has not been doubted in the earlier year. It is not possible to accept the finding of the Assessing Officer that the income is from undisclosed source. Record shows that assessee has submitted contract note, sale bill, demat statement and statement of account to substantiate that sales had been effected. In view of the above CIT(A) was justified in not sustaining the finding of Assessing Officer. Since the disallowance of long term capital gain has not been upheld, disallowance of 5% commission was also rightly