Case Law Details
SUMMARY OF THE CASE LAWS
It was the duty of the A.O. to bring on record sufficient evidences and material to prove that the documents filed by the assessee were bogus, false or fabricated and the long term capital gain shown by him was actually his income from undisclosed sources.
RELEVANT PARAGRAPH
FACTS
The brief facts of the case are that the assessee filed his return of income on 29-10-2001 declaring an income of Rs. 10,65,588/- which includes the Long Term Capital Gain (LTCG) of Rs. 9,55,365/-. The assessee applied vide application No. 2163 for the allotment of shares in M/s. B.T. Technet Limited. Share application money of Rs. 25,000/- was sent through D.D. No. 376096 dated 01-09-1999 drawn at Vijaya Bank, Jeoni Mandi, Agra. The assessee received allotment letter dated 04-10-1999 showing the folio number P00084. Two share certificates of 5000 shares each showing the distinctive numbers and certificate numbers were also received by the assessee. The assessee has duly shown the investment. These shares were sold at the rate of Rs.106/- through the broker M/s. Agarwal & Co. being the member of Delhi Stock Exchange. On the sale of shares, the assessee has shown LTCG. The A.O. did not accept the genuineness of the sale transaction and observed that the assessee could not produce the broker. The identity of the buyer and the seller was also not established. He also doubted that in just 14 months time the prices of the shares cannot be increased by more than 11 times. The CIT(A) confirmed the order of the A.O. When the matter went before the Tribunal, the Id. Judicial Member (J.M.) accepted the genuineness of transactions while the Id. Accountant Member (A.M.) did not agree with the decision of the J.M. and has written a dissenting order.
HELD
I noted that in this case the A.O. has doubted the sale consideration because the share price has increased tremendously. I noted that in the case of Ashok Kumar Lavania also the assessee has purchased the share at the rate of Rs. 4/- per share and sold at the rate of Rs. 65/- to 84/- per share. In that case also the A.O. has not accepted the transaction but on the basis of the evidence the Tribunal has accepted the transaction to be genuine one as there was no corroborative evidence to support the statement of the broker. In this case, I noted that the statement of the broker was not recorded. The transaction was treated as non genuine as the assessee could not produce the broker. It is on record in the order of the CIT(A) that the inspector was able to locate the broker at his address at Ghaziabad but he did not deny the transaction but rather stated to give the statement after having the consultation with his CA. The assessee has submitted the confirmation of the broker dated 15.01.2004 which was rejected as it was not on the stamp paper duly signed by the witnesses. The revenue also observed that the broker was avoiding the department. This in my opinion cannot be the ground to hold the transaction to be a non-genuine transaction. The assessee has given the address of the broker and proved the identity of the broker, even the bank account of the broker is also on record of the department.
The revenue is also influenced that the assessee could not prove the name and address of the buyer of the shares. In the stock Exchange when the transaction is entered into, the assessee is not aware of about the buyer of the shares. He enters into transaction only through a share broker. Therefore, the observation of the A.O. that the assessee could not identify the buyer cannot be the basis of regarding the transaction to be non-genuine one. I also noted that the revenue has been influenced with the fact that the assessee has delivered the blank transfer share certificates to the broker when the delivery of the shares were given. Since the deal has to take place between the brokers, the assessee has to give only blank transfer share certificate to the broker without mentioning the name of the buyer. There is nothing wrong in my opinion and this is a usual practice in the business. From the entire appreciation of the evidence, I noted that the assessee had acquired the shares, the purchase of which was duly declared by the assessee in earlier years which stand accepted by the Revenue. That assessment has not been reopened. The shares were sold through stock brokers who were registered with the Stock Exchange. Shares were sold at the prices quoted at the Stock Exchange at the relevant time. The payment of sale consideration also flown from the bank account of the broker but the broker has deposited the cash in his account as per the revenue.
It was the duty of the A.O. to bring on record sufficient evidences and material to prove that the documents filed by the assessee were bogus, false or fabricated and the long term capital gain shown by him was actually his income from undisclosed sources. The only material to support such conclusion of the lower authorities is either the findings of the DDI in general investigations or the observation that the assessee could not prove the transaction to be genuine one. This is the settled law in view of the decision of the Honourable Supreme court in the case of Daulat Ram Rawatmull 87 ITR 349 (SC) that the apparent is real. Onus is on the person who alleges apparent is not real. None of the judicial precedent supports the case of the Revenue. While making addition as income from undisclosed sources burden on the department is very heavy to establish that the alleged receipt was actually income of the assessee from the undisclosed sources.
