Case Law Details
D.C.I.T. Vs. Sunita Khemka (ITAT Kolkata)– The decisions of the Hon’ble Calcutta High Court in the case of CIT-Vs- Carbo Industrial Holdings Ltd (244 ITR 422) and CIT –Vs- Emerald Commercial Ltd (250 ITR 549) are relevant to the issue where the Hon ’ble Court has held that where the payments are made by Account Payee Cheques and the existence of the brokers is not disputed the assessee cannot be punished for the default of the brokers and share transactions cannot be held to be bogus. The Hon’ble ITAT, Kolkata in the case of Rajkumar Agarwal (ITA 1330/Kol/2007 dated 10/08/07) has held that when purchase and sale of shares were supported by proper Contract Notes, deliveries of shares were received through demat accounts maintained with various agencies, the shares were purchased and sold through recognised broker and the sale considerations were received by Account Payee Cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG.
In the assessment orders under consideration the AO has not considered any of these facts. He has treated the transactions as bogus only on the basis of the suspicion that the difference in purchase and sale price of these shares are unusually high. It is a settled law that assessment cannot be made on the basis of suspicion or surmise. The AO has not brought any material on record to support his finding that there has been collusion/connivance between the broker and the appellant for the introduction of its unaccounted money. In view of the decisions of Hon’ble Kolkata High Court and Hon’ble ITAT, Kolkata discussed supra, and also respectfully following the decision of Hon’ble ITAT, Kolkata dated 28.01 .2010 in ITA No.901 -905, Kol 2009 in the case of Sri Anil Kr. Khemka (husband of the appellant) I hold that the AO is not justified in treating the long term capital gain as bogus. I direct the AO to treat the long term capital gain as claimed by the appellant and tax them at the rates applicable for assessment years 2001 -02 to 2003-04 and for assessment year 2005-06 exemption u/s. 10(38) should be allowed.
INCOME TAX APPELLATE TRIBUNAL, “C” BENCH, KOLKATA
Before : Shri M. Balaganesh, Accountant Member, and
Shri S.S. Viswanethra Ravi, Judicial Member
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Author Bio
Govt. should take initiative to audit the orders passed by AOs and find out as to how many orders are being passed without application of mind, following proper course of law and ignoring set precedents / orders of higher authorities in another cases and book such AOs under criminal law for passing such orders.
Thorough questioning should be made as to why they have passed such orders resulting loss of money, time, energy of departments. Cat will come out of the bag if he has asked for bribe and assesse failed to pay and as a revenge he passed such orders.