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The Tax Publishers2013 TaxPub(DT) 0363 (All-HC) : (2013) 255 CTR 0102 : (2013) 081 DTR 0063 INCOME TAX ACT, 1961 --Capital gains--Long-term capital gains Genuineness of share transaction--assessing officer disallowed the long-term capital gain on sale of shares and made addition as income from other source invoking section 68 viewing broker had not given details and furnished documents, the transaction appeared to be fake. *Held:* Was not justified, as from the entire appreciation of evidence, it was noted that assessee was in possession of shares and had sold the shares in course of ordinary transaction of sale of shares at stock exchange and if the broker did not file any evidence, since the same were seized by the Revenue Department, there was no fault with the assessee. The shares were allotted to the assessee in the public issue which were held in demat account and the sale consideration was received by demand draft. Therefore, the transaction cannot be said to be fake and was a genuine transaction. Income Tax Act, 1961, Section 68 In the Allahabad High Court R. K. Agrswal & Ram Surat Ram (Maurya), JJ. CIT v. Udit Narain Agrawal IT Appeal No. 560 of 2009 A.Y. 2004-05 12 December, 2012 Income-tax Act, 1961, s. 68 In favour of: Assessee Revenue by : Shambhu Chopra Assessee by : by Krishna Agrawal JUDGMENT *By The Court* The present appeal has been filed against the order dated 12-8-2009 passed by the Tribunal, Agra Bench, Agra. The Commissioner, Agra had proposed the following two questions said to be the substantial questions of law arising out of the order of the Tribunal: '1. Whether the Honble Tribunal was legally correct in confirming the findings of Commissioner (Appeals) holding that the sale of share transaction as genuine ignoring the facts that statement of sub-broker Shri Bharat Yadav wherein he had admitted that no actual share transaction was taken place and the bills/contract notes along with draft issued to the beneficiaries in lieu of their own money ? 2. Whether the Honble Tribunal was legally correct in holding that the sale transactions as genuine ignoring the fact that the assessee could not discharge his onus to prove the genuineness of the share transaction as per requirement of section 68 of the Income Tax Act, 1961?' 2. Briefly stated the facts giving rise to the present appeal are as follows : The appeal relates to the assessment year 2004-05. The assessee-opposite party is an individual. He filed return of income on 31-3-2005 declaring income of Rs. 34,97,761. The case was selected for scrutiny and the income from long-term capital gain amounting to Rs. 17,54,237 on sale of 19,000 shares of Focus Industrial Resources through broker M/s MKM Finsec, Delhi was investigated. It transpired that the shares were purchased on 8-7- 2002 for Rs. 1,90,000 and sold on 14-8-2003 for Rs. 19,54,948. The resultant gain was treated by the assessee as long-term capital gains. The assessing officer examined him and was of the view that as the broker had not given details and furnished documents the transaction appeared to be fake, therefore, disallowed the plea of long-term capital gains and added the differential amount of Rs. 17,54,237 as income from other sources. The matter was carried in appeal before Commissioner (Appeals), who vide order dated 27-2-2008 accepted the plea of the assessee and deleted the addition. The Revenues appeal before the Tribunal has failed. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0363 (All-HC) : (2013) 255 CTR 0102 : (2013) 081 DTR 0063

INCOME TAX ACT, 1961

--Capital gains--Long-term capital gains Genuineness of share transaction--assessing officer disallowed the long-term capital gain on sale of shares and made addition as income from other source invoking section 68 viewing broker had not given details and furnished documents, the transaction appeared to be fake. Held: Was not justified, as from the entire appreciation of evidence, it was noted that assessee was in possession of shares and had sold the shares in course of ordinary transaction of sale of shares at stock exchange and if the broker did not file any evidence, since the same were seized by the Revenue Department, there was no fault with the assessee. The shares were allotted to the assessee in the public issue which were held in demat account and the sale consideration was received by demand draft. Therefore, the transaction cannot be said to be fake and was a genuine transaction.

Income Tax Act, 1961, Section 68

In the Allahabad High Court

R. K. Agrswal & Ram Surat Ram (Maurya), JJ.

CIT v. Udit Narain Agrawal

IT Appeal No. 560 of 2009

A.Y. 2004-05

12 December, 2012

Income-tax Act, 1961, s. 68 In favour of: Assessee

Revenue by : Shambhu Chopra

Assessee by : by Krishna Agrawal

JUDGMENT

By The Court

The present appeal has been filed against the order dated 12-8-2009 passed by the Tribunal, Agra Bench, Agra. The Commissioner, Agra had proposed the following two questions said to be the substantial questions of law arising out of the order of the Tribunal:

'1. Whether the Honble Tribunal was legally correct in confirming the findings of Commissioner (Appeals) holding that the sale of share transaction as genuine ignoring the facts that statement of sub-broker Shri Bharat Yadav wherein he had admitted that no actual share transaction was taken place and the bills/contract notes along with draft issued to the beneficiaries in lieu of their own money ?

2. Whether the Honble Tribunal was legally correct in holding that the sale transactions as genuine ignoring the fact that the assessee could not discharge his onus to prove the genuineness of the share transaction as per requirement of section 68 of the Income Tax Act, 1961?'

2. Briefly stated the facts giving rise to the present appeal are as follows :

The appeal relates to the assessment year 2004-05. The assessee-opposite party is an individual. He filed return of income on 31-3-2005 declaring income of Rs. 34,97,761. The case was selected for scrutiny and the income from long-term capital gain amounting to Rs. 17,54,237 on sale of 19,000 shares of Focus Industrial Resources through broker M/s MKM Finsec, Delhi was investigated. It transpired that the shares were purchased on 8-7- 2002 for Rs. 1,90,000 and sold on 14-8-2003 for Rs. 19,54,948. The resultant gain was treated by the assessee as long-term capital gains. The assessing officer examined him and was of the view that as the broker had not given details and furnished documents the transaction appeared to be fake, therefore, disallowed the plea of long-term capital gains and added the differential amount of Rs. 17,54,237 as income from other sources. The matter was carried in appeal before Commissioner (Appeals), who vide order dated 27-2-2008 accepted the plea of the assessee and deleted the addition. The Revenues appeal before the Tribunal has failed.