The ACIT,Abad Circle,, Ahmedabad v. Shri Jigna Gaurang Thakore, Ahmedabad

ITA 769/AHD/2008 | 2003-2004
Pronouncement Date: 01-10-2010 | Result: Dismissed

Appeal Details

RSA Number 76920514 RSA 2008
Assessee PAN AAHPT8585A
Bench Ahmedabad
Appeal Number ITA 769/AHD/2008
Duration Of Justice 2 year(s) 7 month(s) 1 day(s)
Appellant The ACIT,Abad Circle,, Ahmedabad
Respondent Shri Jigna Gaurang Thakore, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 01-10-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 01-10-2010
Date Of Final Hearing 18-08-2010
Next Hearing Date 18-08-2010
Assessment Year 2003-2004
Appeal Filed On 29-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABA D (BEFORE HON'BLE SHRI G.D. AGRAWAL V.P.(AZ) & HON BLE SHRI T.K. SHARMA J.M. ) I.T.A. NO. 768/AHD./2008 ASSESSMENT YEAR : 2003-2004 ASSISTANT COMMISSIONER OF INCOME TAX -VS.- SHRI GAURANG RAJENDRABHAI THAKORE CIRCLE-3 AHMEDABAD AHMEDABAD (PAN : AAHPT 8585 A) (APPELLANT) (RESPONDENT) & I.T.A. NO. 769/AHD/2008 ASSESSMENT YEAR : 2003-2004 ASSISTANT COMMISSIONER OF INCOME TAX -VS.- SHRI JIGNA GAURANG THAKORE CIRCLE-3 AHMEDABAD AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL KUMAR SR . D.R. RESPONDENT BY : S/SHRI S.N. SOPARKAR AND JAIMIN GANDHI O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : BOTH THESE APPEALS FILED BY THE REVENUE WERE HEARD ON THE SAME DATE ARGUED BY COMMON LD. REPRESENTATIVE AND COMMON ISSUES INVOLVED THER EFORE WE HAVE DECIDED TO DISPOSE BOTH THE APPEALS BY THIS COMMON ORDER FOR THE SAKE OF CONVEN IENCE. 2. NOW WE FIRST TAKE UP THE ITA NO. 768/AHD/2008 IN RESPECT OF ASSESSEE SHRI GAURANG RAJENDRABHAI THAKORE. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER DATED 19.12.2007 OF LEARNED COMMISSIONER OF INCOME TAX-VII AHMEDABAD FOR THE A SSESSMENT YEAR 2003-04. THE MAIN GRIEVANCE OF THE REVENUE IS THAT THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) ERRED IN DELETING THE ADDITION OF RS.35 18 529/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCOME FROM UNEXPLAINED SOURCES. 3. BRIEF FACTS RELATING TO THE CONTROVERSY INVOLVED IN THIS GROUND OF APPEAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE FILED THE RETURN OF INCOME ON 23.10.2003 DECLARING TOTAL INCOME OF RS.2 48 488/-. THE ASSESSING OFFICER ASSESSED 2 ITA NOS . 768 & 769/AHD/2008 THE TOTAL INCOME AT RS.37 67 017/- WHEREIN HE MADE THE ADDITION OF RS.35 18 529/- BY HOLDING THAT THIS CAPITAL GAINS IS BROUGHT IN THE BOOKS THR OUGH TRANSACTIONS WHICH ARE NON-GENUINE AND DONE WITH THE SOLE PURPOSE OF CREDITING THIS AMOUNT IN THE BOOKS OF THE ASSESSEE AS LONG-TERM CAPITAL GAINS AND HENCE IT IS TO BE TAXED AS INCOM E FROM UNEXPLAINED SOURCES. THE ASSESSING OFFICER ALSO OBSERVED THAT THE LONG-TERM CAPITAL GA IN IS ON ACCOUNT OF INCORRECT TRANSACTIONS IN THE FORM OF PAPER ENTRIES IN ORDER TO ENSURE THAT THE A SSESSEE THE BENEFIT OF LONG-TERM CAPITAL GAINS. THE DETAILS OF CAPITAL GAINS SHOWN BY THE ASSESSEE ARE GIVEN IN PARA 3 OF THE ASSESSMENT ORDER WHICH IS AS UNDER :- NAME OF SHARE/COMPANY NO. OF SHARES COST/ DATE & AMOUNT SALE/ DATE & AMOUNT PROFIT/LOSS SOMPLAST LEATHER 9295 04/01- RS.95 274/- 02/03- RS.35 18 529/- RS.34 23 255/- 3.1. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER ALSO STATED THAT THE AFORESAID SHARES WERE PURCHASED FROM RAMABEN SAMANI FINANCE PVT. LTD. HAV ING ADDRESS AT P.T. TOWERS DALAL STREET FORT MUMBAI. THE DATE OF PURCHASE WAS 19.04.2001 A ND THE TOTAL VALUE OF THE SHARES IS OF RS.99 937/-. THE ASSESSEE HAS ALSO FURNISHED CONTRA CT NOTES FROM BROKERS PARKLIGHT SECURITIES LTD. AND CHINTAMANI SHARES & BROKING LTD. THROUGH W HOM THE SHARES WERE SOLD.THE ASSESSING OFFICER MADE ENQUIRY FROM RAMABEN SAMANI FINANCE LT D. (BROKER) THOUGH VIDE LETTER DATED 20.10.2005 REFUSED TO HAVE UNDERTAKEN ANY TRANSACTI ON FOR THE ASSESSEE AND HAD STATED THAT THE ASSESSEE WAS NOT THEIR CLIENT. THEREAFTER THE ASSES SING OFFICER ASKED THE ASSESSEE TO SUPPORT THE PURCHASE OF SHARES IN THE LIGHT OF SUCH DENIAL BY T HE BROKER. IT IS STATED THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO SHOW THE GENUINENESS OF THE TRANSACTION HAVING REGARD TO THE DENIAL OF THE TRANSACTIONS BY THE PURCHASE BROKER AND NON-FUR NISHING OF ANY EVIDENCE THAT THE BROKER WAS NOT STATING INCORRECT POSITION AS THE TRANSACTION W AS BOGUS. 3.2. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER ALSO REFEREED TO THE STATEMENT IN DEPOSITORY ACCOUNT WITH KHANDWALA INTEGRATED FINANCE SERVICES LTD. FROM WHOM HE HAD COLLECTED THE DETAILS OF THE ASSESSEES ACCOUNT WITH REFERENCE TO THE SHARES OF SOMPLAST LEATHER AND HAD STATED THAT THE TRANSACTION WAS OFF MARKET TRANSACTION AND THE USUAL CHANNEL OF STOCK EXCHANGE HAD NOT BEEN FOLLOWED. HE THEREFORE OBSERVED THAT THE GEN UINENESS OF TRANSACTIONS WAS SUSPECT. IN THE OPINION OF ASSESSING OFFICER IT WAS FIND OUT THE UL TIMATE BENEFICIARY OF THE SAID TRANSACTION AND 3 ITA NOS . 768 & 769/AHD/2008 WITH WHOM OFF MARKET DEAL WAS ENTERED INTO SO AS T O FIND OUT WHETHER THE SALE OF SHARES WAS GENUINE AND SALE CONSIDERATION WAS CORRECT. THE ASS ESSING OFFICER STATED THAT THE ASSESSEE REFUSED TO IDENTIFY THE PURCHASER OF SHARES. THE AS SESSING OFFICER ALSO STATED THAT M/S. H. NYALCHAND THE DEPOSITORY PARTICIPANT WITH WHOM SHA RES HAVE BEEN LODGED DID NOT FILE REQUIRED DETAILS AND HENCE HE HAD APPROACHED THE BROKER THRO UGH WHOM THE ASSESSEE HAD RECEIVED PAYMENT TO PROVIDE FURTHER DETAILS. THE ASSESSING O FFICER MADE FURTHER ENQUIRIES AND SUBMITTED THE DETAILS AS UNDER WHICH IS APPEARING AT PARAS 4 .4 & 4.5 ON PAGES 5 TO 9 OF THE CIT(A.)S ORDER :- 4.4. IT IS FURTHER OBSERVED BY THE A.O. THAT THE A PPELLANT HAD CLAIMED TO HAVE SOLD THE SHARES TO PARKLIGHT SECURITIES LTD. AND CH INTAMANI SHARES & BROKING LTD. AND THEREFORE HE HAD ASKED THEM TO FURNISH T HE DETAILS REGARDING BANK ACCOUNT AND THE PARTIES TO WHOM THEY HAD SOLD THE S HARES. THEY HAD GIVEN DETAILS AS UNDER :- NAME OF BROKER NO. OF SHARES SOLD AMOUNT RECEIVED SOLD TO REMARKS PARKLIGHT SECURITIES LTD. 3615 15 00 000/- DHARUJI THAKOR BY CHEQUE DRAWN VINAY SHAKARI BANK CHINTAMANI SHARES & BROKING LTD. 5680 20 00 000/- SHEETAL SECURITIES BY CHEQUE DRAWN ON HDFC BANK THE PURCHASERS HAD MADE PAYMENT FROM THEIR ACCOUNT WITH VINAYAK SAHAKARI BANK LTD. AND HENCE HE HAD MADE ENQUIRIES WITH THAT BANK WITH REF ERENCE TO THE ACCOUNT OF DHARUJI THAKOR. IT IS STATED THAT THE MANAGER OF THAT BANK HAD DENIED OF HAVING ANY SUCH ACCOUNT IN THE NAME OF DHARUJI THAKOR. IT IS FURTHER STATED THAT FROM THE DETAILS FURNISHED BY PARKLIGHT SECURITIES HE FOUND THAT DHIRUJI THAKOR HAD ACCOUNT WITH SABARMAT I COOPERATIVE BANK VADAJ BRANCH AND THAT THEY HAD ALSO GIVEN COPIES OF CLIENT REGISTRAT ION APPLICATION AND LEDGER ACCOUNT OF DHIRUJI THAKOR. IT IS STATED THAT THE ACCOUNT OF DHARUJI TH AKOR WAS OPERATED BY KIRTIKUMAR C. PATEL BY WAY OF POWER OF ATTORNEY AND THAT AN AMOUNT OF RS.4 6 20 000/- AND RS 10 39 500/- HAD BEEN DEPOSITED IN THAT ACCOUNT FROM THE ACCOUNT OF BABUJ I DEVAJI THAKOR AND MANSINGH S. THAKOR RESPECTIVELY OUT OF CASH DEPOSIT OF RS.64 LAKH AND RS. 1 CRORE TRANSFERRED IN THE ACCOUNT OF BABUJI AND RS.68 80 500/- IN THE ACCOUNT OF MANSINGH. IT IS STATED THAT HAVING REGARD TO THE FINANCIAL STATUS OF DHARUJI THAKOR THIS ENTRY DOES NOT BELONG TO HIM AND HE IS A NAME LENDER. IT IS STATED THAT KIRTIKUMAR C. PATEL HOLDING POWER OF ATTORNEY OF DHARUJI THAKOR IS WORKING AS A DIRECTOR OF SHEETAL SECURITIES FINANCE LTD AND THAT THE ACC OUNT OF DHARUJI IS LINKED WITH THE ACCOUNT OF THAT COMPANY. THE A.O. THEREFORE OBSERVED THAT THI S ACCOUNT HAD LINK OF SOURCE AND WAS OPERATED BY POWER OF ATTORNEY HOLDER. HE HAD THEREFORE E XAMINED DHARUJI THAKOR AND STATED THAT HE WAS A FARMER FROM VILLAGE BALIYASON. WITH THIS REF ERENCE IT IS STATED BY THE A.O. THAT DHARUJI THAKOR IS A MAN OF SMALL MEANS AND HAD NO FINANCIAL POWER TO PURCHASE SHARES UNDER REFERENCE. HE HAD STATED THAT HIS ACCOUNT WAS OPENED BY A PERS ON HAVING OFFICE AT CHINUBHAI TOWER AHMEDABAD. HIS ACCOUNT WAS FOUND TO BE OPERATED BY KIRTIKUMAR C. PATEL DIRECTOR OF SHEETAL 4 ITA NOS . 768 & 769/AHD/2008 SECURITIES WHICH IS HAVING OFFICE AT CHINUBHAI TOWE R. IT IS STATED THAT DHARUII THAKORE WAS NOT AWARE ABOUT THE TRANSACTION. 4.5. THE A.O HAS FURTHER REFERRED TO THE BANK ACCO UNT OF SHEETAL SECURITIES AND STATED THAT THE ACCOUNT OF SHEETAL SECURITIES AND DHARUJI THAKORE R EVEAL THAT THEY WERE OPERATED BY A SINGLE GROUP AND THERE IS EXCHANGE OF FUNDS IN THIS ACCOUN TS. THUS ACCORDING TO HIM !HE ENTIRE FUNDS IS MANAGED BY SINGLE GROUP. THE DIRECTORS OF SHEETAL SECURITIES ARE ALPESH PATEL AND KIRTIKUMAR C. PATEL. KIRTI.KUMAR PATEL IS POWER OF ATTORNEY HOLD ER OPERATING ACCOUNT OF DHIRUJI THAKOR. DHARUJI IS NOT HAVING DETAILS OF TRANSACTION IN HIS ACCOUNT AND THUS THIS ACCOUNT IS MANAGED BY KIRTIKUMAR PATEL. IT IS THEREFORE STATED BY THE A. O. THAT THIS IS A CASE OF PRICE RIGGING OF SHADES AND CONVERSION OF UNACCOUNTED MONEY INTO LONG TERM CAPITAL GAIN MANAGED BY THE ASSESSEE IN COOPERATION WITH BROKERS AND SHEETAL SECURITIES. T HE APPELLANT HAD EXPLAINED THE DETAILS TO A.O. AND THIS EXPLANATION IS REPRODUCED BY THE A.O . ON PAGE 10 TO 17 OF THE ASSESSMENT ORDER. THIS REPLY IS NOT ACCEPTED BY THE A.O. HAVING REGAR D TO THE OBSERVATION MADE BY HIM IN PARA 3 WHICH ARE SUMMARIZED AS ABOVE. THE A.O'S FINDINGS A RE SUMMARIZED ON PAGE 24 OF THE ORDER ON THE BASIS OF WHICH HE HAS CONCLUDED THAT THE CAPITA L GAIN SHOWN BY THE APPELLANT IS INCOME FROM UNEXPLAINED SOURCES. THESE CONCLUSIONS ARE SUMMARIZ ED AS UNDER: (I) THE BROKER RAMABEN SAMANI FINANCIAL PVT. LTD. HAS DISOWNED THE CONTRACT NOTE. (II) THE CONTRACT NOTE FOR THE PURCHASE OF SHARE S IS FAKE (III) THE CONTRACT NOTE FOR THE PURCHASE OF SHAR E DOES NOT CONTAIN DETAILS LIKE BROKERAGE CHARGED BY THE BROKER (IV) THE APPELLANT HAS FAILED TO PRODUCE AN/ COR ROBORATIVE PROOF IN THE FORM OF PAYMENT MADE TO THE BROKER (V) SINCE THE DATE OF FILING OF THE RETURN OF IN COME FOR A.Y. 2002-2003 WAS NOT OVER IT WAS EASY FOR THE APPELLANT TO INCLUDE THE FAKE PURCHASE IN T HE BALANCE SHEET. II.(I) THE APPELLANT HAS OBTAINED A LETTER FROM THE TRANSFER AGENT M/S. COMPUQUICK DATAMATION (INDIA) LTD. TO EVIDENCE BACK-DATED TRANSFER OF THE PHYSICAL SHARES. (II) AS ADMITTED BY THE TRANSFER AGENT THERE ARE NO RECORD AVAILABLE NO COUNTERCHECK IS POSSIBLE. (III) THE TRANSFER AGENT WHO WAS HANDLING TH E TRANSFER WORK HAS CEASED TO DO SO AFTER DELISTING OF THE COMPANY. III.(I) THE REQUEST FOR DMAT HAS BEEN MADE ON 10- 9-2002 AND THE PHYSICAL SHARES HOVE BEEN DEMATERIALIZED ON 24-9-2002 AND IMMEDIATELY T HEREAFTER THE SHARES HAVE BEEN SOLD IN THE OFF- MARKET DEALS. (II) THE NUMBER OF SHARES SOLD BY THE APPELLANT IS MANY TIME MORE THAN THE TOTAL TURNOVER ON THE STOCK EXCHANGE ( III ) THE GROUP AS A WHOLE HAS SOLD 40 000 EQUITY SHORES DURING THE SOME PERIOD AS AGAINST THE TOTAL TURNOVER ON THE B5E OF 134S7 EQUITY SHARES DU RING THAT PERIOD. 5 ITA NOS . 768 & 769/AHD/2008 IV. (I) THE FINANCIAL POSITION OF SLIL WAS VER Y WEAK AND COULD NOT COMMAND A PRICE IN EXCESS OF RS. 400/- IN THE YEAR 2002-2003. (II) THE QUOTED PRICE OF SLIL WAS MUCH HIGHER THAN ONGC / RIL. (III) THE CARTEL WAS WORKING TO ROMP UP THE SHARE PRICE BY CORNERING TRADABLE SHARES BY TRADING A FEW SHARES AMONG TH EMSELVES AT A HIGH PRICE. V. (I) THE SALE AMOUNT HAS BEEN PA ID BY THE BROKER TO THE APPELLANT BY DEPOS ITING CHEQUES FROM DUBIOUS ACCOUNTS. (II] THE BENAMI ACCOUNTS WERE OPENED IN THE NA ME OF POOR VILLAGERS WHOSE SIGNATURES WERE OBTAINED SURREPTITIOUSLY AND WERE OPERATED BY SING LE GROUP WHICH REFLECTED HUGE DEPOSITS OF UNACCOUNTED CASH. (III) SUCH BENAMI ACCOUNTS WERE OPENED TO COND UCT TRADES OF FICTITIOUS NATURE ONLY. VI. (I) IN THE OFF MARKET DEAL SELLER I.E. TH E APPELLANT IS THE MAIN PERSON WHO IS THE BENEFICIARY. (II) THE SELLER I.E THE APPELLANT 'COULD HAVE DIREC TLY SOLD THE SHARES AND DIRECTED HIS DEPOSITOR/ PARTICIPANT [DP] TO TRANSFER THE SHARES TO THE ACCO UNT OF THE BUYER. (III) THE PURCHASER THE BROKER AND THE APPELLA NT WERE ACTING TOGETHER TO COMPLETE THE DUBIOUS TRANSACTIONS. THE ASSESSING OFFICER CONCLUDED THAT CAPITAL GAIN S HOWN BY THE ASSESSEE IS INCOME FROM UNEXPLAINED SOURCES. 4. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS) IT WAS CONTENDED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON 09.09.2005 THE ASSESSEE PLACED THE FOLLOWING ON RECORD :- (I) XEROX COPY OF THE BILL SHOWING PURCHASE OF SHAR ES FROM THE BROKER AND XEROX COPIES OF THE SALE BILLS SHOWING SALES OF SHARES TO THE BROKE R. (II) XEROX COPY OF THE DEMAT ACCOUNT SHOWING THE HO LDING AND ALSO THE TRANSACTIONS OF SALE OF SHARES OF SLIL. AGAIN IN THE COURSE OF ASSESSMENT PROCEEDINGS ON 30 -1-2006 THE APPELLANT PLACED FOLLOWING FURTHER DETAILS ON THE RECORD OF THE ID. ASSESSING OFFICER :- I) THE ORIGINAL BILL ISSUED BY RAMABEN SAMANI FINAN CE PVT. LTD DT. 20-4-2001 SHOWING PURCHASE OF 9750 EQUITY SHARES OF SLIL. II) THE COPY OF LETTER ISSUED BY COMPUQUICK DATAMAT IONS (I) LTD . THE SHARE TRANSFER AGENT OF SLIL INTIMATING THE DETAILS OF TRANSFER O F PHYSICAL SHARES IN THE NAME OF THE APPELLANT. 6 ITA NOS . 768 & 769/AHD/2008 III) THE ORIGINAL STATEMENT OF KHANDWALA INTEGRATE D FINANCIAL SERVICES PVT. LTD.' 4.2. IT WAS ALSO CONTENDED THAT FOLLOWING FACTS ARE REQUIRED TO BE CONSIDERED :- I. (A) THE APPELLANT ACQUIRED 9750 EQUITY SHARES OF SOMPLAST LEATHER INDUSTRIES LTD. (SLIL) ON 19.04.2001 I.E. DURING THE PREVIOUS YEAR RELEVANT TO AY 2002-03 THROUGH RAMABEN SAMANI FINANCE PVT. LTD. MEMBER OF THE MUMBAI STOCK EXCHANGE FOR A TOTAL CONSIDERATION OF RS.99 937.50 AT THE THEN PREVAILING MARKET PRICE. (B) THE SAID BROKER WAS PAID IN FULL ON 07.05.2001 AGAINST THE DELIVERY OF PHYSICAL SHARE CERTIFICATES. THE COPY OF CASH BOOK FOR THE M ONTH OF APRIL 2001 AND MAY 2001 ARE ATTACHED AS PAPER BOOK PAGE 1. (C)THE SAID BROKER DELIVERED 98 SHARE CERTIFICATES AGAINST THE PAYMENT IN FULL DETAILED AS UNDER :- CERTIFICATE NO. TOTAL NOS. OF CERTIFICATE DIST. NO. TOTAL SHARES 271421 TO 2715 97 6640701 TO 665040 9 700 273028 1 6677801 TO 667785 50 98 9 750 THE XEROX COPIES OF THE SAID SHARE CERTIFICATE ARE ATTACHED AS PAPER BOOK PAGES 2 TO 99. (D) THE APPELLANT IMMEDIATELY FORWARDED THE PHYSICA L SHARES SO RECEIVED TO M/S. COMPUQUICK DATAMATION (INDIA) LTD. WHO WERE THE SHA RE TRANSFER AGENTS OF SLIL ALONGWITH THE DULY SIGNED TRANSFER DEEDS. (E)THE SHARES TRANSFER AGENTS TRANSFERRED THE PHYSI CAL SHARES IN THE NAME OF THE APPELLANT ON 21.5.2001 UNDER TRANSFER NO. 1146. THE COPY OF THEIR LETTER IS ATTACHED AS PAPER BOOK PAGE 100. (F) THE APPELLANT DISCLOSED THIS TRANSACTION IN HIS BOOKS OF ACCOUNTS FOR THE PREVIOUS YEAR RELEVANT TO AY 2002-03 UNDER THE HEAD INVESTMENT AND FILED THE RETURN OF INCOME FOR FY 2002-03 ON 30.10.2002 AS TH E APPELLANT WAS A WORKING PARTNER IN THE FIRM M/S. DEEK PRINTERS WHICH WAS SU BJECT TO TAX AUDIT U/S. 44AB. II. (A) DURING THE PREVIOUS YEAR RELEVANT TO AY 200 3-2004 I.E. IN SEPTEMBER 2002 THE APPELLANT DEMATERIALIZED 9750 EQUITY SHAR ES OF SLIL WITH KHANDWALA INTEGRATED FINANCIAL SERVICES PVT. LTD. THE COPY OF DEMAT ACCOUNT WITH THE SAID DP IS ATTACHED AS PAPER BOOK PAGE 101 TO SHOW THAT THE PHYSICAL SHARE CERTIFICATES RECEIVED FROM RAMABEN SAMANI FIN. PVT. LTD. WERE FINALLY GOT CONVERTED INTO ELECTRONIC FORM. (B) OUT OF 9750 EQUITY SHARES OF SLIL THE APPELLAN T SOLD 9295 EQUITY SHARES THROUGH BROKERS DETAILED AS UNDER :- 7 ITA NOS . 768 & 769/AHD/2008 SR. BROKER DATE OF SALE NO. OF SHARES AMT. REALIZED (RS.) RATE PER SHARE (I) PARK LIGHT SECURITIES LTD. 13.8.2002 3 615 14 96 465.40 413.96 (II) CHINTAMANI SHARES & BROKING LTD. 06.2.2003 1 450 5 07 104.14 349.73 (III) CHINTAMANI SHARES & BROKING LTD. 10.2.2003 1 430 5 04 399.48 352.73 (IV) CHINTAMANI SHARES & BROKING LTD. 12.2.2003 2 800 10 10 559.68 360.91 9 295 35 18 528.70 378.539 (AV.) THE BILLS OF THE BROKERS THROUGH WHOM SHARES WERE S OLD DURING THE PREVIOUS YEAR RELEVANT TO AY 2003-04 ARE ATTACHED AS PAPER BOOK P AGE 102 TO 105. THE SHARE BROKER SOLD THE ABOVE SHARES IN OFF MARKE T TRADE AT THE MARKET PRICE PREVAILING ON THE STOCK EXCHANGE ON THE RESPECTIVE DATES. (C) THE APPELLANT CARRIED FORWARD THE BALANCE 455 E QUITY SHARES OF SLIL IN THE BALANCE SHEET FOR THE PREVIOUS YEAR RELEVANT TO AY 2003-04 UNDER THE HEAD INVESTMENT. THE APPELLANT THEREFORE OFFERED LONG TERM CAPITAL GAINS OF RS.34 23 255/- AND AFTER ADJUSTING CARRIED FORWARD CAPITAL LOSS OF RS. 30 14 553/-. THE APPELLANT ALSO SUBMITTED FOLLOWING DETAILS TO SUPPORT THE ABOVE TR ANSACTIONS. 5. IN ORDER TO EXPLAIN THE OBSERVATION OF THE ASSES SING OFFICER BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE SU BMITTED THE FOLLOWING EXPLANATION :- (I) THE APPELLANT HAD IN THE BALANCE-SHEET FOR THE YEAR ENDED 31.03.2002 SHOWN THE INVESTMENT IN 9750 SHARES OF SLIL. THIS BALANCE SHEET WAS FILED ALONG WITH THE RETURN OF INCOME FOR AY 2002-03. (II) THE SHARES SO PURCHASED WERE PHYSICALLY ACQUIR ED AND THEREAFTER BEFORE ITS SALE CONVERTED INTO DEMATABLE FORM. III) THE TRANSFER AGENT COMPUQUICK DATAMATIONS (I) LTD. HAD ALSO CONFIRMED THIS FACT VIDE LETTER DATED 1-2-2006 WHICH WAS FILED BY THEM IN RESPONSE TO QUERY FROM THE A.O. IV) WITH REFERENCE TO THE A.O'S OBSERVATION A BOUT BROKERAGE NOT MENTIONED IN THE BILL IT IS STATED THAT AT THE RELEVANT TIME IT WAS NOT MANDATORY TO GIVE SUCH 8 ITA NOS . 768 & 769/AHD/2008 DETAILS IN THE BILL AND THAT THE APPELLANT BEING IN VESTOR CANNOT PREVAIL UPON THE BROKER TO MENTION DETAILS IN CONTRACT NOTE AS SUGGE STED BY THE A.O. THE AO HAS NOT GIVEN OPPORTUNITY TO CROSS EXAMINE THE BROKER A ND HAS RELIED UPON THE REPLY FROM THE BROKER. THE APPELLANT SUBMITTED THAT THE A LLEGATION ABOUT FAKE ENTRY IN THE BALANCE SHEET IS TOTALLY INCORRECT AND IS NOT S UPPORTED BY ANY EVIDENCE. THE ACCOUNTS WERE AUDITED U/S.44AB. THE RETURN WAS FILE D WITHIN THE TIME LIMIT AS PER THE PROVISIONS OF THE ACT. V) THE FACT THAT THE SHARES WERE PHYSICALLY T AKEN POSSESSION AND WERE TRANSFERRED IN THE APPELLANT'S NAME IS NOT DENIED. VI) IN THE COURSE OF HEARING THE APPELLANT A LSO SUBMITTED COPY OF PROFIT AND LOSS ACCOUNT OF SHAILLY PROPERTIES PVT. LTD. WHO WE RE HOLDING THE SHARES OF SLIL BEFORE THE SAME WERE PURCHASED BY THE APPELLANT. IT IS SHOWN THAT IN THE SAID PROFIT & LOSS ACCOUNT PROFIT ON SALE OF SHARES OF S LIL IS REFLECTED AND THIS BALANCE SHEET IS FILED WITH ROC WHO HAS ISSUED CERT IFIED COPY THEREOF. THUS THE A.O. CANNOT RELY UPON MERE DENIAL BY RAMABEN SAMANI FINANCE P. LTD. VII) IT IS FURTHER SUBMITTED THAT THE TRANSFER OF SHARES WAS DULY CONFIRMED BY THE TRANSFER AGENT COMPUQUICK DATAMATION (I) LTD AND T HAT THEY WERE DISCONTINUED AS AGENT FOR THE REASON THAT THE SHARES WERE DE-LIS TED FROM THE STOCK EXCHANGE AND THE APPELLANT CANNOT HELD RESPONSIBLE FOR THAT POSI TION. THE FACT THAT THEY HAD CONFIRMED THE TRANSACTION AS TRANSFER AGENT HAS TO BE BELIEVED. VIII) IT IS SUBMITTED THAT THE DELIVERY OF SHAR ES WERE TAKEN IN PHYSICAL DEMAT AS DEMAT WAS NOT COMPULSORY. THE SAID SHORE CONVERTED INTO DEMAT FORM AS IT BECAME MANDATORY FROM FEBRUARY 2002. THE FACT THAT IT WAS TRANSFERRED TO DEMAT ACCOUNT OF APPELLANT ITSELF SHOWS THAT THE SHARES W ERE WITH THE APPELLANT AND WERE PURCHASED BY THEM. IX) IT IS SUBMITTED THAT THE A.O. HAD ALLEGED ABOUT THE TRANSFER OF SHARES WHICH IS MORE THAN THE TOTAL TURNOVER OF SHARES OF SLIL I N THE STOCK EXCHANGE. IT IS SUBMITTED THAT THIS IS ONLY IMAGINATION IT IS SUBM ITTED THAT THE APPELLANT AND HIS DAUGHTER HELD 27300 EQUITY SHARES OF SLIL OUT OF WH ICH 26557 SHARES WERE SOLD IN THIS YEAR AS COMPARED TO WHICH THE VOLUME OF TR ANSACTION OF SUCH SHARES IN BSE IS 224730 SHARES AND NUMBER OF TRANSACTION RECO RDED IS 3950. THUS THE ALLEGATION SO MADE BY THE A.O. IS WITHOUT VERIFICAT ION OF THE FACT. X) THE A.O. HAD REFERRED TO FINANCIAL POSITIO N OF SLIL AND STATED THAT IT CANNOT FETCH A PRICE IN EXCESS OF RS.400/-. IN THIS CONNEC TION IT IS SUBMITTED THAT THE PRICE DEPENDS UPON VARIOUS FACTOR AND THE A.O. CANNOT DET ERMINE THE PRICE. THE PRICE AT WHICH THE SHARES WERE SOLD WAS AS PER PREVAILING MARKET PRICE IN THE STOCK: EXCHANGE. THERE IS NO SUPPORTING TOR THE ALLEGATION THAT THE APPELLANT WAS A PARTY TO THE ALLEGED CARTEL TO DO THE PRICE RIGGING. THE FACT THAT THE NUMBER AT TRANSACTION IN BSE AND THE PRICE PREVAILING ON STOC K EXCHANGE CLEARLY SHOWS THAT THE ALLEGATION WAS INCORRECT. 9 ITA NOS . 768 & 769/AHD/2008 (XI) IT IS ALSO SLATED THAT AS OBSERVED IN PARA 3 O F THE ASSESSMENT ORDER THE A.G HIMSELF HAD ADMITTED THAT THE APPELLANT WAS NOT IN VOLVED IN PRICE RIGGING ALLEGED BY HIM. IT IS ALSO SUBMITTED THAT THE TR ANSACTION IS AT ARMS' LENGTH WHICH COULD BE APPRECIATED FROM THE FACTS SUBMI TTED EARNER. THE APPELLANT HAD SOLD THE SHAVES THROUGH PARKLIGHT SECURITIES AND CH INTAMANI SHARE BRAKING LTD. WHO HAVE GIVEN THE DETAILS OF THE TRANSACTIONS TO THE A.O. THE PURCHASER'S BROKERS PURCHASED SHARES FROM APPELLANT'S BROKER I T IS SUBMITTED THAT DHARUJI THAKOR HAD NEVER STATED THAT THE APPELLANT WAS K NOWN TO HIM MERELY BECAUSE HIS ACCOUNT WAS OPERATED BY KIRTIKUMAR C. PATEL IT IS NOT THE FAULT OF THE APPELLANT. IT IS SUBMITTED THAT THE MONEY FOR SALE PRICE WERE FLOWN FROM THE BROKER'S BANK ACCOUNT WHO PURCHASED THE SHARES ON B EHALF OF THE PURCHASER AND APPELLANT'S BROKER WHO FINALLY MADE PAYMENT TO THE APPELLANT. THE APPELLANT AND THE PURCHASER ARE NOT KNOWN TO EACH OTHER. IT IS SUBMITTED THAT THE APPELLANT IS NOT IN ONE WAY RELATED TO THE DEPOSIT OF CASH AND CHEQUE IN THE ACCOUNT OF DHARUJI THAKOR OR KHYATI FINANCE REFERRED TO BY THE A.O. I T IS SUBMITTED THAT THE APPELLANT IS IN NO WAY CONNECTED WITH SHEETAL SECUR ITIES WHO IS CONSIDERED TO BE THE GROUP CONCERN OF PURCHASER. IT IS SUBMITTED TH AT THE PRICE AND SALE PRICE HAVE BEEN TRANSFERRED THROUGH BANKING CHANNEL. THE TRANSACTIONS ARE CONFIRMED BY BROKERS AND THUS THE APPELLANT CANNOT BE EXPECTED TO EXPLAIN THE SOURCE OF THE ULTIMATE PERSON PURCHASING THE SHARES . 5.3 HAVING REGARD TO THE ABOVE EXPLANATION IT WAS S TATED THAT THE A O. WAS NOT JUSTIFIED IN MAKING THE ADDITION BY WAY OF THE SALE PROCEEDS OF SHOOS UNEXPLAINED INCOME. DURING THE COURSE OF HEARING THE APPELLANT HAD ALSO FURNISHED STATEMENT OF DEMAT ACCOUNT ISSUED BY KHANDWALA FINANCIAL SERV ICES AND ALSO LETTER ADDRESSED TO SLIL BY THE APPELLANT. THE APPELLANT A LSO FURNISHED PHOTO COPY OF THE TRANSFER DEED EVIDENCING THE PHYSICAL TRANSFER OF SHARES. 6. AFTER CONSIDERING THE REMAND REPORT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION OF RS.35 18 529/- MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 7. ON THE BASIS OF THE AFORESAID EXPLANATION BEFOR E THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IT WAS STATED THAT THE ASSESSING OFFIC ER WAS NOT JUSTIFIED IN MAKING THE ADDITION BY WAY OF SALE PROCEEDINGS OF SHARES AS UNEXPLAINED IN COME. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE FURNISHED STATEME NT OF DEMAT A/C. ISSUED BY KHANDWALA INTEGRATED FINANCIAL SERVICES PVT. LTD. AND ALSO LE TTER ADDRESSED TO SLIL BY THE ASSESSEE. THE PHOTOCOPY OF TRANSFER DEED EVIDENCING PHYSICAL TRAN SFER OF SHARES WAS ALSO FURNISHED. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FORWARD ED THE SUBMISSIONS OF THE ASSESSEE TO 10 ITA NOS . 768 & 769/AHD/2008 THE ASSESSING OFFICER FOR COMMENTS AND THE ASSESSIN G OFFICER VIDE LETTER DATED 23.03.2007 FURNISHED COMMENTS AS UNDER :- 'KINDLY REFER TO YOUR LETTER NO. CLT(A)VII/WD.3(L)/ 22/06-07 DATED 17-11-06 ON THE ABOVE CAPTIONED SUBJECT. 2. I SUBMIT HEREUNDER REMAND REPORT IN THE CASE OF ABOVE MENTIONED ASSESSEE. THE ASSESSEE ACQUIRED 9750 EQUITY SHARES OF SOMPLAST LE ATHER INDUSTRIES LTD. (SLIL) THROUGH ONE BROKER M/S. RAMABEN SAMANI FINANCE PVT. LTD. OF MUMBAI DURING F.Y. 2001-02 I.E. ON 19-4-2001 THE ASSESSES SOLD 9295 EQUITY SHARES OF SLIL DURING 2003-04. THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS S UBMITTED THAT HE HAD PURCHASED THE SHARES THROUGH M/S. RAMABEN FINANCE PVT LTD. AND P AID CASH IN FULL SATISFACTION ON 7-5- 2001 BUT DID NOT SUBMIT ANY DOCUMENTARY EVIDENCE IN SUPPORT OF SUCH CLAIM. ENQUIRY CONDUCTED BY THE OFFICE OF THE INCOME TAX OFFICER W ARD 3(4) AHMEDABAD WITH THE BROKER WHOM ASSESSES HAD CLAIMED TO HAVE CONDUCTED THE TRA NSACTION HAD DENIED TO HAVE PURCHASED THE SAID SHARES FOR AND ON BEHALF OF THE ASSESSEE. THE COPY OF THE LETTER WRITTEN BY THE BROKER M/S RAMABEN SAMANI PVT LTD. IN RESP ONSE TO THE NOTICE U/S. 133 OF THE I.T. ACT IS ATTACHED WITH THE ASSESSMENT ORDER OF A.Y. 2 003-04. THE ADDITIONAL DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE IN THE COURSE OF APPELLATE PROCEEDINGS BEFORE YOUR HONOUR ARE AS UNDER :- 1. THE PHOTO COPIES OF THE OF SHARE CERTIFICAT E NO. 271421 TO 271517 AND 273028 BEARING DISTINCTIVE NOS. 6640701 TO 6650400 AND6677 801 TO 6677850 AGGREGATING TO 9 750 EQUITY SHARES OF SLIL DULY TRANSFERRED IN HIS NAME ON 21-05 2001 AND 2. THE PHOTO COPY OF THE TRANSFER DEED DULY SIGN ED BY THE TRANSFEROR 3. I HAVE GONE THROUGH THE COPIES OF THE ADDI TIONAL DOCUMENTS FURNISHED BY THE ASSESSEE THOROUGHLY. I FIND THAT THE SHARE CERTIFIC ATES BEARING NO 271421 TO 271517 AND 273023 WITH THE DISTINCTIVE NOS. 6640401 TO 6650400 AND 6577801 TO 6677850 AND THE NAME OF THE TRANSFEROR IS SHAILY PROPERTY PVT LTD. THE SAID SHARES HAVE BEEN TRANSFERRED ON 21-5-2001 IN THE NAME OF THE ASSESSEE VIDE TRANS FER NO.1146 ALL THE ABOVE ADDITIONAL DOCUMENTS SUBMITTED BY THE ASSESSEE DURING THE APPE LLATE PROCEEDINGS HAVE BEEN TAKEN ON RECORD. I STILL RELY ON THE ARGUMENTS ADVANCED B Y THE ASSESSING OFFICER AT PARA 9(V); (VI)(VII) AND 10 IN THE ASSESSMENT ORDER DATED 30-3 -2006. IN VIEW OF THE ABOVE FACTS IT IS REQUESTED THAT TH E SAME MAY BE TAKEN INTO CONSIDERATION AND THE APPEAL MAY KINDLY BE DECIDED ON MERIT OF TH E CASE. ON RECEIPT OF THE ABOVE COMMENTS THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS) WRITTEN TO ASSESSING OFFICER ON 02.08.2006 WHICH IS AS UND ER :- 6.1. THEREAFTER A LETTER WAS WRITTEN TO THE A.O. ON 2.8.2006 WHICH IS REPRODUCED BELOW FOR THE SAKE OF CLARITY. SUB.: REMAND REPORT IN THE CASE OF MR. GAURANG R. T HAKOR & MS. JIGNA GAURANG THAKORE AY 2003-04 REG. IN THE ABOVE TWO CASES LONG TERM CAPITAL GAINS OFF ERED BY THE ASSESSEE WAS TREATED AS OTHER INCOME BY HOLDING THAT TRANSACTIONS WERE ONLY PAPER TRANSACTIONS THE ENTIRE ADDITION IS BASED ON A SINGLE EVIDENCE THAT THE BRO KER THROUGH WHOM THE SHARES WERE PURCHASED HAD DENIED ANY SUCH TRANSACTIONS. HOWEVER THE FACT REMAINS THAT THESE SHARES 11 ITA NOS . 768 & 769/AHD/2008 WERE TRANSFERRED IN THE NAME OF RESPECTIVE PERSONS IN THE MONTH OF MAY 2001 ITSELF WHICH IS APPARENT FROM THE SHARE CERTIFICATES; PAPE R BOOK RELATED TO WHICH WAS SENT TO YOU FOR YOUR REPORT. IN THE REMAND REPORT SENT VIDE LETTER DATED 23.3.2007 IN FACT NO COMMENTS HAVE BEEN OFFERED AND SIMPLY RELIANCE HAS BEEN PLACED ON THE ASSESSMENT ORDER. I MAY POINT OUT THAT THIS IS NOT AT ALL A PR OPER REMAND REPORT BECAUSE NO COMMENT ON ADDITIONAL EVIDENCE HAS BEEN SENT. 2. IN THIS CONNECTION I AM FORWARDING DETAILS CALLE D FOR FROM THE ASSESSEE IN RESPECT OF M/S SHAILLY CONSTRUCTION PVT LTD AND M/S SHAILLY PR OPERTIES PVT LTD FROM WHOM THESE SHARES WERE PURCHASE BY THESE TWO PERSONS. DETAILS OF DIRECTORS ETC AND THEIR ADDRESS IS ALSO GIVEN IN THOSE DETAILS. IT WOULD BE PROPER IF INQUIRIES ARE MADE ALSO FROM THESE COMPANIES WHETHER THEY HAD SOLD THESE SHARES TO AN Y PERSON OR NOT AND IF THE SHARES WERE SOLD THEN TO WHOM THESE WERE SOLD WHAT WAS T HE DATA OF SATE AND WHICH WAS THE BROKER INVOLVED. ALL THIS FACTS ARRIVE AT THE CORRE CT FACTUAL POSITION. OTHERWISE WERE THE SHARES TRANSFERRED IN THE NAME OF ASSESSEE THERE W ILL BE NO OPTION BUT TO ACCEPT THAT SHARES WERE HELD FOR MERE THAN A YEAR AND SALE RESU LTED IN LONG TERM CAPITAL GAINS. ALL THESE INQUIRIES WERE NECESSARY WHEN ADDITIONAL EVID ENCE WAS SENT YOU ARE THEREFORE DIRECTED TO MAKE FURTHER INQUIRIES FROM THE SELLERS AS WELL AS FROM THE ALLEGED PURCHASERS OF THE SHARES AND SENT A FACTUAL REPORT IN THE MATT ER. IT IS ADVISED THAT THESE INQUIRIES BE MADE DIRECTLY BY YOU AND NOT THROUGH THE ASSISTANCE OF THE ASSESSEE SO THAT CORRECT FACTUAL POSITION EMERGES. THEREAFTER THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) ISSUED A REMINDER WHICH READS AS UNDER :- 'SUB: REMAND REPORT IN THE CASE OF MR. GAURANG R. THAKORE & MS. JIGNA GAURANG THAKORE- A.Y 2003-04-REG. PLEASE REFER TO YOUR LETTER DATED 20.3 2007 AND MY LETTER NO.CLT(A)VII/CIR 3/23/2006-07 DATED 2/8/2007 WHICH WAS FOLLOWED BY A REMINDER DAT ED 19.9.2007. IT IS TO BE POINTED CUT THAT YOU HAVE NOT CARED TO SEND ANY REPORT IN THE M ATTER 2. IT IS TO BE POINTED OUT THAT YOUR REMAND REPORT HAS NOT AT ALL TOUCHED UPON THE ISSUE AND YOU HAVE ONLY RELIED ON YOUR OBSERVATIONS. IT M AY BE NOTED THAT OBSERVATIONS CANNOT BE TREATED AS AN EVIDENCE ESPECIALLY WHEN IT IS APP ARENT THAT THE SHARES WERE TRANSFERRED IN ASSESSEE'S NAME IN THE YEAR 2001 ITSELF AND THOU GH THERE HAS BEEN OFF MARKET SALE THROUGH THE BROKERS BUT THE PURCHASING PARTY IS NOW HERE RELATED TO THE ASSESSEE. FROM THE ORDER AND YOUR SO CALLED OBSERVATIONS IT IS DEA R THAT IN FACT THESE SHARES WERE PURCHASED BY A GROUP OF WHICH THE OFFICIAL OWNERS W ERE A COMPANY CALLED SHEETAL SECURITIES LTD AND ITS DIRECTORS. THERE IS NOTHING TO SHOW THAT ASSESSEE HAD ADVANCED ANY MONEY TO THOSE PERSONS FOR THIS PURPOSE. IN THE CIR CUMSTANCES UNLESS YOU SEND A PROPER REPORT AS ASKED FOR VIDE LETTER DATED 2.8.2007 IT WOULD BE DIFFICULT TO ACCEPT YOUR CONTENTIONS. THOUGH SEVERAL MONTHS HAVE PASSED BUT NO REPLY HAS BEEN RECEIVED. HOWEVER YOU ARE BEING PROVIDED THE LAST OPPORTUNIT Y AND YOU SHOULD SUBMIT YOUR REPORT LATEST BY 15.10.2007 FALLING WHICH THE CASE SHALL B E DECIDED BASED UPON THE ARGUMENTS AND EVIDENCES SUBMITTED BY THE ASSESSEE. PLEASE NOT E THAT NO FURTHER TILL BE ALLOWED AS SINCE THE DATE OF SEEKING FIRST REPORT MORE THAN 1 0 MONTHS HAVE PASSED. 12 ITA NOS . 768 & 769/AHD/2008 ON RECEIPT OF REPORT DATED 1.10.2007 IN PARA 7 THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT THE ASSESSING OFFICER IN THE REPORT HAS NOT FURNISHED ANY NEW ARGUMENTS EXCEPT STATING THAT HE HAD MADE INQUIRY W ITH SHAILLY PROPERTIES LTD. AND IT WAS FOUND THAT THEY HAD LEFT THE PREMISES. HOWEVER THE INSPE CTOR HAD GATHERED THE INFORMATION THAT THE PREMISES WAS EARLIER OCCUPIED BY SHAILLY PROPERTIES PVT. LD. AND IT WAS NOW BEING OCCUPIED BY SOME OTHER CONCERN. EXCEPT THIS NO FURTHER COMMENT S ARE FOUND. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE SU BMITTED THE DETAILS OF ULTIMATE PURCHASERS THE ULTIMATE PURCHASERS ARE IN NO WAY RELATED WITH THE ASSESSEE AND THE SALE PRICE HAS BEEN RECEIVED THROUGH BANKING CHANNEL. IT WAS ALSO SUBMI TTED THAT DHARUJI THAKOR NEVER STATED THAT HE WAS WORKING AT THE INSTANCE OF THE ASSESSEE AND THA T THE AMOUNT WAS GIVEN TO HIM BY THE ASSESSEE FOR THE PURPOSE OF TRANSACTION. ON THIS BASIS IT W AS CONTENDED THAT ALL THE ALLEGATIONS ARE INCORRECT AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLD ING THE PROFIT EARNED WAS NOT LONG TERM CAPITAL GAIN AND THE SALE PROCEEDINGS IS UNEXPLAINED INCOME ARISING FROM FAKE TRANSACTIONS. AFTER CONSIDERING THE ASSESSMENT ORDER AND VARIOUS SUBMISSIONS MADE BY THE ASSESSEE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION OF RS.35 18 529 VIDE ORDER DATED 19.12.2007 IN APPEAL NO. CIT(A.) VII/WD.3(1)/ 23/2006-07 BY OBSERVING IN PAGES 20 TO 23 AT PARA 8 OF THE IMPUGNED ORDER. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8. ON BEHALF OF REVENUE SHRI ANIL KUMAR LD. SR. D .R. APPEARED AND CONTENDED THAT THE BROKER RAMABEN SAMANI FINANCE PVT. LTD. FROM WHOM I T WAS CLAIMED THAT ASSESSEE PURCHASED SHARES VIDE LETTER DATED 20.10.2005 REFUSED TO HAV E UNDERTAKEN ANY SUCH TRANSACTION FOR THE ASSESSEE GAURANG THAKORE. THE BROKER CATEGORICALLY DENIED THE TRANSACTION AND SAID THAT GAURANG THAKORE WAS NEVER A CLIENT OF THE BROKER. THE LETTE R WRITTEN BY THE BROKER IS REPRODUCED BY THE ASSESSING OFFICER ON PAGE 3 OF THE ASSESSMENT ORDER WHICH READS AS UNDER :- WE ARE IN RECEIPT OF YOUR LETTER DATED 13.10.2005 ON 20.10.2005 THROUGH POST. WHEREIN WE HAVE BEEN ASKED BY YOU TO FURNISH THE DE TAILS IN RELATION TO PURCHASED OF SHARES OF SOMP LEATHER ON BEHALF OF SHRI GAURANG J. THAKORE VIDE BILL GMM3/100005 DATED 20.04.2001. IN CONNECTION WITH THE ABOVE WE HAVE BEEN REQUES TED TO FILE THE FOLLOWING DETAILS AND PARTICULARS WITHIN A WEEK OF RECEIPT OF THIS LE TTER. 13 ITA NOS . 768 & 769/AHD/2008 (1) COPY OF CONTRACT NOTE ENTERED BY US WITH SHRI GAURA NG G. THAKORE; (2) DETAILS OF PAYMENTS MADE TO US BY SHRI GAURANG G. T HAKORE. GIVE THE NUMBER AND DATE OF CHEQUE AND THE NAME OF THE BANKER ON WH ICH THE CHEQUE HAS BEEN DRAWN. THE DATE ON WHICH THE CHEQUE HAS BEEN ENCASH ED. (3) THE NAME AND ADDRESS OF THE PARTY FROM WHOM THESE S HARES HAVE BEEN PURCHASED BY US AND THE AMOUNT OF PAYMENT MADE. PLE ASE FILE THE PARTICULARS OF THE CHEQUES BY WHICH THESE PAYMENTS HAVE BEEN MA DE BY US. (4) WE ON GOING THROUGH OUR RECORDS HAVE NOT FOUND ANY SUCH TRANSACTIONS UNDERTAKEN BY US FOR SHRI GAURANG G. THAKORE. FURTHER SHRI GAURANG G. THOKORE IS NOT OUR CLIENT. WE HAVE NOT UNDERTAKEN ANY TRANSACTIONS FOR HIM. ON RECEIPT OF THE ABOVE THE ASSESSEE COULD NOT FUR NISH ANY EVIDENCE OF MONETARY TRANSACTIONS WHICH COULD EVIDENCE THE GENUINENESS OF THE TRANSAC TION IN FACE OF TOTAL DENIAL FROM THE BROKER NOR DID IT FURNISH ANY DOCUMENTARY EVIDENCE THAT TH E BROKER WAS NOT STATING THE CORRECT POSITION. ON THIS BASIS THE ASSESSING OFFICER RIGHTLY TREATE D THE ENTIRE RECEIPT FROM ALLEGED SALE OF SHARES AMOUNTING TO RS.35 18 529/- AS INCOME FROM UNDISCLO SED SOURCES AND LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN DELETING TH E SAME. 9. ON THE OTHER HAND SHRI S.N. SOPARKAR LD. COUNS EL APPEARING ON BEHALF OF THE ASSESSEE FILED A PAPER BOOK CONTAINING 60 PAGES WHICH INTER ALIA INCLUDE THE LETTER DATED 20.10.2005 ADDRESSED TO ASSESSING OFFICER BY THE BROKER RAMABE N SAMANI FINANCE PVT. LTD. APPEARING ON PAGE 9 OF THE PAPER BOOK. HE SUBMITTED THAT THE ASS ESSING OFFICER ASKED THE BROKER TO VERIFY WHETHER SHRI GAURANG J. THAKORE WAS HIS CLIENT WHER EAS THE NAME OF THE ASSESSEE IS GAURANG R. THAKORE. DUE TO INCORRECT MENTIONING OF NAME BY THE ASSESSING OFFICER THE BROKER NAMELY RAMABEN INFORMED THE ASSESSEE THAT GAURANG J. THAKO RE IS NOT ITS CLIENT. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT HAD THE ASSESSING OFFICER E NQUIRED ABOUT THE SHARE TRANSACTIONS BY MENTIONING THE CORRECT NAME OF THE ASSESSEE I.E. GA URANG R. THAKORE IN THAT EVENT THERE WOULD HAVE BEEN NO CONFUSION. HE SUBMITTED THAT DUE TO TH IS MISTAKE THERE WAS NO CONFUSION WHICH ULTIMATELY RESULTED IN TREATING THE ENTIRE SALE PRO CEEDINGS AMOUNTING TO RS.35 18 529/- AS INCOME FROM UNEXPLAINED SOURCES. THE LD. COUNSEL OF THE AS SESSEE SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFTER CALLING T HE REMAND REPORT VERIFIED THE CORRECTNESS 14 ITA NOS . 768 & 769/AHD/2008 OF THE TRANSACTIONS AND TOOK THE VIEW THAT ENTIRE SALE PROCEEDS CAN NOT BE TREATED UNEXPLAINED AND ONLY CAPITAL GAIN AS OFFERED BY THE ASSESSEE IS TAXABLE. HE ACCORDINGLY SUBMITTED THAT THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) BE UPHELD. 10. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THROUGH TYPOGRA PHICAL ERROR THE ASSESSING OFFICER WHILE MAKING THE ENQUIRY FROM RAMABEN SAMANI FINANCE PVT. LTD. MENTIONED THE NAME OF THE ASSESSEE AS GAURANG J. THAKORE WHICH RESULTED LOT OF CONFUS IONS AND M/S. RAMABEN CONFIRMED THAT GAURANG J. THAKORE IS NOT THEIR CLIENT. THE ASSESSE E HAS ALSO FURNISHED THE SHARE CERTIFICATE BEARING NO. 271421 TO 271517 AND 273028 BEARING DIS TINCTIVE NOS. 6640701 TO 6650400 AND 6677801 TO 6677850 AGGREGATING TO 9750 EQUITY SHARE S OF STIL DULY TRANSFERRED IN ITS NAME ON 21.05.2001 VIDE TRANSFER NO. 1146. BEFORE THE LEARN ED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSING OFFICER HAS NOT OFFERED ANY COMMENTS ON THIS POINT. IN PARA 8 OF THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) AFTER EXAMINING ALL THE DETAILED DOCUMENTS CONSIDERING THE REMAND REPORT OF THE ASS ESSING OFFICER DELETED THE ADDITION MADE BY THE A.O. IN THE IMPUGNED ORDER AT PARA 8 IN PAGES 2 0-23 WHICH READS AS UNDER :- 8. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER ARID VARIOUS SUBMISSIONS MADE ON BEHALF OF THE APPELLANT. A PERUSAL OF THE ASSESS MENT ORDER SHOWS THAT THE A.O. HAS CONSIDERED THE SALE PROCEEDS OF SHARES AS UNEXPLAIN ED CREDITS THE BASIS OF SUCH CONCLUSION ARE THAT HE HAD MADE INQUIRIES FROM THE BROKER FROM WHOM THE PURCHASE OF SHARES WAS MADE IN THE PAST BY THE APPELLANT AND TH AT THE BROKER HAD DENIED TO HAVE AY TRANSACTION WITH THE APPELLANT T. THEREFORE ACCORD ING TO THE A.O. THE SHARES WERE NEVER PURCHASED BY THE APPELLANT HE HAS REFERRED TO ENQUI RIES MADE WITH THE BROKER OF THE ULTIMATE PURCHASER OF THE SHARES AND HAS OBSERVED T HAT THE PURCHASER DHARUJI THAKOR WAS A FORMER THAT HIS ACCOUNT WAS BEING OPERATED BY POWER OF ATTORNEY HOLDER SHRI K.C. PATEL. IT IS OBSERVED BY THE A O. THAT SHRI K.C. PA TEL IS ONE OF THE DIRECTORS OF SHEETAL SECURITIES LTD. AND THAT THE TRANSACTIONS IN THE BA NK ACCOUNT OF DHARUJI THOKOR AND SHEETAL SECURITIES ORE BEING OPERATED BY ONE GROUP. IT IS ALSO OBSERVED THAT DHARUII THAKOR WAS EXAMINED AND THAT HE HAD NOR MADE ANY TR ANSACTION IN HIS ACCOUNT WHICH WAS BEING MANAGED BY SHRI K.C. PATEL. ACCORDING TO HIM THEREFORE THE ENTIRE TRANSACTION IS OF CONVERSION OF UNACCOUNTED MONEY I NTO LONG TERM CAPITAL GAIN BY RIGGING THE PRICE OF THE SHARES. THE ASSESSEE HAS SUBMITT ED COPIES OF SHARE CERTIFICATE WHICH SHOWS TINE ENDORSEMENT THAT SHARES WERE TRANSFERRED IN HIS NAME ON 21.5.2001. ASSESSEE HAD ALSO FILED COPY OF TRANSFER DEED DULY SIGNED BY THE SELLER TO SHOW THAT SHARES WERE SOLD TO THE ASSESSEE. THE ASSESSEE HAS ALSO SHOWN THESE SHARES IN HIS BALANCE SHEET FILED FOR A.Y. 2002-03 I.E THE YEAR IN WHICH THESE SHARES WERE TRANSFERRED IN HIS NAME. THE ASSESSEE HAS ALSO FILED COPY OF ANNUAL ACCOUNTS FILED BY THE SELLER COMPANY TO SHOW THAT THEY HAD SHOWN INCOME FROM SALE OF SHARES IN T HEIR ANNUAL ACCOUNTS FILED BEFORE REGISTRAR OR COMPANIES. ON CONSIDERATION OF THESE F ACTS SUBMITTED BY THE APPELLANT ; IT IS SEEN THAT THE APPELLANT HAD FURNISHED COPIES OF TH E BROKER'S BILL FOR PURCHASE OF SHARES THE SHARES WERE PHYSICALLY HELD BY THE APPELLANT AND THAT THE SAME WERE 15 ITA NOS . 768 & 769/AHD/2008 TRANSFERRED TO APPELLANT'S DEMAT ACCOUNT. THE APPEL LANT HAD ALSO FURNISHED BEFORE THE A.O. THE CONFIRMATION OF TRANSFER AGENT OF THE SHAR ES OF SLIL IT IS ALSO SEEN FROM THE ANNUAL ACCOUNTS OF THE COMPANY WHICH SOLD SHARES TO THE ASSESSEE THAT THEY HAVE OFFERED INCOME FROM SALE OF THE SHARES IN THEIR ANNUAL ACCO UNTS FOR THE YEAR ENDED 31.3.2001 WHICH WERE FILED BEFORE' THE REGISTRAR OF COMPANIES AND COPIES OF WHICH WERE FLED DURING PROCEEDINGS. THUS IT IS VERY CLEAR THAT THESE SHARE S WERE PURCHASED BY THE ASSESSEE. THE SHARES WERE SOLD BY THE APPELLANT THROUGH PARKLIGHT SECURITIES LTD. AND CHINTAMANI BROKING & SHARES LTD. IT IS SEEN THAT THE CONSIDERA TION IS PAID BY CHEQUE THROUGH THESE BROKERS. IN THE CIRCUMSTANCES THE APPELLANTS TRANSACTIONS ARE SUPPORTED BY DOCUMENTARY EVIDENCE REFERRED TO ABOVE. EVEN PARK LIGHT SECURITIES LTD. HAVE CONFIRMED THE TRANSACTIONS. THE A.O. IN THE REMAND REPORT HA S NOT REBUTTED THESE EVIDENCE: EXCEPT STATING THAT HE MADE ENQUIRIES WITH SHAILLY PROPERT IES LTD. AND THEY WERE NOT AVAILABLE AT THE RELEVANT TIME. HOWEVER DOCUMENTARY EVIDENCE FU RNISHED BY THE APPELLANT IN THE FORM OF DEMAT ACCOUNT WHERE THE SHARES ARE CREDITED TO T HE APPELLANT'S ACCOUNT ACCOUNT WITH PARKLIGHT SECURITIES LID. AND THEIR CONFIRMATIONS A RE NOT REBUTTED BY THE A.O. IT IS SEEN THAT THE APPELLANT HAD GIVEN DETAILS OF BROKER THRO UGH WHOM SHARES WERE SOLD AND BROKER HAD GIVEN DETAIL OF ULTIMATE PURCHASER. IT IS NOT THE CASE THAT THE ULTIMATE PURCHASER DHARUJI THAKOR OR SHEETAL SECURITIES ARE IN ANY WAY RELATED TO THE APPELLANT. IT IS ALSO NOT THE CASE OF THE A.O. THAT THE ULTIMATE PURCHASE R GOT FUNDS FROM THE APPELLANT BY WAY OF ADVANCE OR RETURN OF PURCHASE CONSIDERATION. IT IS IMPORTANT TO POINT OUT THAT THE FACT THAT THERE IS NOTHING TO SHOW THAT ASSESSEE HAD MAD E AVAILABLE ANY FUNDS TO THE PURCHASER DESPITE THE FACT THAT THE AO WAS SPECIFI CALLY ASKED LO MAKE INQUIRIES IN THIS REGARD AND TO POINT OUT ANY EVIDENCE TO SHOW SOME C ONNECTION BETWEEN THE FUNDS RECEIVED BY THE ASSESSES ON SALE OF SHARES AND AN/ MONEY PROVIDED BY HIM. THE AO HAS ALSO MENTIONED THAT TRANSACTIONS ON THE STOCK E XCHANGE WERE VERY LIMITED. BUT IF THE CHART ENCLOSED WITH THE ASSESSMENT ORDER ISS SEEN IT IS CLEAR THAT OVER ALL DURING THE FINANCIAL YEAR THERE ARE TRADING OF MORE THAN 2.24 LAKHS OF SHARES OF THIS COMPANY. DHARUJI THAKOR WHOSE STATEMENT IS RECORDED HAS ALSO NOT STATED THAT HE WAS ACTING AT THE INSTANCE OF THE APPELLANT THUS EVEN IF OBSERVATIO N OF PRICE RIGGING IS BELIEVED IT IS NOT ESTABLISHED THAT THE APPELLANT WAS INVOLVED IN THIS PRICE RIGGING. HE MAY BE BENEFITED BY THE TRANSACTIONS ENTERED INTO WITH REFERENCE TO THE SHARES OF SLIL BUT DOES NOT ESTABLISH THAT THE TRANSACTION WAS NOT GENUINE OR ACT ACTUALL Y CARRIED OUT. IN THE CIRCUMSTANCES WHEN THE PURCHASE OF SHARES IS ESTABLISHED BY EVIDE NCES THE SALE IS ALSO ESTABLISHED AS ABOVE THE A.O. WAS NOT JUSTIFIED IN HOLDING THE SA ID TRANSACTION AS NON-GENUINE AND BRINGING TO TAX THE SALE PROCEED OF IT AS UNEXPLAIN ED INCOME. THE PROFIT SO ARISING TO THE APPELLANT IS DIRECTED TO BE HELD AS LONG TERM CAPIT AL GAINS. A.O. IS THEREFORE DIRECTED TO WORK OUT LONG TERM CAPITAL GAINS ON THE SALE OF THE SE SHARES AS PER LAW AND TAX THE SAME AS LONG TERM CAPITAL GAINS. THE A.O. WILL WORK OUT CORRECT INCOME ACCORDINGLY. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCU MSTANCES OF THE CASE WE ARE CONVINCED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS GIV EN COGENT REASON FOR DELETING THE ADDITION OF RS.35 18 529/- MADE BY THE ASSESSING OF FICER. THEREFORE WE INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ). RESULTANTLY THIS GROUND OF APPEAL RAISED BY THE REVENUE IS REJECTED. 11. NOW WE TAKE UP THE ITA NO. 769/AHD/2008 IN RESP ECT OF ASSESSEE SHRI JIGNA GAURANG THAKORE. 16 ITA NOS . 768 & 769/AHD/2008 THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 20.12.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VII AHMEDABAD FOR THE ASSESSMENT YEAR 2003-04. THE ONLY GROUND RAISED BY THE REVENUE IN ITS APPEA L IS AS UNDER :- THE CIT(A.) HAS ERRED IN LAW AND ON FACTS IN DELET ING THE ADDITION OF RS.74 80 095/- MADE ON ACCOUNT OF INCOME FROM UNEXP LAINED SOURCES. 12. AT THE OUTSET BOTH SIDES CONCEDED THAT THE FAC TS AND CIRCUMSTANCES FOR TREATING THE ENTIRE SALE AMOUNTING TO RS.74 80 095/- AS INCOME FROM OTH ER SOURCES IS IDENTICAL WITH THAT IN ITA NO. 768/AHD/2008. IT WAS ALSO CONCEDED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE CASE ALSO CALLED THE REMAND REPORTS AND AFTER C ONSIDERING THE REMAND REPORT DELETED THE ADDITION FOR THE DETAILED REASONS GIVEN IN PARA 8 ON PAGE 20 OF THE IMPUGNED ORDER. 13. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN PARA 8 ON PAGE 20 OF THE IMPUGNED ORDER WHICH READS AS UNDER :- 8. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R AND VARIOUS SUBMISSIONS MADE ON BEHALF OF THE APPELLANT. A PERUSAL OF FINE ASSESSMENT ORDER SHOWS THAT THE A.O. HAS CONSIDERED THE SALE PROCEEDS OF SHARES AS UNEXPLAINED CREDITS. THE BASI S OF SUCH CONCLUSION ARE THAT HE HAD MADE INQUIRIES FROM THE BROKER FROM WHOM THE PURCHASE OF SHORES WAS MADE IN THE PAST BY THE APPE LLANT AND THAT THE BROKER HAD DENIED TO HAVE ANY TRANSACTION WITH THE APPELLANT. THEREFORE ACCORDING TO THE A.O. THE SHARES WERE NEVER PURCHASED BY THE APPELLANT. H E HAS REFERRED TO ENQUIRIES MADE WITH ME BROKER OF THE ULTIMATE PURCHASER OF TH E SHARES AND HAS OBSERVED THAT THE PURCHASER HARSHAD THAKOR AND VASANT THAKOR WERE MEN OF NO MEANS AND THEIR BANK ACCOUNT ARE LINKED WITH THE SHEETAL SECURITIES AND THEIR GROUP. IF IS ALSO OBSERVED THAT HARSHAD AND VASANT THAKOR WERE EXAMIN ED AND THAT THEY HAD NO DETAILS OF TRANSACTION IN THEIR ACCOUNT. ACCORDING TO HIM THEREFORE THE ENTIRE TRANSACTION IS AN ATTEMPT OF CONVERSION OF UNACCOUN TED MONEY INTO LONG TERM CAPITAL GAIN BY RIGGING THE PRICE OF THE SHARES. THE ASSESSEE HAS S UBMITTED COPIES OF SHARE CERTIFICATE WHICH SHOWS THE ENDORSEMENT THAT SHAR ES WERE TRANSFERRED IN HIS NAME ON 21.05.2001. ASSESSEE HAS ALSO FILED COPY OF TRA NSFER DEED DULY SIGNED BY THE SELLER TO SHOW THAT SHARES WERE SOLD TO THE ASSESSE E. THE ASSESSEE HAS ALSO SHOWN THESE SHARES IN HIS BALANCE SHEET FILED FOR A Y. 20 02-03 I.E. THE YEAR IN WHICH THESE SHARES WERE TRANSFERRED IN HIS NAME. THE ASSESSEE HAS ALSO FILED COPY OF ANNUAL ACCOUNTS FILED BY THE SELLER COMPANY TO SHOW THA T THEY HAD SHOWN INCOME FROM SALE OF SHARES IN THEIR ANNUAL ACCOUNTS FILED BEFOR E REGISTRAR OF COMPANIES. THE SHARES WERE SOLD BY THE APPELLANT THROUGH PARKLIGHT SECURITIES LTD. AND PRAMUKH SHARE & STOCK IT IS SEEN THAT THE CONSIDERATION IS PAID BY CHEQUE THROUGH THESE BROKERS IN THE CIRCUMSTANCES THE APPELLANT'S TRAN SACTIONS ARE SUPPORTED BY DOCUMENTARY EVIDENCE REFERRED TO ABOVE. EVEN PARKL IGHT SECURITES LTD. HAVE CONFIRMED THE TRANSACTIONS. THE A O. IN THE REM AND REPORT HAS NOT REBUTTED 17 ITA NOS . 768 & 769/AHD/2008 THESE EVIDENCES EXCEPT STATING THAT WHEN HE M ADE ENQUIRIES WITH SHAILY CONSTRUCTION LTD. THEY WERE NOT AVAILABLE AT THE RE LEVANT TIME. HOWEVER DOCUMENTARY EVIDENCE FURNISHED BY THE APPELLANT IN THE FORM OF DEMAT ACCOUNT WHERE THE SHARES ARE CREDITED TO THE AP PELLANT'S ACCOUNT ACCOUNT WITH PARKLIGHT SECURITIES LTD. AND THEIR CONFIRM ATIONS ARE NOT REBUTTED BY THE A.O. IF IS SEEN THAT THE APPELLANT HAD GIVEN DETAILS OF BROKER THROUGH WHOM SHARES WERE SOLD AND BROKER HAS GIVEN DETAILS OF ULTIMATE PURCH ASERS. IT IS NOT THE CASE THAT THE ULTIMATE PURCHASER HARSHAD THAKOR OR VASANT THAKOR OR SHEETAL SECURITIES ARE IN ANY WAY RELATED TO THE APPELLANT. IT IS ALSO NOT THE CASE THAT THE ULTIMATE PURCHASER GOT FUNDS FROM THE APPELLANT BY WAY OF ADVANCE OR R ETURN OF PURCHASE CONSIDERATION. IT IS IMPORTANT TO POINT OUT THAT TH ERE IS NOTHING TO SHOW THAT ASSESSEE HAD MADE AVAILABLE ANY FUNDS TO THE PURCHASER DESP ITE THE FACT THAT THE AO WAS SPECIFICALLY ASKED TO MAKE INQUIRIES IN THIS REGARD AND TO POINT OUT ANY EVIDENCE TO SHOW SOME CONNECTION BETWEEN THE FUNDS RECEIVED BY THE ASSESSEE ON SALE OF SHARES AND ANY MONEY PROVIDED BY HIM. THE A.O. H AS ALSO MENTIONED THAT TRANSACTIONS ON THE STOCK EXCHANGE WERE VERY LIMITE D. BUT IF THE CHART ENCLOSED WITH THE ASSESSMENT ORDER IS SEEN IT IS CLEAR THAT OVER ALL DURING THE FINANCIAL YEAR THERE ARE TRADING OF MORE THAN 2.24 LAKHS OF SHARES OF TH IS COMPANY. HARHAD THAKAR AND VASANT THAKOR WHOSE STATEMENTS WERE RECORDED HAVE A LSO NOT STALED THAT THEY WERE ACTING AT THE INSTANCE OF THE APPELLANT. THUS EVEN IF OBSERVATION OF PRICE RIGGING IS BELIEVED BY ONE IT IS NOT ESTABLISHED THAT THE APP ELLANT WAS INVOLVED IN THIS PRICE RIGGING. SHE MAY BE BENEFITED BY THE TRANSACTIONS E NTERED INTO WITH REFERENCE TO THE SHARES OF SLIL BUT THAT DOES NOT ESTABLISH THAT THE TRANSACTION WAS NOT GENUINE OR NOT ACTUALLY CARRIED OUT. IN THE CIRCUMSTANCES WHEN THE PURCHASE OF SHARES IS ESTABLISHED BY EVIDENCES THE SALE IS ALSO ESTABLIS HED AS ABOVE. THE A.O. WAS NOT JUSTIFIED IN HOLDING THE SAID TRANSACTION AS NON-GE NUINE AND BRINGING TO TAX THE SALE PROCEED THEREOF AS UNEXPLAINED INCOME. THE PROFIT S O ARISING TO THE APPELLANT IS DIRECTED TO BE HELD AS CAPITAL GAIN. A.O. IS THERE FORE DIRECTED TO WORK OUT LONG TERM CAPITAL GAINS ON THE SALE OF THESE SHARES AS PER LA W AND LAX THE SAME AS LONG TERM CAPITAL GAINS. THE AO WILL WORK OUT CORRECT INCOME ACCORDINGLY. 14. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AU THORITIES BELOW. THE FACTS AND CIRCUMSTANCES AS WELL AS REASONING GIVEN BY THE ASS ESSING OFFICER FOR TREATING THE SALE PROCEEDS OF SHARES ARE IDENTICAL WITH THAT OF THE CASE OF AS SESSEE SHRI GAURANG RAJENDRABHAI THAKORE. IN THE CASE OF SHRI GAURANG RAJENDRABHAI THAKORE IN I. T.A. NO. 768/AHD/2008 (SUPRA) WE HAVE UPHELD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETING THE ADDITION OF RS.35 18 529/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF INCOME FROM UNEXPLAINED SOURCES. THEREFORE WE FOLLOWING THE SAID ORDER UPHOLD THE O RDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHEREBY HE DELETED THE ADDITION OF RS .74 80 095/- IN THE CASE OF ASSESSEE SHRI JIGNA GAURANG THAKORE FOR THE IDENTICAL REASON AS D ISCUSSED ABOVE. AS A MATTER OF FACT IN RESPECT OF BOTH THE ASSESSEES THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS DIRECTED THE ASSESSING OFFICER TO WORK OUT LONG-TERM CAPITAL GAI N ON THE SALE OF SHARES AS PER LAW AND TAX THE 18 ITA NOS . 768 & 769/AHD/2008 SAME AS LONG-TERM CAPITAL GAINS. WE THEREFORE INC LINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND REJECT THE GROUND OF APPEAL RAISED BY THE REVENUE. 15. IN THE RESULT BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 01.10.201 0 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 01/ 10 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT CONCERNED (4) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIS TRAR ITAT AHMEDABAD LAHA/SR.P.S.