Long term capital gain from 21st Century Finance Ltd. is Genuine

On perusal of same, we find that the CIT(A) has made several
meritorious, objective and extensive findings; only then and thereafter he has accepted assessee’s claim and granted relief. Now, we sum up our findings/ conclusions:

(i) The assessee has submitted all details and documentary evidences in
support of purchase, sales and holding of impugned shares. The AO has not found any infirmity in those documents.

(ii) The shares were purchased and sold online through recognized stock-
exchange. The purchase price was paid through A/c payee cheques and the sale consideration was also received through A/c payee cheques. Immediately after purchase, the shares were credited to
assessee’s demat A/c and they were held therein for a period as long as
4 years before sale. The assessee is holding Demat a/c through Indusind Bank which is a prominent independent banker. It is an undisputed fact that the assessee has sold only part of the holding and even after such sale, continued to hold remaining quantity which were carried to subsequent year. The AO has not identified any iota of
negativity in these factors.

(iii) Regarding the penal action taken by SEBI, we note that the said action
was taken against Shyam through whom the assessee purchased shares in the year 2004-05. Thereafter, Shyam does not have any role.

It is on record that the assessee sold shares through Sunil and there is
no penal action against Sunil. It is also a fact that the AO made a
direct verification from Sunil u/s 133(6) wherein he confirmed the sale of shares having been made by assessee through him. Thus, the factum of sale of shares through Sunil is unquestionably proved and that too without any blame. Regarding purchase of shares, we take
note of an important fact from Point No. of assessment-
order that the investment made by assessee at the time of purchase of
impugned shares was accepted by department while framing
assessment of assessee u/s 153A/143(3) of AY 2005-06. When it so, the purchase is also unquestionably accepted by tax authorities. That brings us to conclude very simply that both sale and purchase are very much established/accepted. At the cost of repetition, we may also add
that during entire period of 4 years from purchase to sale, the assessee
had held the impugned shares in Demat A/c with Indusind Bank.

Thus, no adverse conclusion can be taken on the basis of mere imposition of penalty by SEBI on Shyam who had no role except purchase of shares in the year 2004-05.