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8. Paper book in comprises of audited balance sheet and P&L a/c for years ending 31st March, 1995 to 31st March, 2002.

9. Paper book IV comprises of xerox copies of parties bill along with assessee's purchase bills due to non-acceptance of Sauda by concerned parties, xerox copy of settlement sheet and chart showing foreign tour by director.

10. It was pleaded by the learned Counsel of the assessee that the business of assessee-company is that of only a share broker. He contended that assessee has never engaged in the activity of sale and purchase of shares at its own. During the year under consideration the assessee had become agent of National Stock Exchange (NSE) and it was provided with two computer terminals to deal with the transactions. Earlier to this, the assessee was acting as a broker without the facilities of doing the transactions on computer. During the year under consideration the turnover of assessee-company had increased manifold due to membership of NSE. To substantiate this, he referred to p. 20 of paper book-III wherein the assessee-company for asst. yr. 1996-97 had earned a total sum of Rs. 12,74,540 in the shape of public issue brokerage/commission and underwriting commission (Rs. 11,62,100 and Rs. 1,12,440, respectively). As against said income for asst. yr. 1996-97 it had earned a cumulative sum of Rs. 85,89,857 for asst. yr. 1997-98 from these activities. He referred in this regard to p. 27 of the paper book No. III. He also referred to the audited accounts for asst. yrs. 1995-96, 1996-97 to contend that not even a single share was purchased or sold by the assessee-company to show that the assessee-company had never engaged in the business activity of sale and purchase of shares at its own. He contended that for the year under consideration as the volume of business activity of assessee had increased a lot, due to communication gap, etc., certain clients disowned certain transactions of purchases of shares, therefore, to honour those transactions with NSE, the assessee had purchased those shares. However, by the end of the year none of those shares were kept by the assessee and those shares were disposed during the year itself. Such contentions were raised to contend that the intention of assessee had never been to engage in sale and purchase of shares at its own. It was only due to compulsion, the assessee had to fulfil its obligation with regard to certain transactions of purchases of shares as the same were disowned by the clients of assessee-company due to communication gap, etc. The balance sheet and P&L a/c of various years were referred to show that all these transactions were not entered into by the assessee at its own but these transactions were with regard to its clients and these transactions were disowned by its clients. Therefore, in order to be in the business assessee had fulfilled those transactions as in absence of fulfilling those transactions the assessee may have been treated to be in default and thus could be debarred from carrying on its activities as a broker of shares.

PARKAR SECURITIES LTD.
Details of trading account For the period of 1-4-1996 to 31-3-1997 _____________________________________________________________________________________________ Credit Particulars Amount Debit Particulars Amount _____________________________________________________________________________________________ 13-8-1996 Sett. No. 32 15685.30 Sett. No. 29 1420143.40 Trf. from Dipik Israni Trf. from Dipak Israni 27-8-1996 Sett. No. 34 823329.70 20-8-1996 Sett, No. 33 46485.80 Trf. from Dipak Israni Trf. from Shreeji Investment 29-1-1997 Sett. No. 04 141985.70 17-9-1996 Sett. No. 37 36535.10 Trf. from Ankush Trf. from Pushpa Caplease Tej Finance 19-3-1997 Sett. No. 11 8527394.00 29-10-1996 Sett. No. 43 11839.30 Trf. from Ankush Trf. from N.A. Modi Caplease 12-11-1996 Sett. No. 45 109669.40 Trf. from Anada Share Consultancy 30-12-1996 Sett. No. 52 24411.00 Trf. from Shreeji Investment 7-1-1997 Sett. No. 01 81933.60 Trf. from Kantaben Bhagirath 14-1-1997 Sett. No. 02 10829,40 Trf. from Kashmira R. Shah 31-3-1997 Closing 2038774.90 21-1-1997 Sett. No. 03 211704.50 Trf, from Ankush Caplease Trf. from Nimish 208312.60 Vora 5-2-1997 Sett, No. 05 25339.20 Trf. from Sakaria Stock Finance 5-2-1997 Sett. No. 05 53879.50 Trf. from Mansi Consultancy 12-2-1997 Sett. No. 06 173712.50 Trf. from Pushpa Tej Finance 5-3-1997 Sett. No. 09 9014210.30 Trf. from Ankush Caplease 19-3-1997 Sett. No. 11 44555.00 Trf. from Kantaben Bhagirath 19-3-1997 Sett. No. 11 73609.00 Trf. from Bharat Bhudarji _____________________________________________________________________________________________ 11547169.60 11547169,60 _____________________________________________________________________________________________ He took us through these statements, copies of which are produced in paper book No. IV to show that all these transactions were entered by assessee in the-bills raised by it to its respective clients who had disowned these transactions and assessee being a member of NSE had to honour these transactions as in case of failure the assessee could be debarred to carry on its broking activities with NSE. He contended that all these bills are part of account books and record maintained by assessee in conformity with rules of NSE and, therefore, the same is contemporary evidence which could not be ignored or discarded in absence of any contradictory or adverse material. He contended that where there is an entry in the account books of the assessee, and it is supported by relevant documents, the Department cannot act unreasonably and reject that explanation. Before the Department rejects such evidence it must show a commensurate weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The Department cannot by merely rejecting a good explanation convert good proof into no proof. He in this regard referred to the decision of Hon'ble Supreme Court in the case of Shreelekha Banerjee and Ors. v. CIT . He contended that assessee had forgone brokerage for the abovementioned transactions from its clients who disowned certain transactions. He in this regard referred to the list placed at p. 118 of paper book II, the contents of which are as under:
13. He further contended that the clients who had disowned certain transactions were good clients and assessee has earned a brokerage of Rs. 34,34,765 from these clients during the year under consideration and details in this regard as furnished at p. 119 of paper book-II are as under:
Details of brokerage received during the year from following clients:
____________________________________________________ Code No. Name of client Amount Rs.
____________________________________________________
3012          Ankush Caplease           340500
3013          Dipak Israni              100500
3015          N.A. Modi                  45500
3017          Kantaben Bhagirath         83520
3019          Shreeji Investment        272300
3045          Pushpa Tej Finance        444725
3086          Anada Share Consultancy  1015400
3178          Sakaria Stock Finance      12050
3183          Mansi Consultancy          38665
3197          Nimish Vora                45255
3249          Bharat Bhudarji            31740
              Total                    3434765
____________________________________________________
Referring to the brokerage earned he contended that the assessee had taken a decision of prudent businessman not to lose these clients, therefore, the transactions which were disowned were taken by assessee at its own in business interest. The intention of assessee was never to deal in the sale and purchase of shares at its own. He contended that as pointed out earlier at the end of the year not even a single share was held by assessee as the shares pertaining to disowned transactions were disposed of at the earliest opportunity by the assessee. Had there been an intention to deal in the share, the assessee could have retained those shares for an appropriate time to get better value.