Tribunal dismisses appeal, upholds disallowance of short term capital loss due to non-genuine transactions.

The Tribunal upheld the CIT(A)'s decision to disallow the claimed short term capital loss of Rs. 1,65,077, as the transactions were deemed non-genuine based on the lack of share delivery, payment, and STT, coupled with the Director's admission of fraudulent billing practices. The Tribunal found no merit in the assessee's arguments and dismissed the appeal.

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Issues:
Challenge to correctness of CIT(A) order, Addition of Rs. 1,65,077 as short term capital loss, Genuine nature of share transactions.

Challenge to CIT(A) Order:
The assessee challenged the correctness of the CIT(A) order dated 10.12.2003 for A.Y. 2005-06. The assessee raised objections regarding the reopening of the case under Section 148 and the consideration of evidences and submissions. However, the counsel for the assessee did not press ground No. 1, leading to its dismissal. The only grievance that remained was the confirmation of the addition of Rs. 1,65,077.

Addition of Short Term Capital Loss:
The facts of the case revealed that the assessee, an individual deriving income from salary, filed a return of income for the relevant year. The Assessing Officer (AO) disallowed the claimed loss of Rs. 1,65,077 from the short term capital gains, as he believed the transactions with M/s. Gold Star Finevest Pvt. Ltd. were bogus based on statements during a search. The CIT(A) referred the matter back to the AO for verification, who reported that the assessee did not provide evidence of share delivery. The CIT(A) upheld the disallowance, stating that the transactions were not genuine, as the shares were not delivered or paid for, considering the Director's admission of issuing bogus bills. The Tribunal dismissed Grounds No. 2 & 3, upholding the AO's decision.

Genuine Nature of Share Transactions:
The assessee contended before the Tribunal that the transactions were supported by contract notes and should not be doubted. The counsel argued against using the Director's statement without cross-examination and cited precedents to support the claim's genuineness. However, the Tribunal noted the Director's admission of fraudulent activities and the lack of share delivery or payment by the assessee. It highlighted the absence of STT payment and the settlement of only the loss amount, indicating a scheme to reduce tax liability. The Tribunal found no error in the CIT(A)'s decision, dismissing the appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decision to disallow the claimed short term capital loss of Rs. 1,65,077, as the transactions were deemed non-genuine based on the lack of share delivery, payment, and STT, coupled with the Director's admission of fraudulent billing practices. The Tribunal found no merit in the assessee's arguments and dismissed the appeal.

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