Upheld Decision: No Substantial Question of Law Found in Tax Appeal, Transactions Deemed Legitimate and Properly Conducted.

The HC upheld the ITAT's decision, rejecting the Tax Appeal filed under Section 260A of the Income Tax Act, 1961. The HC agreed with the ITAT that there was no substantial question of law, as the transactions were legitimate and conducted through proper channels. The appeal was dismissed with no order as to costs.

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Issues Involved:
The Tax Appeal filed under Section 260A of the Income Tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal dated 28.10.2022 regarding the deletion of an addition on account of disallowance of a bogus loss incurred in penny stock for the Assessment Year 2012-13.

Summary of Judgment:

Issue 1: Disallowance of Bogus Loss in Penny Stock
The appellant contended that the Income Tax Appellate Tribunal erred in deleting the addition of Rs. 18,57,032/- on account of disallowance of a bogus loss incurred in penny stock. The appellant argued that the transaction was pre-arranged and sham, carried out through a penny script company to launder money for long term capital gain and claim exemption under Section 10(38) of the Income Tax Act, 1961. However, the Tribunal noted that the assessee was actively engaged in share trading, the stock in question was not blacklisted by SEBI, and transactions were conducted through authorized brokers on recognized stock exchanges. The Tribunal found no evidence to support the claim of a bogus transaction, emphasizing that all transactions were legitimate and conducted through proper channels. Therefore, the Tribunal concluded that the Assessing Officer's disallowance was based on conjecture and surmises, lacking factual basis. As such, the Tribunal's decision was upheld, and the Tax Appeal was rejected at the admission stage.

Final Decision:
The High Court upheld the Tribunal's decision, ruling that the issue was purely a question of fact and no substantial question of law was found for consideration. The Tax Appeal was rejected, with no order as to costs.

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