Share-trading loss disallowance restored where the Tribunal relied on incorrect facts, an unexamined retraction, and unsupported cross-examination claims.

Share-trading loss was rightly disallowed because the assessee neither responded to the show-cause notice nor substantiated the loss with supporting evidence. The Tribunal's contrary finding that relevant evidence had been filed was factually incorrect, making its deletion of the disallowance perverse. A director's retraction filed over two years after the statement and after assessment required examination before acceptance; the Tribunal did not undertake that examination. Its reliance on denial of cross-examination was also unsupported because the record showed no request for cross-examination. The assessment and first appellate decision were restored in favour of the Revenue.

---

---

Issues: (i) Whether the deletion of the disallowance of the share-trading loss was sustainable; (ii) Whether the director's delayed retraction of his statement and the asserted absence of cross-examination justified the Tribunal's interference.

Issue (i): Whether the deletion of the disallowance of the share-trading loss was sustainable.

Analysis: The assessee did not respond to the show-cause notice proposing disallowance of the loss and did not substantiate the genuineness of the claimed share-trading loss with supporting documents. Its non-participation before both the assessing and first appellate authorities was material. The Tribunal's finding that evidence had been filed in response to the proposed disallowance was factually incorrect, as the earlier material was furnished only in response to statutory notices.

Conclusion: The Tribunal's deletion of the disallowance was perverse; the share-trading loss was rightly disallowed. The issue is decided in favour of the Revenue.

Issue (ii): Whether the director's delayed retraction of his statement and the asserted absence of cross-examination justified the Tribunal's interference.

Analysis: The affidavit retracting the director's statement was filed over two years later and after completion of assessment. The Tribunal neither assessed the validity of that retraction nor addressed its belated nature. Further, the record did not show that the assessee had sought cross-examination, rendering the Tribunal's finding on denial of such opportunity contrary to the facts.

Conclusion: The delayed retraction could not be accepted without examination and the alleged denial of cross-examination did not support the Tribunal's decision. The issue is decided in favour of the Revenue.

Final Conclusion: The assessment disallowing the claimed loss and the first appellate decision were restored, and the substantial questions of law stood answered for the Revenue.

Ratio Decidendi: A Tribunal's interference with an assessment is perverse where it proceeds on factually incorrect assumptions, accepts an unexamined belated retraction, and relies on denial of cross-examination without a recorded request for it.

---