TaxTMI 
TaxTMI 
2024 (2) TMI 1406
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....the Ld. C.I.T.(A) is completely arbitrary, unjustified and illegal. 3. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in making disallowance of Rs. 2,27,75,452/- on account of bogus loss in share trading which is completely arbitrary, unjustified and illegal. 4. For that on the facts of the case, the Ld. C.I.T.(A) was wrong in dittoing the order of the A.O. and confirming the disallowance amounting to Rs.2,27,75,452/- as trading loss in share transaction were done on the platform of the exchange, treating the same as bogus loss which is completely arbitrary, unjustified and illegal. 5. For that on the facts of the case, the A.O. has only relied upon Investigation Wings materials but the A.O. himself has not made any independent enquiry, therefore, the disallowance amounting to Rs.2,27,75,453/- is completely arbitrary, unjustified and illegal. 6. For that on the facts of the case, the Ld. CIT(A) ought to have considered that the assessee company had discharged its onus by furnishing all the relevant documents in connection with the trading of share and also proved the identity, creditworthiness and genuineness of transactions....
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.... transaction or a single incident in assessee's case. The relevant submission in APB page 17 is duly inserted as below: img 6. Ld. A/R in argument further, placed that during the assessment and appeal proceeding, assessee submitted all the documents before the authorities and no veracity was challenged by the Revenue authorities. The relevant documents are as follows: SL. NO. PARTICULARS Authorities before whom Hied/ available PAGE NO(s). 1. Audited Balance Sheet CIT(A) &A.0. 1 to20 2. Copy of Income Tax Return along with ITR-V CIT(A)&A.O. 21 to 60 3. Notice issued u/s 143(2) of the Act CIT(A) &A.0. 61 to 62 4. Written submission filed before AO on 27.12.2017 with all documentary evidences substantiating the transaction. CIT(A)&A.O. 63 to 74 5. Statement showing details of purchase, sale & loss as incurred by the assessee & as disallowed by the AO in the disputed shares. CIT(A) &A.0. 75 6. Scrip-wise statement of loss along with respective Contract Notes: i) Cressanda Commercial Ltd ii) Dhanleela Investment Ltd iii) Mahavir Advances Ltd iv) MatraKaushal Ltd v) Mashika Finance Ltd vi) Pearl Agriculture Ltd vii) Pearl Electric Ltd viii) Rajlaxm....
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....;-21,77,390.67 Total -2,77,75,452.84 It is seen from the details that the assessee has suffered a loss of Rs.2.27.75,453/- while trading in shares transaction in listed securities, as these losses have been booked in transaction of different Penny Stocks. Therefore, the assessee is requested to explain why these loss of Rs.2.27,75,453/- should not be disallowed in computing total income." 8. The Ld. A.R further argued that the issue is duly covered by the order of the Co-ordinate Bench of ITAT-Kolkata in the case of Samrat Finvestors Pvt. Ltd. vs. ITO in ITA No. 840/Kol/2023 for AY 2014-15 date of pronouncement 11.01.2024. The relevant paragraphs are duly reproduced as below: "3. The facts qua the first issue raised by the assessee are that the assessee, during the year, has incurred loss of Rs. 3,98,50,208/- which comprised of share trading loss amounting to Rs. 2,87,07,277/- and Rs. 1,11,42,931/- in respect of loss on trading in F & O segment. The Assessing Officer observed from the details filed by the assessee that the assessee has incurred loss in seven (7) shares which were listed on the stock exchange. The list of the stocks are ....
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....rs and exit providers. The price rigging was done by giving benefit to various subscribers with connivance of share brokers and the motive was to convert their unaccounted money into tax exempt long-term capital gains and for that purpose, there were certain persons chosen as exit providers who would buy shares when the share prices would be at its peak and those exit providers thereafter would suffer losses on account of fall in the price of the shares. This specific fact on the file shows that the exit providers were already chosen to execute the plan. The motive was to give the benefit of bogus long-term capital gains to various beneficiaries and to make that plan foolproof, the exit providers were already chosen with a predetermined planning as to at what stage the beneficiaries of bogus long-term capital gains would be given exit. That perhaps was not dependent upon chance exit providers willing to book bogus shortterm capital loss. Neither the name of the assessee nor of his share broker is mentioned in the list of exit providers. The circumstances of this case do not suggest of unnatural and unrealistic human conduct. The Assessing Officer in this case has not pointed out an....
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.... of the scrips or being the predetermined and pre planned beneficiary of the devised scheme, therefore, the impugned additions are not warranted in this case, and the same are accordingly ordered to be deleted." 38. Respectfully following the above decision of this Tribunal in the case of Raigarh Jute & Textile Mills Ltd. vs. ACIT (supra), which is squarely applicable on the facts of the instant case of assessee i.e., M/s. Gateway Financial Services Ltd., we find that the alleged loss has been incurred by the assessee in the regular course of its business. We also note that the statement of various persons recorded by the AO/investigation wing/search team in the course of other proceedings as well as the report of the Kolkata investigation wing, there is no reference to a direct evidence indicating that the transactions in question is in the nature of accommodation entry or for arranging bogus loss. Thus, the addition/disallowance made by the assessee is merely on the basis of preponderance of probabilities. Therefore, in the present case, when the statements and investigation report relied upon by the AO has not been given to the assessee for the purpose of cross-examination as....