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2023 (2) TMI 1219 - AT - Income TaxDisallowance of contrived losses on NMCE - execution of trades on a recognized exchange (MCE) - glaring evidences/ findings of synchronized trades executed by the assessee with a cluster of brokers/counter parties on MCE exchange which had resulted in excessive losses - as per CIT losses obtained by assessee on NMCE platform were contrived losses and these losses were incurred by executing the synchronized trade dealings in illiquid commodities, thus deleted addition - HELD THAT:- In the present case, it is not a case of AO that the transactions of the assessee have not been proved with supportive evidence but the action of the AO revolves around the sole allegation that the assessee incurred artificial losses to square up its profit earned from other commodity exchanges and to evade tax liability. AO observed that transactions are not genuine. As we have noted above that it is not a case of the AO that no transactions were undertaken and assessee booked bogus losses but the allegation of the AO is that the losses were incurred by the assessee were only contrived losses and these losses were managed with the help of brokers who always there in group of clusters so as to same can be set off against the profits earned from activities of trading other then NMCE platform. On being asked by the Bench, the CIT(DR), except reading and supporting assessment order could not bring or substantiate any factual position or allegation against the assessee by way of cogent findings and supportive documentary evidence or positive adverse material against the assessee to prove that the alleged losses were not actually accrued to the assessee and the assessee claimed bogus losses CIT(A) noted a very important factual position which is self speaking that the assessee incurred losses on similar commodity in the other stock exchanges on high value and also earned profit in NMCE and incurred losses on MCX in the forward trading of copper. Allegation of the A.O. that assessee has undertaken high volume transaction in 60 second we note that the SEBI has permitted 15 to 20 transactions per minute as per revised Circular No. 97 dated 27.09.2016 and merely because the assessee has incurred losses on a particular platform does not Ipso facto established that the losses are contrived or artificial and the sole intention is to set off the profits earned from other stock exchanges and to reduce and evade the tax liability on the profits earned from other stock exchanges. We are unable to see any ambiguity perversity or any other valid reason to interfere with findings arrived by the Ld. CIT(A). Our conclusion also gets support from Hon’ble Kolkata High Court in the case of PCIT vs. BIB Cables and Conductors [2018 (8) TMI 525 - CALCUTTA HIGH COURT] Accordingly grounds nos. 1 to 5 of revenue for A.Y. 2011-12 are dismissed. Non-inclusion of the profit accrued to the assessee from the transactions pertaining to M/s. Victory Tip Up Pvt. Ltd. by holding that the said transactions have not been recorded in the books of accounts of the assessee - CIT(A), on examination of books of accounts found that the said speculation business transactions with M/s. Victory Tip Up Pvt Ltd. were reflected in audit report and the transactions highlighted and alleged by the AO in the assessment order were dully recorded in the books of account. Per contra, CIT(A), on examination of books of accounts found that the said speculation business transactions with M/s. Victory Tip Up Pvt Ltd. were reflected in audit report and the transactions highlighted and alleged by the AO in the assessment order were dully recorded in the books of account. Therefore, we are unable to see any valid reason to interfere with the findings arrived by the Ld. CIT(A) and thus we uphold the same. This ground of revenue is also dismissed.
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