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2014 (6) TMI 398 - AT - Income TaxConfirmation of addition – Bogus loss from share broker to set off as STCG - Reassessment - Held that:- One of the Directors of the group of share broking companies, Shri Mukesh Choksi has admitted that his companies were indulging in fraudulent billing activities and in the business of providing bogus profit/loss and capital gains/loss, etc. - through the Investigation Wing the AO came to know that the assessee has taken bogus loss from the said share broking company - The assessee is a salaried employee and nothing has been brought on record to show that she has been trading/investing in the stock market in the past/subsequent years - no delivery of shares was taken - the assessee never paid for the shares purchased by her nor received the sale consideration on sale of shares - Only the difference, i.e. the loss was settled - The transactions of purchase and sale of shares were neither subjected to security transaction tax nor any evidence has been brought on record to suggest that STT was paid on these transactions. This conduct of the assessee defies all logics because such practice is done only in the derivatives market where no delivery is taken and the settlement is done only on account of profit or loss - The statement of the Director of the share broking company cannot be brushed aside lightly - When the person from whom the alleged transaction has been taken place categorically denies the genuineness of the transaction there remains nothing to be proved more because a contract for unlawful activity is void abinito - the assessee has purchased bogus loss from the share broker to set off the sort term capital gains to reduce tax liability – thus, there was no infirmity in the findings of the CIT(A) – Decided against Assessee.
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