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2024 (1) TMI 1062 - ITAT CUTTACKBogus share transactions - disallowance of loss in respect of transaction of the shares - Reliance on the statement of broker/entry operator - exemption u/s 10 (38) with respect to alleged income under the head “Long Term Capital Gain” on sale of shares of penny stock - as argued by assessee statement as been recorded from entry operator by the DDIT (Investigation) Kolkata was not provided to be cross examined - HELD THAT:- It is trite law that if any evidence is available with the Revenue and the same is going to be used against the assessee, it is compulsory that such evidence must be put to the assessee for assessee’s cross examination or rebuttal. The denial of opportunity of cross examination by the AO itself is absolute failure of principles of natural justice and this itself will make the evidence to be discarded. Other than the statement of Shri Sanjay Vora, the Assessing Officer is not in possession of any evidence to show that the transaction entered into by the assessee in respect of purchase and sale of shares of Shreenath Commercial and Finance Ltd., as colourable device, is available. The assessee on the contrary has produced ledger accounts, purchase bills, sale bills and even bank account statement in respect of the transaction. It was very much open to the AO to invoke his powers u/s. 133(6) of the Act or to call for information from the stock brokers. This has not been done. AO has blindly relied upon the statement recorded from one stock broker who has given names of various companies and Shreenath Commercial and Finance Ltd., is also one of them. The shares purchased by the assessee and sold by the assessee are on Bombay Stock Exchange. STT has also been clearly paid on both the transactions. These are not off-line transactions. AO has also not considered the fact that the assessee had to sell the shares of Maa Tarini Industries Ltd., to protect itself from the financial loss caused on account of loss incurred in the transactions of shares of Shreenath Commercial and Finance Ltd. This being so, respectfully following the principles laid down in the case of Smt. Bimala Devi Singhania (2023 (10) TMI 1351 - ORISSA HIGH COURT] the disallowance of loss in respect of transaction of the shares of Shreenath Commercial and Finance Ltd., in the case of the assessee as made by the AO and as confirmed by the ld CIT(A) stands reversed. Decided in favour of assessee.
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