TMI Blog2009 (7) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee which was treated as the loss arising out of sham and bogus transactions. 2. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O. 3. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the Assessing Officer be restored to the above extent. 2. The brief facts of the case are that the assessee has claimed a loss of ₹ 7,34,994/- in respect of the sale/purchase of the shares of the Reliance Industries (RIL), as a business loss. The Assessing Officer observed that 56,538 shares of RIL were purchased @ ₹ 269/- per share on 07/11/2002 and sold on 11/11/2002 @ ₹ 256/- per share i.e. at the loss shown, while tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and that transactions did not exist. It also indicated that the shares remained in name of M/s. Parklight Securities which sold directly later. (6) The entire transactions were collusive and the loss was contrived. The Assessing Officer pointed out to the decision of the ITAT, Calcutta, reported in 74 ITD 43 and of Calcutta High Court 236 ITR 950 in this regard. The decision of the Hon'ble Gujarat High Court in the case of Sakarlal Balabhai 69 ITR 156 and in case of McDowell 154 ITR 148(SC) was referred to affirm that the transactions were sham and part of tax evasion. The Assessing Officer therefore made the addition. 3. Aggrieved by the assessee went in appeal before the ld. CIT(Appeals) and made the following submissions:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urned positive income of ₹ 9.07 lakhs in its return for A.Y. 2003-04, filed on 24th October-2003, with the ACIT, Central Circle-1(3), Ahmedabad (copy filed). Moreover, the assessee was the only person competent to decide its course of action in business, regarding the timing of sale and purchase and even otherwise, no one can foresee the trend in share market, as noticed by the Assessing Officer, with the benefit of hind sight. The doubt of Assessing Officer about the timing of the transaction was irrelevant. (c) Similarly, the observation of the Assessing Officer that the assessee contrived to avoid entries in Demat account, was incorrect since the shares purchased on 07/11/2002 were sold before the due date of settlement on 12/11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Demat Account. The suspicion of the Assessing Officer about the timing and rate, remains a surmise in absence of any evidence to the contrary and on considering the uncertainty inherent in the share market. In these facts and circumstances, the assumption of the Assessing Officer about the transactions being non-genuine in nature/contrived, is not supported by facts/details on record and so the addition made by him cannot be upheld and is deleted. 6.1. It is however, seen that there was no consequential delivery effected and so the lo9ss of ₹ 7,34,994/- from the aforesaid transaction is be treated as speculation loss. 5. The Ld. Departmental Representative supported the order of the Assessing Officer. 6. The Ld. Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Representative to controvert the above findings of the ld. CIT(Appeals). We find that the Assessing Officer alleged the transactions as bogus merely because these transactions were settled otherwise then by actual delivery and actual payment of the full amount of purchase and sale value and because the transactions were with related parties. In our considered opinion from the above observation it cannot be concluded that the transactions were bogus or sham. It is not the case of the revenue that the price at which shares were purchased and sold by the assessee were not the market value of the shares at the relevant time. Further, the transactions were duly supported by contract note of registered share broker and the details of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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