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2016 (9) TMI 1152 - ITAT KOLKATA

2016 (9) TMI 1152 - ITAT KOLKATA - TMI - Treatment to loss on shares - bogus loss - the broker of KSE was suspended - Genuineness of transaction doubted - failure to produce books - Held that:- The transactions were complete in terms of documentation and there was no defect in the papers submitted by the assessee in support of the transactions. We also find that there were entries for the sale purchase of the shares in the bank statements, contract notes, dmat account of the assessee. In our con .....

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d. We also find that the broker was not suspended during the period, when the transactions for sale & purchase of the shares taken place. The ld. DR has also not brought on record the reasons for which the broker was suspended. In view of above, we are inclined to reverse the order of authorities below - Decided in favour of assessee. - ITA No.935/Kol /2012 - Dated:- 12-8-2016 - Shri Waseem Ahmed, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member For The Appellant Shri V. N. Datta .....

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1. That the order passed by the Ld Assessing Officer as well as Ld. C.I.T.(A) is arbitrary, imaginary without any basis and illegal. 2. That the Ld. C.I.T.(A) has erred in confirming the disallowance of short term capital loss of ₹ 5681304/- which was disallowed by the Ld Assessing Officer only on the basis of that the stock broker has been suspended by the SEBI, which is totally against the fact and law also. 3. That the Ld. C.I.T.(A) has erred in confirming the disallowance of short term .....

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ch is totally unjustified and it should not be sustained. 5. That leave may be granted to add, to alter modify or amend ground or grounds of appeal during the hearing of appeal. Shri V.N. Datta, Ld. Authorized Representative appeared on behalf of assessee and Shri Sallong Yaden, Ld. Departmental Representative appeared on behalf of Revenue. 2. Only inter-connected issue in this appeal is that Ld. CIT(A) erred in confirming the action of Assessing Officer by treating the short term capital loss o .....

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es and booked a loss of ₹56,81,304/-, details of such companies are as under:- Inwards Outwards Loss Globe stock 43,32,152/- 12,47,803/- 30,84,354/- Pslfinance 4,97,725/- 49,300/- 4,48,425/- Limtxinv 9,89,900/- 1,24,700/- 8,65,200/- Sangocon 15,75,340/- 2,92,080/- 12,83,260/- During the assessment proceedings, AO observed that sale/purchase of shares of M/s Globe Stock and Securities Ltd. has been banned by SEBI and investigation is carried out against the other companies as stated above b .....

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ssee by furnishing purchase and sales bills with a view to provide the loss to assessee. Accordingly, AO observed that the loss claimed by assessee for ₹ 56,81,304/- in the sale-purchase of share of the aforesaid companies are nothing but a bogus short term capital loss which cannot be allowed to the carried forward. Thus, the loss claimed by assessee was disallowed. 5. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that : (i) The Kolkata Stock Exchang .....

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shares purchased at market rate through broker M/s Rajendra Prasad Shah against account payee cheque, the shares were duly credited in the demat account of assessee. Similarly, shares were sold at the market rate against the payment through account payee cheque therefore no disallowance by holding the aforesaid transactions as bogus is warranted However, Ld. CIT(A) has disregarded the claim of assessee and upheld the action of AO by observing the following facts:- (a) Share broker, M/s Rajendra .....

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a sharp decline in the price of the companies. Although, the SENSEX was gaining ratio growth. Accordingly, Ld. CIT(A) found that modus operandi adopted by assessee is to avoid taxes being non-genuine circumstances and it was nothing but a colorable device to avoid tax and he upheld the action of AO. Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. 6. Before us Ld. AR submitted paper book which is running pages from 1 to 63 and stated that SEBI has suspended .....

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per book. On the hand the ld. DR vehemently supported the order of the lower authorities. 6.1 We have heard rival parties and perused the materials available on record. From the foregoing discussion we find that the authorities below have treated the loss of the assessee as bogus because the broker of KSE was suspended. However, we find that the transactions were complete in terms of documentation and there was no defect in the papers submitted by the assessee in support of the transactions. We .....

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