TMI Blog2017 (6) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... ifications might have been made to accommodate the appellant as the broker of the appellant was a sister concern". CIT(A) has confirmed the order of AO on his own surmise and conjecture which is not permissible in the eyes of law. Ld. DR has also not brought anything on record contrary to the advance arguments placed by Ld. AR for the assessee as well as no defects of whatsoever has been pointed out in the documents produced by assessee in support of its impugned loss. We also find whatever modifications were carried out by the broker they were carried out within the time permitted by the NSE for the purpose of modification. Thus we hold that the impugned loss claimed by assessee is genuine loss and allowable deduction - Decided in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares. The above loss was incurred by the assessee at the fag-end of the relevant Assessment Year i.e. from 18.03.2009 to 26.03.2009. All the transactions were carried out through a broker namely M/s Ratnabali Capital Markets Ltd. (RCML for short) a member of National Stock Exchange (NSE for short). The director in the assessee-company and RCML were common and the name of RCML was appearing in the list of specified person as envisaged u/s. 40(A)(2)(b) of the Act. The assessee has also paid brokerage to RCML for ₹92,566/- only for the above stated transactions. The Assessing Officer during the course of assessment proceedings to verify the veracity of the loss claimed by assessee has confirmed from NSE by issuing a notice u/s. 133(6) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of the above, AO treated the impugned loss of ₹19,76,538/- as bogus and accordingly added to the total income of assessee. 5. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that the client s name and code were modified within the time permitted by National Securities Clearing Corporation Ltd., (NSCCL short) which is the wholly owned subsidiary of NSE. The assessee also submitted that there is always huge rush during the marketing hours and therefore there is high possibility of human errors due to extremely high volume of orders which are placed on screens on real time basis. The assessee also submitted that all the transactions were carried out through banking chann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is confirmed as it was done with the intention of reducing appellant company s taxable income manipulation of transactions entered into by the Appellant s sister concern who was the Broker and helped in manipulation for the benefit of the Appellant. Hence, this ground of appeal of the appellant is dismissed. Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. 6. Ld. AR for the assessee filed paper book which is running pages from 1 to 20 and cited case law. Ld. AR for the assessee reiterated the arguments that were placed before Ld. CIT(A). Further, he also submitted the copies of contract notes in support of the transactions giving rise to the impugned loss which are placed on pages 1 to 5 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the supporting evidence such as contract note, payment of STT were filed at the time of assessment proceedings. We also find that Ld. CIT(A) confirmed the order of AO on the basis of his guess-work as evident from his appellate order which is reproduced below:- there is a possibility that the modifications might have been made to accommodate the appellant as the broker of the appellant was a sister concern. Further the ld. CIT-A has observed in his order as under:- Even though apparently it has not been established that the such modification had that the loss would not be attributable to these modifications On perusal of the order, we find that Ld. CIT(A) has confirmed the order of AO on his own surmise and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 159 ITR 289 (SC). Therefore, we hold that the impugned loss cannot be subject-matter of addition on the basis of suspicion. In this regard we also rely in the case of CIT vs. Kundan Investment Ltd. reported in 263 ITR 626 (Cal) where Hon'ble jurisdictional High Court has held:- The Tribunal had found that all relevant documents relating to contract notes, bills, the quoted price and other materials were produced. The transactions were made through cheques. All the shares related to the reputed companies and were quoted market rates, which was verified from the statement of the stock exchanges. On these basis, the Tribunal found that the CIT(A) had proceeded on the basis of suspicion that there might be some ingenuinity in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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