2009 (7) TMI 1283 - AT - Income Tax

Summary

Issues involved:
The judgment involves the deletion of addition of Rs. 7,34,994 made by the Assessing Officer on account of loss on sale of shares shown by the assessee, which was treated as the loss arising out of sham and bogus transactions. The main issues revolve around the genuineness of the transactions and the treatment of the loss as speculative.

Details of the judgment:

1. Assessing Officer's Findings:
The Assessing Officer noted discrepancies in the sale and purchase of shares of Reliance Industries (RIL) by the assessee with a related concern, M/s. Parklight Securities Ltd. The AO rejected the explanation provided by the assessee, alleging that the transactions were sham and contrived, citing various reasons including lack of proof of delivery, payment, and receipt, as well as early sale before the settlement period.

2. Assessee's Submissions:
The assessee contended that the transactions were genuine and not contrived. They provided evidence to support their claims, including details of the transactions, audit reports, and correspondence with the stock exchange. The assessee argued that the sale and purchase were legitimate business decisions and not aimed at evading taxes.

3. CIT(Appeals) Decision:
The CIT(Appeals) considered the evidence presented by the assessee and concluded that the transactions were genuine off-market transactions. The CIT(Appeals) found no evidence to support the Assessing Officer's claim that the transactions were non-genuine or contrived. The CIT(Appeals) directed the Assessing Officer to treat the loss as arising from speculative transactions due to the absence of actual delivery of shares.

4. Tribunal's Decision:
The Tribunal upheld the CIT(Appeals) decision, stating that the transactions were supported by contract notes from a registered share broker and were reported to the Stock Exchange. The Tribunal found no concrete evidence to prove that the transactions were sham or that the assessee did not suffer the claimed loss. The Tribunal dismissed the revenue's appeal, emphasizing that doubts and conjectures were insufficient grounds to deem the transactions as bogus.

In conclusion, the Tribunal affirmed the CIT(Appeals) decision to delete the addition of Rs. 7,34,994 as the loss was treated as arising from speculative transactions due to the absence of actual delivery of shares. The Tribunal found no substantial evidence to support the revenue's claim that the transactions were sham or non-genuine, thereby dismissing the revenue's appeal.