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TMI Blog2019 (6) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... referred reports can be the basis of additions. A statement has been made that SEBI has suspended the transactions in the scrip but contrary evidence has been brought on record by the assessee to demonstrate that the scrip is being traded even today. Thus, the basis on which the Assessing Officer has made the disallowance, cannot be upheld. Disallowance of Interest deduction u/s 57(iii) - The claim of he assessee is upheld for the simple reason that the ld. CIT(A) agreed with the contentions of the assessee and the only ground on which he upheld the disallowance was that the loss claimed as short term capital loss was suspicious and bogus. As we have held that the assessee s claim on the short term capital loss has to be allowed, this objection of the ld. CIT(A) cannot be sustained. Hence we allow this ground of the assessee. - I.T.A. No. 2419/Kol/2018 - - - Dated:- 21-6-2019 - Sri J. Sudhakar Reddy, Accountant Member For The assessee : Shri Bijaya Kumar Sahoo, FCA For The Revenue : Shri Robin Choudhury, Addl. CIT Sr. D/R ORDER Per J. Sudhakar Reddy :- This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29000 4. 4. The assessee was requested to furnish the following evidences in support of the transaction in shares on account of which three was a claim of short term capital loss of ₹ 18,97,566/- PURCHASE. 01. Please specify the date of purchase along with quantity 02. Please specify the mode of payment 03. If the payment is made through banking channel, submit the corresponding bank statement reflecting the above transaction 04. Please furnish the document related to allotment of shares if applicable 05. Please furnish the contract notes if applicable 06. Please give complete details (such as name, address, contact no. Etc) of the broker 07. Whether the shares were purchased in physical form or dematerialized form 08. When did you open the DEMAT account and what is the name and address of the DP 09. Please furnish the DEMAT statement since its opening 10. Please specify the date on which these shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the assessee carried the matter in appeal. The ld. First Appellate Authority confirmed both the additions. On the issue of disallowance of short term capital loss, the ld. CIT(A) relied on circumstantial evidence. The ld. CIT(A) at page 29 para 6.1. and 6.2. concluded as follows:- 1. I have carefully considered the action of the Ld. AO in making an addition of ₹ 18,97,566/-as unexplained credit u/s 68 of the Income Tax Act, 1961. After an exhaustive discussion and elaborating the factual and legal matrix, I find that the Ld. AO has held that the claim of Short Term Capital Loss was to be denied to the assessee individual, and was to be assessed as unexplained cash credit u/s 68 of the I T Act. The Ld. AO has placed on record the entire gamut of findings, and there is, in my considered view no further requirement for elaboration from this forum. In my view of the facts there are elaborate and direct evidence' to clearly indicate that that the entire transactions undertaken by the appellant were merely accommodation entries taken for the purpose of such bogus Short Term Capital Loss made by the assessee during the previous year. It is appare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the instant case. There are grave doubts in the story propounded by the assessee before the authorities below. None of the material produced before the Ld. AO by the assesseeappellant are 'enough to justify the humongous gains accruing to the assessee by way of Capital Gains.' In my considered view the banking documents are mere self serving recitals. The law in the matter of self-serving recitals has been long established by the Hon'ble apex Court. In the case of CIT vs P.Mohankala 291 ITR 278, the Hon'ble Supreme Court held that : the money came by way of bank cheque and was paid through the process of banking transactions was not by itself of any consequences. The burden of proof is on the assessee in the matter of justification of receipts which are of suspicious and 'dubious nature, In the case of CIT vs. Durga Prasad More (1971)82 ITR 540 ,(SC), their Lordships laying down the significance 'of human probabilities held as under: in a case where a party relied on self serving recitals in documents; it ~as ''tor that 'party to' establish the truth of those recitals: the taxing authorities were entitled to took into the surrounding ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, he held that the assessee has a good case and had the transactions leading to short term capital loss were genuine, then he would have allowed this claim. He held that, as he had taken a view that the claim of short term capital loss is not genuine, the disallowance was upheld. 6. Aggrieved the assessee is before me. 7. The ld. Counsel for the assessee submits that, the assessee has produced all the evidence within its command in support of the genuineness and correctness of the transactions. He submitted that the share transactions were done through recognized share broker firms on the stock exchange and that STT was paid on all transactions. He pointed out that the Assessing Officer has recorded at para 4.4. of his order that the assessee has furnished all the details that are sought by him. He contended that the entire disallowance of the claim of the assessee was made based on suspicion. He argued that the Assessing Officer has relied on the report of the DIT (Inv.), which does not contain the name of the assessee. He pointed out that the so-called statements recorded from the brokers and entry operators were retracted and this fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer. The Assessing Officer has also at para 4.4. of his order acknowledged that all evidences as desired by him were furnished. The Assessing Officer has relied on the report of the investigation wing of the department. As held by us, in various other decisions, the report of the investigation wing of the Income tax Department can be a starting point for investigation into the affairs of the assessee but cannot be the whole and sole basis on which an addition can be made. Copy of the report is neither furnished to the assessee nor is placed before us for my consideration. When a copy of the report is not brought on record, the question of relying on the same to make an addition to the income, does not arise. 9.1. The assessee has purchased and sold shares through brokers. Copies of Contract notes, copies of payment through banks and other evidences were filed in support of the genuineness of the transactions. The Assessing Officer relies on the statement of the brokers and that of the entry operators but, none of these statements have been brought on record. The contents of the so called statements are not known. SIT report relied upon by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficiaries - On basis of said information, sale consideration received by assessee on sale of shares was added to his income as unexplained cash credit - It was noted that observations of Investigation wing were general in nature and were applied across board to all 60,000 assessees who fell in this category - There was no specific evidences produced against assessee - Submission of assessee that she was not party to scam etc., was not controverted by revenue authorities - Nothing was brought on record to show that persons investigated, including entry operators or stock brokers, had named that assessee was in collusion with them - Whether in absence of any finding specifically against assessee in investigation wing report, impugned addition made under section 68 to income of assessee was unjustified. 10. Applying the propositions of law laid does in this case-law to the facts of the case on hand, we delete these additions as the entire additions was made on surmises and conjectures. Regarding the disallowance u/s 57(iii) of the Act, the claim of he assessee is upheld for the simple reason that the ld. CIT(A) agreed with the contentions of the assessee and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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