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TMI Blog2008 (10) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 - BADAR DURREZ AHMED and RAJIV SHAKDHER JJ. R. D. Jolly for the appellant. Salil Aggarwal and Prakash Kumar for the respondent. JUDGMENT The judgment of the court was delivered by RAJIV SHAKDHER J. - This is an appeal under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), preferred by the Revenue against the judgment dated February 28, 2005, passed by the Income-tax Appellate Tribunal (hereinafter referred to in short as "the Tribunal") in ITA No. 3273/Del/2000, in respect of the assessment year 1996-97. 2. The Revenue being aggrieved has proposed the following questions of law which, according to them, are substantial questions of law. These are as follows: "(i) Whether the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(2) of the Act. In response thereto the authorised representative of the assessee appeared before the Assessing Officer. It is important to note that in the first instance the assessee was represented by one set of authorised representatives and since the assessee had been taken over by M/s. Goel Gases Group, it was subsequently represented by another set of representatives. This is relevant in view of the fact that the Assessing Officer has made some observations with regard to the lack of knowledge of the director of the assessee in respect of the impugned transactions. 5. Coming back to the facts, the assessee in its return had declared income by way of interest to the extent of Rs. 38,02,385. Against the said income it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion that the loss amounting to Rs. 33,31,395 in respect of share transactions had to be disallowed. Consequently, the said loss was added back to the total income of the assessee. The rationale for arriving at this conclusion is contained in the Assessing Officer's order dated March 26, 1999. The rationale being: (i) the assessee had no experience in dealing in share transactions; (ii) the former director of the assessee, Mr. Sen. who was examined by him had stated that share transactions had not been carried out throughout the year in issue, or even the succeeding financial year. Mr. Sen had stated before the Assessing Officer that he was not only unaware of the loss suffered in the share transactions but had also not heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduce the taxable income. 7. Being aggrieved, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) (hereinafter referred in short as "CIT(A)"). The Commissioner of Income-tax (Appeals) examined the facts placed before the Assessing Officer and the submissions made by the assessee including the point-wise rebuttal made by the assessee before him. The Commissioner of Income-tax (Appeals) after considering the material on record and the submissions of the assessee, came to the conclusion that the impugned share transactions with the broker were substantially in order and, hence, could not be treated as bogus transactions for the reason that: the assessee had brought on record documentary evidence in the form of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a reasonable explanation by supplying the necessary data that at the relevant time the broker had in his possession a larger number of shares of each of the four companies than those purchased by the assessee, and that the broker may have dealt with the shares of which otherwise the assessee was the owner and, hence, possessed the details with respect to their distinctive numbers by breaching the custodian rule; for which the assessee could not have been penalised for the infraction committed by the broker. 8. The Revenue being aggrieved by the order of the Commissioner of Income-tax (Appeals) preferred an appeal to the Tribunal. The Tribunal after examining the matter in detail sustained the order of the Commissioner of Income-tax (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that the heart of the matter is that the Assessing Officer was dissatisfied with the explanation offered by the assessee with regard to 8,100 shares in respect of three (3) of the four (4) entities out of a total number of 2,30,300 shares traded by the assessee. Based on the perceived lack of explanation by the assessee, the Assessing Officer doubted the entire transaction of shares conducted by the assessee through the broker, as a colourable device, with a view to evade tax. In our opinion, the approach adopted by both the Commissioner of Income-tax (Appeals) and the Tribunal was correct. Both the Commissioner of Income-tax (Appeals) as well as the Tribunal having examined the record and weighed the evidence placed before them ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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