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The ITO, Ahmedabad vs. Shri Champalal Gopiram Agarwal - (Income Tax Appellate Tribunal) (23 Dec 2022)

In absence of any specific finding against the assessee, the assessee cannot be held to be linked to the wrong acts merely on basis of assumptions


Direct Taxation

The assessee is an individual and deriving income from business and from investment in shares and from other sources. The assessee for the year under consideration declared taxable income of Rs. 11,25,300 only and also claimed carry forward of loss of Rs. 43,54,574 from the activity of sale and purchase of shares and securities. The issue raised by the Revenue is that, the learned CIT-A erred in deleting the addition of Rs. 19,310 on account of bogus transaction in the scrip of Aarya Global Share and Securities Ltd.

The income generated by the assessee cannot be held bogus only on the basis of the modus operandi, generalisation, and assumptions of certain facts. In order to hold income earned or loss incurred by the assessee as bogus, specific evidence has to be brought on record by the Revenue to prove that the assessee was involved in the collusion with the entry operator/ stock brokers for such an arrangements. In absence of such finding, no adverse inference can be drawn against the assessee.

In the case on hand, admittedly there was no evidence available on record suggesting that the assessee or his broker was involved in the rigging up of the price of the script of Arya Global Shares & Securities Ltd A.Y. 2012-13 and Vax Housing Finance Corp. Ltd. Thus, it appears that the assessee acted in the given facts and circumstances in good-faith.

In view of the judgment of Delhi High Court in Pr. CIT vs. Smt. Krishna Devi present Tribunal hold that in absence of any specific finding against the assessee, the assessee cannot be held to be guilty or linked to the wrong acts merely on basis of surmises and assumptions. The income earned by the assessee on the scrip of Arya Global Shares and Securities Ltd and loss incurred on the scrip of Vax Housing Finance Corp. limited cannot be held bogus merely on the basis of some assumption of the AO unless cogent materials are brought on record. Therefore, there is no reason to disturb the finding of the learned CIT(A) and direct the AO to delete the addition and disallowances made by him. Hence the grounds of Revenue's appeal are dismissed.


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