Case Law Details
Suprinit Tradinvest Pvt. Ltd. Vs ITO (ITAT Ahmedabad)
Introduction: The Income Tax Appellate Tribunal (ITAT) Ahmedabad addressed the case of Suprinit Tradinvest Pvt. Ltd. Vs Income Tax Officer (ITO) concerning the disallowance of business loss in share transactions. The ITAT emphasized that Assessing Officers (AO) should not disallow business loss without proper verification of documents. This article delves into the details of the case, the grounds of appeal, and the ITAT’s directive for thorough document scrutiny.
Detailed Analysis: Suprinit Tradinvest Pvt. Ltd., engaged in trading shares, filed an appeal against the order of the CIT(A), National Faceless Appeal Centre, for the Assessment Year 2014-15. The AO disallowed a business loss of Rs. 1,53,890, alleging sham transactions in certain scrips. The AO’s decision was based on the belief that these transactions were pre-arranged and controlled by entry providers.
During the assessment proceedings, the chartered accountant of the assessee provided necessary details and responses. However, the AO, in paragraph 4.8 of the assessment order, referred to statements of entry providers, exit providers, and brokers, alleging the transactions were sham. The AO concluded that the claimed loss on trading in specific shares was bogus and, consequently, disallowed.
The CIT(A) upheld the AO’s decision, leading the assessee to file an appeal before the ITAT. The appellant argued that the AO failed to discharge the onus of proving the transactions were non-genuine and based the disallowance on suspicion rather than concrete evidence. The appellant submitted investors’ reports, contract notes, and evidence of genuine transactions through SEBI registered intermediaries.
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