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.
The ITAT noted that the AO did not adequately address the documentary evidence presented by the assessee. Despite fluctuations and data increases mentioned by the AO, the tribunal emphasized that such reasons were insufficient for disallowing the business loss. The ITAT held that the AO’s decision lacked justification, and the appeal of the assessee was allowed.
Conclusion: The ITAT Ahmedabad, in the case of Suprinit Tradinvest Pvt. Ltd. Vs ITO, highlighted the importance of thorough document verification before disallowing business losses in share transactions. The tribunal emphasized that suspicions alone were insufficient grounds for such disallowances. This decision reiterates the significance of concrete evidence in tax assessments, ensuring fairness and justice in the taxation process.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the Assessee against order dated 08.06.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2014-15.
2. The Assessee has raised the following grounds of appeal :-
“1. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO in disallowing business loss of Rs. 1,53,890/-.
2. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO in not granting opportunity of cross examination of persons as demanded by the appellant.”
3. The assessee company is engaged in the business of trading in shares and Return of income for the Assessment Year 2014-15 was filed on 30.09.2014 declaring total income at Rs.5,08,113/-. The return of income was processed under Section 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny under CASS and statutory notice under Section 143(2) of the Act was issued on 28.08.2015 which was duly served upon the assessee. Notice under Section 142(1) of the Act dated 16.08.2016 alongwith questionnaire was issued to the assessee and served on the assessee. In response to the notices, the Chartered Accountant of the assessee attended the assessment proceedings from time to time and furnished the details called for. After verification of the books of account, the Assessing Officer observed that the among other few shares the assessee has also carried out share transactions in following scrips which were admittedly used by the entry providers for providing accommodation entry of Long Term Capital Gain/Short Term Capital Gain/Business Loss etc :-
