DCIT Vs Jainam Investments (ITAT Mumbai)
ITAT Mumbai held that disallowance on account alleged fictitious trading loss in absence of any direct incriminating material is not sustainable. Accordingly, CIT(A) rightly deleted the disallowance and allowed the appeal of the assessee. Thus, the present appeal by revenue is dismissed.
Facts- The assessee, a partnership firm, has been carrying on the business of trading in shares, derivatives and futures & options for several years. Post scrutiny assessment, AO recorded reasons to believe that income chargeable to tax had escaped assessment and, accordingly, issued notice under section 148 of the Act on 31.03.2021.
In the course of reassessment proceedings, the assessee furnished multiple submissions and explanations in response to queries raised by AO. Upon consideration of the entire material on record, AO proceeded to treat the loss of ₹1,96,04,400/ – claimed on the BSE equity derivatives segment as a fictitious loss and made an addition accordingly. AO further made an addition of ₹11,50,557/ – treating the same as a bogus loss entry allegedly obtained from entities linked to Shri Naresh Jain.
CIT(A), by the impugned order, upheld the initiation of reassessment proceedings but deleted the additions on merits in respect of both issues. Aggrieved by the deletion of the additions, the Revenue has preferred the present appeal.
