Disallowance of loss on share unsustainable as evidences duly submitted

Genuine Finance Pvt. Ltd. Vs DCIT (ITAT Ahmedabad)

ITAT Ahmedabad held that disallowance of loss on share on mere conjecture and surmises is unsustainable as assessee duly submitted all the evidences.

Facts- The assessee is engaged in the business of shares and securities and trades in shares of various companies and income / loss earned therefrom is shown as business income. The assessee filed return of income for A.Y. 2011-12 on 30.09.2011 declaring total loss of Rs. 60,36,102/-. AO observed that the assessee company sold shares of VAS Infrastructure Pvt. Ltd. and total sale value for A.Y. 2011-12 is Rs. 39,08,227/-. AO further observed that M/s. VAS Infrastructure Pvt. Ltd. is penny stock company, which has been used by beneficiaries (sell of share) to launder money in the garb of Long Term Capital Gain (LTCG) while claiming tax exemption under Section 10(38) of the Income Tax Act, 1961. Thus, AO assessed the total income of the assessee at Rs. 2,70,191/- and made disallowance of loss of Rs. 18,57,032/-.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

Conclusion- It is pertinent to note that the assessee is continuously dealing in share trading of various shares/scripts and the said fact is not disputed. The Script of M/s VAS Infrastructure Ltd. was not blacklisted by the SEBI at the relevant period.

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