PCIT Vs R.C. Suppliers Private Limited (Calcutta High Court)
Calcutta High Court has dismissed an appeal filed by the Principal Commissioner of Income Tax (PCIT) against R.C. Suppliers Private Limited, upholding an Income Tax Appellate Tribunal (ITAT) decision that found no evidence of price rigging by the assessee in a Rs. 71.38 lakh penny stock loss case. The revenue’s appeal, challenging the ITAT’s order dated November 29, 2023, for the assessment year 2014-15, was rejected on the grounds that it raised no substantial questions of law.
The case revolved around the disallowance made by the Assessing Officer (AO) regarding a loss of Rs. 71,38,200 claimed by R.C. Suppliers Private Limited from transactions involving shares of “First Financial Services Ltd.” The AO had concluded that the transaction was “manufactured, managed and fabricated” to create a bogus loss, citing the company’s presence on a list of entities involved in suspicious penny stock transactions.
The revenue presented two main questions of law before the High Court. Firstly, whether the Tribunal erred in failing to appreciate that the disallowance was justified given that “First Financial Services Ltd.” was on a suspicious transaction list and the assessee, specialized in share dealing, had no justifiable reason to engage with such scrips. Secondly, whether these cumulative facts inescapably led to the conclusion that the transaction was fabricated to claim a bogus loss.
