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| The Tax Publishers2020 TaxPub(DT) 1282 (Chen-Trib) INCOME TAX ACT, 1961
Section 70
Where AO disallowed trading loss based on information from Investigations wing without establishing collusion of assessee in alleged fraud, order of AO was unsustainable as it was based merely on suspicion.
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Loss - Set off - Loss from sale of shares treated as speculation loss -
Grievance of assessee was that CIT(A) erred in treating loss from sale of shares as speculation loss as per section 43(5) of Income Tax Act, 1961. Assessee contended that AO had disallowed trading loss based on information from Investigations wing and treated same as Penny Stocks and thus, there was inconsistency between view of CIT(A) and that of AO. Held: There was nothing on record to say that report of Director of Investigation Wing was made available to assessee. Furthermore, AO did not establish collusion of assessee in alleged fraud. Time gap involved between purchase and sale of shares was more than one year and shares were demated. Transactions could not be held as ''not genuine'' merely based on suspicion. Suspicion however, be strong cannot take the place of proof. It is settled position of law that no addition can be made on mere suspicion. Therefore, disallowance of claim for set off of loss in trading of the transactions could not be upheld.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2015-2016
IN THE ITAT, CHENNAI BENCH
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