Shagun Business Services Pvt. Ltd., Kolkata V. I.T.O.,Ward-5(1), Kolkata

ITA 2395/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7414 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Tangible material; Corroborative evidences
• Section: 250; 147; 68; 148

Judgement Text

ITA NO. 2395/KOL/2019 ASSESSMENT YEAR: 2009-2010 SHAGUN BUSINESS SERVICES PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C(SMC) BENCH, KOLKATA BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 2395/KOL/2019 ASSESSMENT YEAR: 2009-2010 SHAGUN BUSINESS SERVICES PVT. LIMITED,............. .............................APPELLANT 13, POLLOCK STREET, KOLKATA-700001 [PAN:AADCS5402J] -VS.- INCOME TAX OFFICER,.............................,.. .............................................RESPON DENT WARD-5(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 APPEARANCES BY: SHRI ANIL KOCHAR, ADVOCATE, FOR THE APPELLANT SMT. RANU BISWAS, ADDL. CIT, SR. D.R., FOR THE RESP ONDEN T DATE OF CONCLUDING THE HEARING : JANUARY 27, 2020 DATE OF PRONOUNCING THE ORDER : JANUARY 31, 2020 O R D E R THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10, ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-19, KOLKAT AS ORDER DATED 25.09.2019 PASSED IN THE CASE NO. CIT(A),KOLKATA-19 /10196/2017-18, INVOLVING PROCEEDINGS UNDER SECTION 143(3)/147 OF T HE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. THE ASSE SSEES DETAILED PAPER BOOK RUNNING INTO 25 PAGES COMPRISING OF SECT ION 148 NOTICE, THE ASSESSING OFFICERS REASONS RECORDED IN SUPPORT THEREOF, WRITTEN SUBMISSIONS BEFORE THE CIT(APPEALS), STOCK BROKERS STATEMENT AND COPY OF BANK ACCOUNT STANDS PERUSED. 2. IT TRANSPIRES DURING THE COURSE OF HEARING THAT THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE ON MERIT; APART FROM RAISING LEGAL ISSUE OF VALIDITY OF SECTION 147 PROCEEDINGS, SEEKS TO REVERSE BOTH T HE LOWER AUTHORITIES ACTION TREATING THE DISALLOWANCE OF LOSSES AMOUNTIN G TO RS.19,09,281/- TO ITA NO. 2395/KOL/2019 ASSESSMENT YEAR: 2009-2010 SHAGUN BUSINESS SERVICES PVT. LIMITED 2 BE BOGUS SINCE INVOLVING ALLEGED CLIENT CODE MODIFI CATION MADE BY THE BROKER. THE CIT(A)S DETAILED DISCUSSION AFFIRMING THE ASSESSING AUTHORITYS ACTION TO THIS EFFECT READS AS UNDER:- 6. GROUND NOS. 2, 3 & 4 ARE AGAINST THE ADDITION MADE U/S. 68 OF THE ACT BY THE AO IN THE SUM OF RS.19,09,281/ - OBSERVING AS UNDER: - 'FROM THE REPLY IT APPEARS THAT THE ASSESSEE HAS ITSELF ADMITTED THAT CLIENT CODE MODIFICATION WAS OCCURRED IN ITS SHARE DEALING BUSINESS. THE DEPARTMENTAL INVESTIGATION WING FOUND OUT THAT THE ASSESSEE IS ONE OF BENEFICIARY OF CLIENT CODE MODIFICATION. SO IT IS CLEAR THAT THE ASSESSEE BOOK ED BOGUS LOSS OF RS.19,09,281/- UNDER THE GARB OF CLIE NT CODE MODIFICATION.' 7. THE AIR APPEARING ON BEHALF OF THE APPELLANT VEH EMENTLY DISPUTED THE ADDITION MADE ON THIS PRETEXT BY THE A O. 8. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF THE AIR OF THE APPELLANT AND PERUSED THE RELEVANT ISSUE IN THE ASS ESSMENT ORDER AS WELL AS THE MATERIALS PLACED BEFORE ME. THE AO H AS RECORDED THAT THE INVESTIGATION CARRIED OUT BY THE DIRECTORA TE OF INCOME TAX (INVESTIGATION), UNIT 1 (3), AHMEDABAD REVEALED THAT NET LOSS TO THE EXTENT OF RS.19,09,281/- WAS ARRANGED B Y THE APPELLANT THROUGH THE BROKER WHICH IS A CONTRIVED L OSS. THE AO HAS RECORDED THAT THE APPELLANT HAD FAILED TO SUBST ANTIATE ITS BONAFIDENESS WITH PROPER EVIDENCE BY PRODUCING ANY BOOKS OF ACCOUNTS THAT THERE WAS NO SUCH TRANSACTION THROUGH CLIENT CODE MODULE. IT IS THE CASE OF THE AO THAT AS THE TRANSA CTION HAD BEEN MADE THROUGH THE PAN OF THE APPELLANT, HE OUGHT TO BE WELL AWARE OF THE FACT OF TRANSACTIONS BEING CARRIED OUT THROUGH CLIENT CODE MODIFICATION, AND OUGHT TO HAVE RAISED OBJECTIONS WITH THE BROKER AGAINST SUCH TRANSACTION. IT IS THE AO'S CASE THAT AS THE APPELLANT HAD FAILED TO PROVIDE ANY EVIDENCE IN THE MATTER OF RAISING ANY OBJECTIONS WITH THE BROKER, AS WELL AS ANY CERTIFICATE FROM THE BROKER TO THE EFFECT THAT THER E WAS NO SUCH TRANSACTION IN THE NAME OF THE APPELLANT TOWARDS SH IFTING OUT PROFIT AND LOSS OF SHARE BUSINESS THROUGH CLIENT CO DE MODULE. THEREFORE THE AO HAS RECKONED THAT AS IT IS QUITE E VIDENT ON RECORD THAT DURING THE RELEVANT ASSESSMENT YEAR, TH E APPELLANT HAD SHIFTED OUT PROFIT OF RS.19,09,281/- AND THEREF ORE THIS AMOUNT WAS CORRECTLY ADDED BACK TO ITS TOTAL INCOME . 8.1. HAVING EXAMINED THE MATTER, I FIND THAT THE AP PELLANT HAS NOT BEEN ABLE TO BRING ANYTHING ON RECORD TO PROVE THE RATIONALE, NEED AND JUSTIFICATION FOR CLIENT CODE MODIFICATION S. WHILE IT MAY BE TRUE THAT SUCH CLIENT CODE MODIFICATION MAY NOT PER SE BE ILLEGAL, IT HAS TO BE BROUGHT ON RECORD BY THE APPE LLANT, AS HE IS THE BENEFICIARY THAT THE MODIFICATIONS WERE TO BE O N AN ACCEPTABLE LEVEL, AND THE CLIENTS WERE KYC COMPLAIN T. IN SUCH ITA NO. 2395/KOL/2019 ASSESSMENT YEAR: 2009-2010 SHAGUN BUSINESS SERVICES PVT. LIMITED 3 MATTER, THE RELEVANT EXTRACT OF SEBI CIRCULAR DATED 06.02.2003, RELATING TO THE MODIFICATION OF CLIENT CODE IS BEIN G REPRODUCED HEREUNDER: - 'THE STOCK: EXCHANGES SHALL NOT NORMALLY PERMIT CHANGES IN THE CLIENT ID AND WOULD KEEP A STRICT VI GIL ON CASES OF CLIENT CODE MODIFICATION AND WOULD IMPLEME NT A MONETARY PENALTY STRUCTURE THAT WOULD ESCALATE WI TH THE NUMBER OF SUCH INCIDENCES. BESIDES, THE EXCHANG E MAY TAKE NECESSARY ACTION AGAINST MEMBERS MAKING REPEATED CHANGES. HOWEVER, GENUINE MISTAKES MAY BE ALLOWED TO BE RECTIFIED. 'THUS, A CAREFUL READING OF THE ABOVE, EXTRACT SUGG ESTS THAT THE CHANGE IN CLIENT ID IS GENERALLY HOT ALLOWED EXCEPT WHERE THERE, IS SOME GENUINE MISTAKE. THE SEBI CIRCULAR ALSO MAN DATES THE STOCK EXCHANGES TO KEEP STRICT VIGIL THE INSTANCES OF CLIENT CODE MODIFICATION AND IMPLEMENTATION OF A PENALTY STRUCT URE. IN THE LIGHT OF THE READING AND SUBMISSION OF NSE, IT IS T O BE OBSERVED THAT THE PRACTICE ADOPTED BY NSE IS SCRUTINY OF CLI ENT CODE MODIFICATIONS ON A POST FACTO BASIS, WITH MONETARY PENALTIES IN DIRECT PROPORTION TO THE QUANTUM OF INCIDENCE IN CO MPLIANCE WITH THE SEBI CIRCULAR. REGARDING THE REQUIREMENT O F NOT ALLOWING THE CHANGE IN CLIENT CODE EXCEPT FOR GENUI NE MISTAKE, IT IS ALSO TO BE OBSERVED THAT THE TERM 'GENUINE MISTA KE' HAS WIDE CONNOTATION. HOWEVER, ON PERUSAL OF THE SUBMISSIONS MADE OUT BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS, IT DOES NOT EMANATE THAT THE MODIFICATIONS WERE GENUINE. FURTHE R, A CAREFUL STUDY OF THE SEBI CIRCULAR WOULD REVEAL THAT A TWO TIER PENALTY STRUCTURE HAS BEEN PROVIDED FOR. A MONETARY PENALTY HAS BEEN ENVISAGED WHEN THERE IS AN ESCALATION IN THE NUMBER OF CLIENT CODE MODIFICATIONS. HOWEVER, IN THE CASE OF REPEATE D OFFENCES, FURTHER NECESSARY ACTION HAS BEEN RECOMMENDED. THER EFORE, IN VIEW OF MATTER, I HOLD THAT THE AO WAS CORRECT IN C ONCLUDING THAT IN THE PRESENT INSTANCE THERE WAS DELIBERATE SHIFTI NG OF PROFITS BY THE APPELLANT IN CONNIVANCE WITH THE BROKER. THUS, THE ADDITION OF RS.19,.09,281/ - RESORTED TO BY THE AO ON THIS B EHALF ACCORDINGLY UPHELD, AND THE GROUND NOS. 2, 3 & 4 OF THE APPELLANT STANDS DISMISSED. 3. LEARNED COUNSEL VEHEMENTLY CONTENDS THAT THE LD. CIT(APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE A .OS ACTION IN TREATING THE ASSESSEES ABOVE STATED LOSS AS UNEXPLAINED CAS H CREDIT. THE REVENUE, ON THE OTHER HAND, HAS CHOSEN TO PLACE STRONG RELIA NCE ON THE LD. CIT(APPEALS)S FOREGOING DETAILED DISCUSSION. I NOT ICE IN THESE PECULIAR FACTS AND CIRCUMSTANCES THIS TRIBUNALS COORDINATE BENCH IN M/S. KHAITAN TRADE HOLDINGS PVT. LIMITED VS.- ITO IN ITA NO. 21 79/KOL/2017 HAS ADJUDICATED THE VERY ISSUE AS UNDER:- ITA NO. 2395/KOL/2019 ASSESSMENT YEAR: 2009-2010 SHAGUN BUSINESS SERVICES PVT. LIMITED 4 2. THE ASSESSEE IS A COMPANY AND IS A SUB-BROKER IN SHARES. THE ASSESSING OFFICER DISALLOWED THE CLAIM ON ACCOU NT OF DERIVATIVE TRANSACTIONS OF RS.8,91,057/-. THE ASSES SING OFFICER HELD THAT THE ASSESSEE HAD ENTERED INTO LIMITED TRA NSACTIONS AND ALL THE TRANSACTION IN WHICH THE ASSESSEE ENTERED I NTO WERE TRANSACTIONS IN WHICH CLIENT CODE MODIFICATION (CCM ), WAS MADE BY THE BROKER, THROUGH WHOM THE TRANSACTIONS WERE A FFECTED. HE HELD THAT THE LOSS WHICH WERE BOOKED BY THE ASSESSE E WERE ACTUALLY INCURRED BY SOMEBODY ELSE, BUT BY CHANGING THE CODE SUBSEQUENTLY, THE BROKER TRANSFERRED THE LOSS TO TH E ASSESSEE. THE ASSESSING OFFICER GAVE A LETTER TO THE STOCK EXCHAN GE FOR VERIFICATION OF THE GENUINENESS OF THE TRANSACTIONS . THE STOCK EXCHANGE HAS CONFIRMED THAT MODIFICATIONS WERE MADE IN THIS CASE. THE ASSESSEE CONTENDED THAT ALL THESE TRANSAC TIONS WERE GENUINE AND THAT THE RELEVANT CONTRACT NOTES, THE R ECORD OF THE TRANSACTION WERE SUBMITTED BY THE ASSESSEE AND THAT , THE PAYMENTS FOR THE TRANSACTIONS WERE MADE THROUGH BAN KING CHANNELS AND CONFIRMATIONS ARE FURNISHED TO ESTABLI SH THE GENUINENESS OF THE TRANSACTIONS. IT CONTENDED THAT, WHEN THE NATIONAL STOCK EXCHANGE ITSELF HAS CONFIRMED THAT T HE TRANSACTIONS IN QUESTION, THE LOSS CANNOT BE DISALL OWED. THE ASSESSING OFFICER APPLIED THE THEORY OF HUMAN PROBA BILITIES AND RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAJ V. CIT (1995) 214 ITR 801 (SC) AND CIT-VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC), AND MADE THE DISALLOWANCE. 2.1. ON APPEAL THE ID. FIRST APPELLATE AUTHORITY, UPHELD THIS ORDER OF THE ASSESSING OFFICER. HE HELD THAT HUMAN ERROR CANNOT OCCUR ON ALL OCCASIONS. HE OBSERVED THAT THE DERIVA TIVE TRANSACTIONS TOOK PLACE THROUGH A BROKER BUT ON DIF FERENT DATES. HE ALSO APPLIED THE THEORY OF PROBABILITIES AND DIS MISSED THE CASE OF THE ASSESSEE. HE REJECTED THE CONTENTIONS O F THE ASSESSEE THAT ADDITION CANNOT BE MADE ON MERE SUSPICION, CON JECTURES AND SURMISES AS HELD BY THE HON'BLE SUPREME COURT IN TH E CASE OF MESSRS. LALCHAND BHAGAT AMBICAL VS THE COMMISSIONER OF INCOME- TAX 37 ITR 288 SC. 3. AGGRIEVED THE ASSESSEE IS BEFORE US IN APPEAL. 4. AFTER HEARING RIVAL CONTENTIONS, I FIND THAT THE ASSESSEE HAS PROVIDED DOCUMENTARY EVIDENCE BY WAY OF CONTRACT NO TES, BANK STATEMENTS EVIDENCING CHEQUE PAYMENTS FOR ALL THESE TRANSACTIONS, PAYMENT OF SECURITY TRANSACTIONS TAX BEFORE THE ASSESSING OFFICER. THE NATIONAL STOCK EXCHANGE HAS CONFIRMED THAT THESE TRANSACTIONS HAVE TAKEN PLACE IN THE EXC HANGE AND IN THE NAME OF THE ASSESSEE. THE ISSUE THAT HAS TO BE ADJUDICATED, IS WHETHER, WHEN CCM IS DONE TO CORRECT ERRORS, IT CAN BE INFERRED THAT MANIPULATION HAS BEEN DONE BY THE ASSESSEE. 4.1. THE KOLKATA 'A' BENCH OF THE TRIBUNAL, IN THE CASE OF M/S. RATNABALI COMMODITIES VS. THE INCOME TAX OFFICER, W ARD-12(3), ITA NO. 2395/KOL/2019 ASSESSMENT YEAR: 2009-2010 SHAGUN BUSINESS SERVICES PVT. LIMITED 5 KOLKATA, IN ITA NO. 787/KOL/2013, ASSESSMENT YEAR 2 008-09, ORDER DT 30/08/2017, WHEREIN AT PARA 5 & 6, IT HAS BEEN HELD AS FOLLOWS:- '5. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE ISSUE IN HAND IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE SAID ORDER DT. 16-06-17 IN ASSESSEE'S OWN CASE IN ITA NO. 191/KOL/2015 FOR THE A.Y 2009-10, WHEREIN THE ASSES SEE HAS CLAIMED LOSS OF RS.19,76,538/-. THE AO TREATING THE SAME AS BOGUS ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE ONLY ON THE GROUND THAT THE BROKER HAS MODIFIED THE NAME AND CODE OF ASSESSEE. WE FIND THA T THIS TRIBUNAL VIDE ITS SAID ORDER DT. 16-06-17 IN ASSESSEE'S OWN CASE FOR THE A.Y 2009-10 HELD THAT MODIFICATIONS ARE PERMITTED BY NSE AND SUCH MODIFICATION CARRIED OUT WITHIN THE PRESCRIBED TIME LIMIT PROVIDED BY NSE. RELEVANT PORTION OF FINDING OF SUCH ORDER IS REPRODUCED HEREIN BELOW:- 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED AND PLACED RELIANCE UPON. THE ISSUE BEFORE US REVOLVES FOR THE AMOUNT OF LOSS CLAIMED BY ASSESSEE FOR- 19,76,538/- WHICH WAS TREATED BY THE AUTHORITIES BELOW AS BOGUS MAINLY DUE TO THE MODIFICATION CARRIED OUT IN THE NAME AND CODE OF THE ASSESSEE BY THE BROKER. THE DIRECTOR OF THE ASSESSEE-COMPANY AND THE DIRECTOR OF THE BROKER COMPANY LISTED WITH NSE ARE SAME PERSON. THE IMPUGNED LOSS WAS TREATED AS BOGUS DUE TO SEVERAL REASONS SUCH AS IT WAS INCURRED AT THE FAG-END OF THE YEAR, TO REDUCE THE TAXABLE PROFIT EARNED BY ASSESSEE DURING THE YEAR AND SIMILAR KIND OF LOSS WAS ALSO DISALLOWED IN THE IMMEDIATE PRECEDING YEAR. 7.1 FROM THE FOREGOING DISCUSSION, WE FIND THAT INDEED THE CLIENT'S CODE AND NAME WERE MODIFIED IN RESPECT OF TRANSACTIONS CLAIMED BY ASSESSEE. HOWEVER, ON PERUSAL OF RECORD, WE FIND THAT THE IMPUGNED TRANSACTIONS WERE CARRIED OUT THROUGH BANKING CHANNEL AND ALL THE SUPPORTING EVIDENCE SUCH AS CONTRACT NOTE, PAYMENT OF STT WERE FILED AT THE TIME OF ASSESSMENT PROCEEDINGS. WE ALSO FIND THAT LD. CIT(A) CONFIRMED THE ORDER OF AO ON THE BASIS OF HIS GUESS-WORK AS EVIDENT FROM HIS APPELLATE ORDER WHICH IS REPRODUCED BELOW:- 'THERE IS A POSSIBILITY THAT THE MODIFICATIONS MIGHT HAVE BEEN MADE TO ACCOMMODATE THE ITA NO. 2395/KOL/2019 ASSESSMENT YEAR: 2009-2010 SHAGUN BUSINESS SERVICES PVT. LIMITED 6 APPELLANT AS THE BROKER OF THE APPELLANT WAS A SISTER CONCERN. ' FURTHER THE ID. CIT -A HAS OBSERVED IN HIS ORDER AS UNDER:- 'EVEN THOUGH APPARENTLY IT HAS NOT BEEN ESTABLISHED THAT THE SUCH MODIFICATION HAD BEEN DONE IN VIOLATION OF RULES AND REGULATIONS PRESCRIBED BY SEBI AND THE AO HAD PROCEEDED ON SUSPICION, HOWEVER AT THE SAME TIME IT ALSO CANNOT BE CONCLUDED EITHER THE LOSS WOULD NOT BE ATTRIBUTABLE 10 THESE 'MODIFICATIONS'. ON PERUSAL OF THE ORDER, WE FIND THAT LD. CIT(A) HA S CONFIRMED THE ORDER OF AO ON HIS OWN SURMISE AND CONJECTURE WHICH IS NOT PERMISSIBLE IN THE EYES OF LAW. LD. DR HAS ALSO NOT- BROUGHT ANYTHING ON RECOR D CONTRARY TO THE ADVANCE ARGUMENTS PLACED BY LD. AR FOR THE ASSESSEE AS WELL AS NO DEFECTS OF WHATSOEVE R HAS BEEN POINTED OUT IN THE DOCUMENTS PRODUCED BY ASSESSEE IN SUPPORT OF ITS IMPUGNED LOSS. WE ALSO F IND WHATEVER MODIFICATIONS WERE CARRIED OUT BY THE BROKER THEY WERE CARRIED OUT WITHIN THE TIME PERMITTED BY THE NSE FOR THE PURPOSE OF MODIFICATIO N. THUS, WE ARE OF THE VIEW THAT THE ORDER OF AUTHORIT IES BELOW IS BASED ON SURMISE AND CONJECTURE AND SAME IS NOT BASED ON TANGIBLE MATERIAL TO TREAT THE IMPUGNED LOSS AS BOGUS LOSS. 7.2 MOREOVER, WE ALSO FIND THAT THE DETAILS FURNISH ED BY THE ASSESSEE IN RESPECT OF TRANSACTIONS GIVING R ISE TO THE LOSS WERE EXACTLY MATCHING WITH THE DETAILS FURNISHED BY THE NSE. IN NONE OF THE CASE, AUTHORIT IES BELOW HAVE BROUGHT ON RECORD WHERE ANY MISMATCH - IS FOUND BETWEEN THE BOOKS OF THE ASSESSEE AND THE CONFIRMATION RECEIVED FROM NSE. HAD THERE BEEN ANY MANIPULATION IN THE IMPUGNED LOSS THEN IT COULD HAV E BEEN REVEALED FROM THE CONFIRMATION RECEIVED FROM NSE. THEREFORE, THE MODIFICATIONS IN THE CLIENT'S NAME AND CODE CANNOT JUSTIFY THE IMPUGNED LOSS AS BOGUS. THUS, WE CONCLUDE THAT THE IMPUGNED ADDITION HAS BEEN MADE BY THE AUTHORITIES BELOW ON THE BASIS OF SURMISE AND CONJECTURE WHICH IS NOT PERMISSIBLE IN THE EYES OF LAW AS HELD BY THE HON'BLE SUPREME COUR T IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CLT BIHAR AND ORISSA (1959) 159 ITR 289 (SC). THEREFORE , WE HOLD THAT THE IMPUGNED LOSS CANNOT BE SUBJECT- MATTER OF ADDITION ON THE BASIS OF SUSPICION. IN TH IS REGARD WE ALSO RELY IN THE CASE OF CIT VS. KUNDAN INVESTMENT LTD. REPORTED IN 263 ITR 626 (CAL) WHERE HON 'BLE JURISDICTIONAL HIGH COURT HAS HELD:- ITA NO. 2395/KOL/2019 ASSESSMENT YEAR: 2009-2010 SHAGUN BUSINESS SERVICES PVT. LIMITED 7 'THE TRIBUNAL HAD FOUND THAT ALL RELEVANT DOCUMENTS RELATING TO CONTRACT NOTES, BILLS, THE QUOTED PRICE AND OTHER MATERIALS WERE PRODUCED THE TRANSACTIONS WERE MADE THROUGH CHEQUES. ALL THE SHARES RELATED TO THE REPUTED COMPANIES AND WERE QUOTED SHARES IN THE STOCK EXCHANGES AND WERE PURCHASED AND SOLD AT THE PREVALENT QUOTED MARKET RATES, WHICH WAS VERIFIED FROM THE STATEMENT OF THE SLACK EXCHANGES. ON THESE BASIS, THE TRIBUNAL FOUND THAT THE CIT(A) HAD PROCEEDED ON THE BASIS OF SUSPICION THAT THERE MIGHT BE SOME INGENUINITY IN THE TRANSACTIONS. ON THE BASIS OF TH E MATERIALS PRODUCED, THE TRIBUNAL CAME TO A FINDING OF FACT, WHICH DOES NOT SEEM TO BE PERVERSE. WHETHER THE SHARES COULD BE SOLD IMMEDIATELY ON THE DATE OFPURCHASE OR NOT WAS A QUESTION OF BUSINESS EXPEDIENCE. WHETHER THE DECISION WAS' CORRECT OR 'WRONG CANNOT THE QUESTION, WHICH CAN HE A SUBJECT-MATTER OF DECISION IN SUCH A CASE. IN ORDER TO FIND OUT WHETHER THE TRANSACTION IS GENUINE OR IN GENUINE IT IS NEITHER THE EXPEDIENCE NOR CORRECTNESS OF THE DECISION NOR THE BUSINESS EXPERTISE OF THE PERSON TO BE CONSIDERED. IT IS TO BE CONSIDERED ON THE BASIS OF THE MATERIALS THAT THERE WAS NO SUCH TRANSACTION AND THAT THESE SHARE TRANSACTIONS WERE PAPER TRANSACTIONS. THE SUFFERING OF LOSS, COULD NOT BE A FACTOR FOR SUCH PURPOSE.' HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE VIEW TAKEN BY THE TRIBUNAL ALLOWING SHARE LOSS CANNOT BE SAID TO BE ERRONEOUS OR PERVERSE.- CIT VS. EMERALD COMMERCIAL LTD & ANR (2001) 171 CTR (CAL) 193: (2001) 250 ITR 539 (CAN. CIT- VS. DHAWAN INVESTMENT & TRADING CO. LTD (1999) 238 ITR 486 (CAN AND CIT VS. CURRENCY INVESTMENT CO. LTD (2000) 158 CTR (CAL) 361: (2000) 241 ITR 494 (CAL) RELIED ON. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE IMPUGNED LOSS CLAIMED BY ASSESSEE IS GENUINE LOSS I N THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND THERE FORE ELIGIBLE FOR DEDUCTION. ACCORDINGLY, AD IS DIRECTED . THIS GROUND OF ASSESSEE'S APPEAL IS ALLOWED.' 6. IN VIEW OF ABOVE, WE FIND THAT THE CIT-A WAS NOT JUSTIFIED IN CONFIRMING THE IMPUGNED ADDITION/DISALLOWANCE OF LOSS ON ACCOUNT TRANSACTIO NS IN DERIVATIVES TO THE EXTENT OF RS. 5,46,885/-. ACCORDINGLY, THE SAME IS LIABLE TO BE DELETED. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. ITA NO. 2395/KOL/2019 ASSESSMENT YEAR: 2009-2010 SHAGUN BUSINESS SERVICES PVT. LIMITED 8 5. RESPECTFULLY FOLLOWING THE PROPOSITIONS OF LAW L AID DOWN BY THE COORDINATE BENCH OF THE TRIBUNAL, AND IN VIEW O F THE EVIDENCE ON RECORD, I DELETED THIS DISALLOWANCE AND ALLOW THIS APPEAL OF THE ASSESSEE. 4. I ADOPT THE ABOVE EXTRACTED DETAILED REASONINGS MUTATIS MUTANDIS TO HOLD THAT THE IMPUGNED UNEXPLAINED CASH CREDIT ADDI TION IS NOT SUSTAINABLE IN THE FACTS OF THE PRESENT CASE. THE S AME IS DIRECTED TO BE DELETED. THE ASSESSEES OTHER SUBSTANTIVE GROUND CHALLENGING THE VALIDITY OF THE PROCEEDINGS (SUPRA) IS NOT PRESSED FOR DURING T HE COURSE OF HEARING. 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 31, 2 020. SD/- (SATBEER SINGH GODARA) JUD ICIAL MEMBER KOLKATA, THE 31 ST DAY OF JANUARY, 2020 COPIES TO : (1) SHAGUN BUSINESS SERVICES PVT. LIMITED, 13, POLLOCK STREET, KOLKATA-700001 (2) INCOME TAX OFFICER, WARD-5(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-19, KOL KATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.