Exemption u/s. 10(38) disallowed as sale of share was an affair to convert unaccounted money: ITAT Ahmedabad

 

Facts:

1. The Assessing Officer observed during reassessment proceedings that the assessee was involved in transactions with Chandni Textiles Engineering Industries Ltd., which was a dummy company resulting in a declared loss of Rs.1,99,01,199/-. The trading in these shares was found to be managed/manipulated by one Shri Shirish C Shah (SCS), rendering them non-genuine.

2. The assessee contended that all transactions were through banking channels, reflected in Demat accounts, and conducted at prevailing market rates.

3. AO held that the trades were not genuine business transactions, but a part of accommodation entries, thus the loss of Rs.1,52,20,891/- on Chandni shares was disallowed and added to the total income.

ITAT Ahmedabad held as below:

1. The detailed modus operandi unearthed by the tax authorities clearly reveal that SCS has been engaged in systematically providing bogus accommodation entries to various clients, through a systematic operation, involving various persons.

2. The assessee, being in this line of business of stock trading (professional stock broker), has systematically incurred losses on sale of three companies, which have no financial standing to set off profits on sale of shares of the entities.

3. He has not furnished any reason as to why under what circumstances the assessee deliberately sold shares of these companies and incurred losses on the stock exchange.

4. We observe that the assessee, has systematically incurred losses on sale of three companies, which have no financial standing to set off profits on sale of shares of the entities.

5. In the result, the appeal of the assessee is dismissed for both the year under consideration.

The copy of the order is as under:

Shailesh S Jhaveri Ahmedabad vs The Dy Cit Cent Circle