(Per : Honourable Mr.Justice Akil Kureshi)
1. Revenue is in appeal against the judgment of Income Tax Appellate Tribunal dated 6.10.2016 raising following question :
"Whether the Appellate Tribunal has erred in law and/or on facts in deleting the addition of Rs. 4,99,44,800/on account of disallowance of loss in trading of shares of Fast Track Ltd., Indocare Pharma Ltd., Sea Gul Le ltd. and Wellworth Overseas Ltd?"
2. Issue pertains to disallowance of loss of Rs. 4.99 crores (rounded off) claimed by the assessee which the assessee claimed to have suffered in the process of trading in shares of four specified companies. The Assessing Officer in the order of assessment held that the transactions were sham transactions. In his opinion, this was so because the transactions were carried out offmarket; the assessee was not able to prove the genuineness thereof; the deals were collusive in nature and such other similar grounds. The CIT(Appeals) however, reversed the order of Assessing Officer making the following observations :
"9.4 In the light of the above discussion, I find that the transactions in question appear to be real transactions and not merely book/paper entries as observed by the A0. The deliveries of shares have been routed through the demat accounts. The payments have been made and received through banking channels. Confirmations of the parties with whom the transactions have been entered into have been furnished and have not been disputed. Market quotations in support of price of shares on the date of purchase and sale are furnished which establishes that the transactions are at market rates. Thus, I agree with the argument of the A.R. that simply because some of the transactions are off market ones; they do not lead to the conclusion that the transactions are sham or fake. It is submitted that off market transactions are valid transactions though not through stock exchange but they are duly routed through demat accounts and banking channels. It is seen that the AO in the assessment order has observed that "the onus lies on the assessee to establish the correctness of those bills and that this can be proved either by furnishing the evidence indicating that the transactions have been routed through the stock exchange and/or the exchange of shares/monies has taken place on the dates of transactions". From the foregoing discussion, it is clear that the appellant has already proved that the transactions in case of all 4 scrips are routed through stock exchange and the exchange of monies/shares has also taken place through banking channels and demat accounts. On the given facts of the case and considering the decisions relied upon by the appellant, I am convinced that the transactions in question and the loss incurred by the appellant in trading of shares is genuine and incurred in the normal course of his business. Accordingly, the addition of Rs. 4,99,44,800/on account of disallowance of loss in share trading of 4 companies is hereby deleted."
3. The Tribunal in the impugned judgment confirmed the view of CIT(Appeals) observing as under :
"9. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that all the impugned transactions were routed through Demat accounts. It is also an undisputed fact that the transactions have been done at market rates. Simply because some of the transactions are off market transactions, it cannot be said that such transactions are sham or fake even the off market transactions have been done at market rates. The Assessing Officer has failed to bring any cogent material evidence on record which could suggest that the transactions are sham or bogus. It is pertinent to mention here that wherever there was a profit in similar off market transactions, the AO has accepted the same. Therefore, we do not find any merit in disbelieving the losses incurred by the assessee in the ordinary course of his business. Considering the totality of the facts, we do not find any reason to interfere with the findings of the ld CIT(A). Appeal filed by the Revenue is accordingly dismissed."
4. It can thus be seen that CIT(Appeals) found that the transactions were through Demat accounts. They were confirmed by the opposite parties and payments were made through banking channel. The entire issue therefore, revolves around appreciation of evidence on record. CIT(Appeals) and Tribunal having concurrently come to factual findings, no question of law arises.
5. Counsel for the Revenue however, referred to the appeal memo and contended that in past SEBI had penalised the assessee for indulging into such offmarket transactions. Firstly, there is no reference to any such past deeds of the assessee in the order of assessment. Secondly, in any case, even as per the Revenue, the referred instance is relatable to earlier period.
6. Tax Appeal is dismissed.