The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that Transaction done through Bombay stock exchange on Securities Transaction Tax ( STT ) cannot be considered as sham or bogus transaction The fact of the case was  the assessee  filing its income return electronically on October 17, 2016, reporting a loss of Rs. 1,42,24,334/-. The return was flagged for scrutiny assessment through the Computer Assisted Scrutiny System ( CASS ), leading to the issuance and delivery of statutory notices to the taxpayer.

The counsel for the assessee Rakesh Gupta strongly refuted the Assessing Officer’s accusation of the taxpayer having engaged in fictitious transactions to report losses. The counsel argued that the allegation lacked merit, emphasizing that the taxpayer had declared a loss of Rs. 1,42,24,334/- upfront. Even after a portion of this loss, amounting to Rs. 1,41, 29,989/-, was disallowed, the assessee still incurred a loss of Rs. 94,345/-. Therefore, the counsel asserted that the assessee had gained no advantage from the Assessing Officer’s claim.

The counsel contended that the transactions in question were conducted through the Bombay Stock Exchange, dismissing any suggestion of their being bogus. The two member bench of the tribunal comprising Astha Chandra ( Judicial member ) and N.K.Billaya ( Accountant member ) observed that the  revenue’s attempt to provide compelling evidence to prove that the taxpayer benefited from declaring the alleged fraudulent loss fell significantly short.

On the contrary, the available evidence indicated that the transaction had been conducted through the Bombay Stock Exchange, with Securities Transaction Tax ( STT ) duly paid, indicating its legitimacy and dispelling any notion of it being a sham or bogus transaction. Taking into account all the facts presented, we instructed the Assessing Officer to acknowledge the loss of Rs. 1,41,29,989/-. In the result the appeal of the assessee was allowed.