COMMISSIONER OF INCOME TAX Vs. B D GOENKA

JUDGEMENT

(1.) THE assessee this case has filed a return of income for the asst. yr. 1972-73 disclosing a total income of Rs. 1, 12, 470. In his return the assessee has disclosed a profit of Rs. 11, 587 on sale of shares. He also claimed a loss of Rs. 3, 51, 550 arising out of the sales of 28, 535 shares. THE ITO found that the shares which were claimed to have been sold to the assessee's father stood in the name of the father even prior to the transactions of sale, that this and other circumstances clearly showed that there was no sale or purchase of shares and that the entire transaction relating to the sale or purchase of shares noted in the assessee's books were bogus in nature. In this view, the ITO refused to take the sum of Rs. 11, 587 as profits arising from the shares and disallowed the claim for set off of loss claimed as arising from the sale of shares.

(2.) AGGRIEVED by the order of the ITO the assessee took the matter to the AAC contending that the shares were held as vestment which represented his capital assets and, therefore, the loss arising from the sale of these assets were to be allowed as capital loss.

(3.) WE are however, of the view that so long as the finding of the Tribunal that the sales of shares are real transactions, stands, the assessee's claim for set off of the loss arising from the sales of shares has to be upheld. The finding of the Tribunal that the sales of shares are real transactions and not bogus as found by the ITO has not been specifically challenged. Further, it is seen that the finding to the Tribunal that the sales of shares are real transactions and not bogus is based on the facts and certain special circumstances referred to by the Tribunal. If we are to go by the finding to the Tribunal that the sales are real transactions and not bogus, then the Tribunal is right in allowing the set off of the loss arising from the sales of shares since the decision of the Tribunal is based on its factual finding that the sales are real transactions and the sales have resulted in loss, then the consequent loss arising out of the sales of shares has to be allowed as be allowed as set off. In this view of the matter, we do not see any justification for directing a reference. The petition is, therefore, dismissed. No costs.