Principal Commissioner of Income Tax Central- 2, Kolkata versus M/s. Zulu Merchandise Private Limited

Parties Involved

Facts Summary

The assessee, M/s. Zulu Merchandise Private Limited, a non-banking financial company (NBFC) engaged in money lending and trading of shares and securities, filed its return of income for the assessment year 2014-2015 disclosing a total income of Rs. 1,34,616/-. The case was selected for scrutiny, and the assessing officer disallowed a loss of Rs. 51,33,870/- incurred by the assessee on account of trading in shares of Radford Global Limited and Shreenath Commercial, considering the transactions to be sham and fabricated. The assessing officer relied on an investigation report indicating circular trading and manipulation of share prices. The assessee appealed, contending that the transactions were genuine and conducted through recognized stock exchanges. The appellate authority and the tribunal had differing views, leading to the current appeal by the revenue.…

Legal Issues

• 1. Whether the Income Tax Appellate Tribunal was justified in deleting the disallowance of Rs. 51,33,870/- on account of share trading without considering the genuineness of the transaction.
• 2. Whether the Tribunal was justified in relying on the decision in Namokar Builders Private Limited without examining the facts of the current case.
• 3. Whether there was a violation of principles of natural justice by not providing the investigation report to the assessee.
• 4. Whether the revenue can maintain the appeal despite the tax effect being below the prescribed limit.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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