The assessee had purchased wheat which was stored with “pakka arhatias” godowns and as a result of an insect infestation, the quality of the stored wheat deteriorated and could not be sold at market price, leading to a stock loss of Rs. 75,31,781 in the hands of the assessee. However, the Assessing Officer was of the view that such loss was a bogus transaction and was being shown to avoid payment of capital gains tax amounting to Rs. 78,83,716 on the sale of office space for Rs. 2 crores by the assessee.

On appeal, the Tribunal observed that the assessee had provided in tabular form details of the purchase of wheat, copies of bills and vouchers, etc. showing the amount transmitted through RTGS, rate of purchase, labour charges etc. the Assessing Officer should have summoned the “pakka arhatias” godown owners and cross-verified whether the infestation had taken place in all seven godowns. The Assessing Officer only had a doubt but did not enquire into it. The Commissioner of Income Tax (Appeals) failed to appreciate that delivery taken by the “pakka arhtias” in the capacity of agent of the assessee was to be construed as actual delivery taken by the assessee. Therefore, the Revenue authorities had failed to bring conclusive evidence for falsifying the claim of the assessee. The Assessing Officer was directed to accept the loss of Rs. 75,31,781 disclosed by the assesse. (AY. 2015-16)