TaxTMI 
TaxTMI 
2023 (1) TMI 1119
X X X X Extracts X X X X
X X X X Extracts X X X X
....hallenged upto ITAT by the assessee and, as noticed earlier, the Tribunal restored all the issues to the file of learned CIT(A). The assessee was not satisfied with the orders passed by Learned CIT(A) in the second round also and hence, the present appeals have been filed by the assessee before the Tribunal. 4. We shall 1st take up appeal filed by the assessee for assessment year 1992-93. At the time of hearing, the learned AR did not press ground numbers 1,2,3,5 & 10. These grounds are dismissed as not pressed. 5. Ground No. 4 relates to the addition of Rs. 35,000/- made on account of unexplained cash found at the residence of the assessee at the time of search. The facts are that the search team found physical cash of Rs. 99,900/- at the premises of the assessee at the time of search. The assessee explained in the statement recorded under section 132 (4) of the Act that, out of the above said cash balance, a sum of Rs. 50,000/- represented savings of various family members. Further, the assessee offered a sum of Rs. 45,000/- as his income in the return filed by him out of the above said cash. The search team had also recorded a statement from the brother of the assessee named S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plained investment. The facts relating to this issue are stated in brief. In connection with the search proceedings of the assessee, the revenue carried out Survey operations u/s 133A of the Act at the premises of the employer of the assessee named Mr Kishore Janani, who was a stockbroker. During the course of survey, certain share certificates registered in the name of the assessee were found. The value of those shares was Rs. 86,300/-. Hence the assessee was asked to explain the sources for making the above said investments. It was submitted that these share certificates do not belong to the assessee and they actually belonged to the customers of the Share broker. It was explained that, as per practice followed by the broker's office, the physical share certificates purchased by the jobbers would be registered in the name of employees till the record date. In effect, it was explained that the assessee is holding the share certificates on behalf of the jobbers/sub-brokers (customers of employers). The assessing officer did not accept above said explanations of the assessee. Accordingly, he took the view that shares belong to the assessee only and accordingly assessed the amount of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he was holding them on behalf of others. Hence we are of the view that the above said explanations, in the facts and circumstances of the case, may be accepted. Further, when an asset is not belonging to the assessee, the question of assessing the same u/s 69 of the Act does not arise, as held in the case of Ushakant Patel (supra). Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition of Rs.86,300/- relating to unexplained investment in shares. 11. Ground No.8 relates to the addition of Rs.3,25,000/- made u/s 69A of the Act relating to Bank deposits. The AO noticed that the family members of the assessee have given loans to Shri Harshad Mehta. It was stated that Shri Harshad Mehta had given cash to the family members and the same was used to given loans to him by way of cheque. The AO noticed that the said loans have been returned back by Shri Harshad Mehta to the family members. However, they have not withdrawn any cash from bank accounts for repaying corresponding cash to Shri Harshad Mehta. When questioned about the same, the assessee replied that there was no evidence to show that the family members have returned back ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../- each were out of her past savings and does not represent cash belonging to the appellant. The appellant also submits that the Bank a/c wherein cash was deposited, was in the name of Mrs. Heena A Vyas jointly with Mrs Deepika G Vyas (brother's wife) (Page 92 of PB) and therefore, the said cash deposit cannot be treated as appellant's income. The appellant therefore prays that the said addition of Rs.10,000/- is incorrect and unjustified." We notice that the AO has made this addition on the presumption that the assessee would have made the impugned deposits of Rs.10,000/-. The AO has disregarded the submission of Smt Heena A Vyas that she has made this deposit out of her past savings. Further, it is a joint bank account and it may not be possible to presume that the assessee alone would have funded. Hence, we are of the view that the AO has made this addition only on presumption and hence the same cannot be sustained. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this addition of Rs.10,000/-. 16. Ground No.10 relates to the addition of brokerage income of Rs.37,000/-. In the Statement taken u/s 132(4) of the Act, the assessee h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that, out of the above said sale, the assessee has sold 2900 shares by way of hedging transactions. The hedging contract was closed by purchasing 1700 shares in March, 1992 and 1200 shares in April, 1992. The assessee claimed that the closing of hedging transaction by purchasing shares in March, 1992 has resulted in a loss of Rs.20,17,775/- and the same was claimed in AY 1992-93. The hedging transaction closed in April, 1992 resulted in a loss of Rs.7,35,750/- and the same was claimed in AY 1993-94. 19. The AO did not accept the claim of hedging transactions. He observed that the assessee has sold the shares out of the stock available with him and accordingly computed capital gain. He rejected the claim of hedging stating that the shares of MLIL were not allowed for forward purchase or sale and hence the transactions undertaken by the assessee is in violation of bye laws of Stock exchange. The assessee had placed reliance on the Circular No.23D(XXXX-4) dated 12.09.1960 issued by CBR. However, the AO held that the said circular will not apply to the facts of the present case. 20. The Ld CIT(A), however, accepted the transactions as hedging/forward transactions and the loss of Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ock Exchange. He invited our attention to clause 45 of the bye laws, as per which the securities (shares) are classified into following two categories:- (i) Cleared Securities, i.e., securities admitted to dealing on the Exchange and placed by the Governing Board on the Cleared Securities List; and (ii) Non-cleared Securities, i.e., securities other than Cleared Securities. He submitted that clause 80 of the Bye laws stated that all bargains (contracts) in securities other than for the Clearing shall be settled outside the Clearing House by delivery and payment between the contracting parties in accordance with the provisions in that behalf contained in the relative Regulation. Accordingly, he submitted that the transactions entered by the assessee are in accordance with the regulations prescribed under the Bye laws of the Stock Exchange and hence they cannot be considered as illegal. In the alternative, he submitted that even if the transactions are considered to be in violation of the Stock Exchange bye laws, yet such violation cannot result in the transaction to be illegal. He further submitted that the carry forward of the transactions were permitted during the relevant po....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the dividend relates to the shares belonging to the broker Shri Kishor Janani, whose shares were registered in the name of the assessee, when the shares remained undelivered to the jobbers for want of payment or for any other reason. The AO did not accept the same. He took the view that the average dividend rate would be 10% and accordingly, the par value of shares was arrived by the AO at Rs.3,46,000/-. The AO further assumed that the average market value of shares would be twice the par value. Accordingly, the AO arrived at the value of investments at Rs.6,92,000/- and assessed the same in the hands of the assessee. The AO also assessed dividend income of Rs.34,631/-. 26. The Ld CIT(A), however, gave set off of amount of investments of Rs.86,300/- found in the name of the assessee earlier and accordingly confirmed the addition to the extent of Rs.6,05,000/-. The Ld CIT(A) further noticed that the assessee has received dividend income on certain shares in the succeeding year. The AO determined the value of investments pertaining to those dividends at Rs.89,140/- and accordingly enhanced the addition relating to unexplained investments. The Ld CIT(A) confirmed the addition of....