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TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 1267
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....f the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 5,60,54,528/- made on account of unexplained increase in capital holding that the capital accumulation is fully explained on the basis of capital in the ITR of A.Y 2011-12 and accumulated income in the ROI for A.Y 2012-13 to A.Y 2014-15 ignoring that assessee has shown NIL capital balance in ITR filed for A.Y 2014-15? 3) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 80,70,224/- made on account of investments in F&O and equities from unexplained sources holding that the same was found explained from the withdrawal from Firms and bank transfers along with profits from F&O STCG, LTCG and other profits, ignoring that during the assessment proceedings assessee could not explain the source of Rs. 80,70,244/- over and above ethe withdrawals from firms and bank transfers? 4) It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent." 3. Now we shall take grounds of Revenue's appeal in seriatim. Ground No.1 raised by the Revenue relates to del....
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....M/s Nirmal Bang and you have shown total profit of Rs. 77,57,945/- from Futures and Options trading. On perusal of the statements showing transaction undertaken by you during F.Y 2014-15 in the trading of Future & Options. It is seen that there is huge difference in the profit shown by you in ROI. The details of total investments, sales and profit thereon earned by you in different derivatives from above four parties are as under: Sr. No. Name of the parties Total investment (amount in Rs) Total sales receipt (amount in Rs) Net profit (Amount in Rs. ) 1 Jainam Share Consultant Pvt. Ltd. 35,31,533/- 35,48,991/- (-) 38,86,586/- 2 Nirmal Bang Securities Pvt. Ltd. 5,91,101/- 7,59,859/- (-)1,68,758/- 3 J.M. Financial Services Pvt. Ltd. 2,62,74,330/- 2,07,77,317/- 54,97,013/- 4 Motial Oswal Securities Ltd. 5,7216,719/- 1,11,85,781/- 4,60,30,938/- 5.2 From the above details, it is very clear that you have earned total profit/gain from trading of future and options of Rs. 4,74,72,607/-, whereas you have shown only profit of Rs. 77,57,945/- in your return of income. Thus, there is a difference of Rs. 3,97,14,662/- of the profit earn by you in trading of future and....
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....ally baseless and uncalled for. Therefore, assessing officer had called for information u/s 133(6) of the Act from the relevant share brokers and had obtained the gain loss statement in the case of the assessee. The gain / loss statement so ascertained was differentiated separately in an excel sheet and on the basis of the said statement the profit derived by the assessee had been ascertained. The said excel sheet reflecting the difference pertaining to Motilal Oswal is given hereunder: Sr.No. (+) (-) Sr.No. (+) (-) Sr.No. (+) (-) 1 (+) (-) 31 6641.5 3040 61 45127.5 34170 2 4625 66330 32 18428.75 325365 62 5216.25 19520 3 1250 66330 33 76640 527386.3 63 79787.5 23110 4 4720 82080 34 36120 201130 64 1906903 1350 5 47960 239690 35 8100 1495 65 92750 13240 6 35520 49940 36 81520 43225 66 1031450 10240 7 3353760 823680 37 3900 6487 67 19020 70040 8 99915 234080 38 66500 90880 68 107635 11280 9 158835 47850 39 43820 15707 69 19880 104240 10 4530 24235 40 8205 29910 70 57560 108720 11 6365 440492 41 14670 2713,75 71 1604220 1400 12 1229040 130890 42 3540 288642 72 340 3603....
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....0 30320 90155 140 19600 - 170 17040 - 200 3135 111 20200 53345 141 47130 - 171 266146 - 201 35 112 14630 74880 142 36390 - 172 18431 - 4585735 113 1008165 43960 143 38110 - 173 3877605 - 12980 114 37650 3760 144 94955 - 174 4900 - 57216719 11236366 115 34220 31260 145 32590 - 175 600 - 116 1040 11979 146 5350 - 176 10435 - 117 8617.5 423370 147 6060 - 177 2056 - 118 9990 86640 148 21512 - 178 26580 - 119 2503695 2410 149 40135 - 179 128400 - 120 35520 277260 150 1020 - 180 31120 - 8. Thus as per the above statement the Assessing Officer noted that total gains derived by the assessee from Motilal Oswal is Rs. 5,72,16,719/- and loss Rs. 1,12,36,366/- resulting into net gain of Rs. 4,59,80,353/-. The above chart has been prepared date-wise i.e. from 1.4.14 to 31.3.2015. 9. The excel sheet reflecting the difference pertaining to Nirmal Bang is given hereunder: Sr.No. (+) (-) 1 3....
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....934268 124 3211 - 95 4711 8176 125 77187 - 96 420844 10361 126 79238 - 97 12209 63776 127 26222 - 98 7412 49670 128 1340 - 99 65937 99987 129 13602 - 100 27857 19274 130 16924 - 101 15004 52079 131 4380 - 102 1192808 21348 132 3281 - 103 650621 2684 133 55797 - 104 47048 9231 Total 26274217 20663317 105 16634 26185 106 2743 7188 107 320508 4263 108 364840 10819 109 48992 3457 110 7789 29522 111 4846 169160 112 8153 43680 113 38539 416758 114 10291 7148 115 13518 98785 116 73227 103347 117 2094 - 118 10624 - 119 119021 - 120 28143 - 11. Thus, as per the above, the net gains derived by the assessee was Rs. 2,62,74,217/- and net loss at Rs. 2,06,63,317/- resulting into net gain of Rs. 56,10,900/- ....
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....hat the total profit derived from trading in Futures and Options comes to Rs. 4,75,35,910/-. The assessee has shown total profit amounting to Rs. 77,57,945/- but the actual profit is Rs. 4,75,35,910/-. Hence, the difference comes to Rs. 3,97,77,965/- (4,75,35,910 - 77,57,945), which was added to the total income of the assessee by the assessing officer. 16. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Learned CIT(A) who has partly deleted the addition made by the Assessing Officer. The ld CIT(A) observed that the Assessing Officer's working of net gain from the brokers gain/loss statement is misleading figure and not the actual profits. The assessing officer was given opportunity to consider the reconciliation tables and submit remand on the same. However, in the remand report dated 29.12.2018, the assessing officer has ignored the issue of reconciled statement and did not offer any comments. The main reason for discrepancies was analyzed by the ld CIT(A), and after proper analysis the addition of Rs. 3,97,77,965/- was deleted and only addition of Rs. 60,088/- pertaining to incorrect loss computation by the assessee was ....
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....next settlement cycle. This led to adding up of all such rollover Future and Option transaction, and therefore assessing officer computed incorrect net gain. This way, ld Counsel defended the order of ld CIT(A). 19. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. In order to prove the genuineness of the transaction, the ld Counsel, submitted following documents and evidences, viz: (i) Computation of income (Pb pages 1-5) (ii) Balance sheet and P&L account(Pb pages 6-7); (ii) assessee's reply dated 12.10.2017 to Assessing Officer(Pb pages 8-9); (iv) assessee's reply dated 11.09.2017 to Assessing Officer with annexures pages 11 to 27; (v) contra ledger account of assessee from 4 parties( Pb pages 28 to 81) (vi) ledger account in assessee's books of 4 parties (Pb from pages 82 to 103); (vii) Assessee's reply to assessing officer dated 13.11.2017 (Pb pages 104 to 105) (viii) ledger of IDBI savings (Pb pages 106-111); (ix) Capital account in magic fashions (Pb pages 112 to 113), (x) Capital account in N.M. Fashions (Pb page No.114); (xi) Return of income of assessee AY. 2014-15 (Pb ....
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....6,10,900 Jainam Securities 41,07,063 79,93,649 (38,86,586) Net income 4,75,35,910 Based on the above working of gain/loss from four brokers, the assessing officer concluded that net income from Future and Option should have been shown by assessee at Rs. 4,75,35,910/- as against Rs. 77,57,945/- shown by the assessee in the return of income. We note that Assessing Officer considered the reply of the assessee during assessment proceedings, however held in para 5.4 (page 6 of assessment order) that above net income was worked out from the gain/loss statement called from brokers u/s 133(6) of the Act. The Assessing Officer reproduced excel sheet working of net gain/loss in the assessment order and did not accept the assessee's objection to the figures ascertained. Thus, addition of Rs. 3,97,77,965 (Rs. 4,75,35,910 -Rs. 77,57,945) was made to the total income of the assessee. 21. In the appellate proceedings, the assessee explained the reason for working of net income of Rs. 3,97,77,965/- by the Assessing Officer. The assessee has shown from the details of the same gain/loss statement analyzed by the Assessing Officer that in the case of Jainam Share Consultan....
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....e F&O transactions which has not been settled and caried over to the next settlement cycle. This led to adding up of all such rollover F&O transaction giving incorrect net gain working by the Assessing Officer. 23. Considering the above reconciliation, the ld CIT(A) noted that Assessing Officer's working of net gain from the brokers gain/loss statement is misleading figure and not the actual profits. The Assessing Officer was given opportunity to consider the reconciliation tables and submit remand on the same. However, in the remand report dated. 29.12.2018, the Assessing Officer has ignored the issue of reconciled statement and did not offer any comments. The main reason for discrepancies was analysed by the ld CIT(A) and it was noted by ld CIT(A) that in the working profits from Motilal Oswal Sec. Ltd., all the transactional value of F & O rolled over was misread as profits by the Assessing Officer. Once this column of rolled over F & O transaction are considered properly, the assessee's profit working was found to be correct. Similarly, in the case of Jainam Share, the share trading and commodity trading transactions were added with F & O transactions leading to incorrect ....
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....efore, Revenue is in appeal before us. 27. Learned DR for the Revenue vehemently argued that ld CIT(A) was erred in holding that the capital accumulation is fully explained on the basis of capital in the Income Tax Return of assessment year (A.Y.) 2011-12 and accumulated income in the return of income (ROI) for A.Y. 2012-13 to A.Y. 2014-15 ignoring that assessee has shown NIL capital balance in ITR filed for A.Y. 2014-15. The DR further stated that assessee himself has contended that in the return for the A.Y. 2014-15, assessee had not filed the figures of balance sheet, hence the return of income for the said year reflected Nil capital. In case the assessee was having capital balance during the said year, it was mandatory for the assessee to reflect the actual figures in his return of income. Failure to furnish the same is a mistake on his own part, hence by contending now without any evidence that assessee had capital balance during the previous year would not suffice. Therefore, ld DR contended that addition made by the Assessing Officer should be sustained. 28. On the other hand, Shri Mehul K.Patel, ld Counsel for the assessee, pleaded that the capital balance of Rs. 5,60,88,....
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....in the return of income for assessment years 2012-13, 2013- 14, 2014-15 and current assessment year. In the remand report on this issue, the Assessing Officer has not given any adverse comments, therefore ld CIT(A) held that the addition of Rs. 5,60,88,803/- is not sustainable in the eye of law and deleted the addition. We have gone through the above findings of ld CIT(A) and noted that conclusions arrived at by the CIT(A) are correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss ground No.2 raised by the Revenue. 30. Coming to the ground No.3 raised by the Revenue, which relates to deleting the addition of Rs. 80,70,224/- made on account of investments in Future &Option and equities. 31. Learned DR for the Revenue submitted that investments in Future &Option were made by the assessee from unexplained sources. Therefore, ld CIT(A) erred in deleting the addition holding that the same was found explained from the withdrawal from Firms and bank transfers along with profits from F&O, STCG, LTCG and other profits, ignoring the fact that during the assessment proceedings, assessee could not explain the source of Rs. 80,70,244/- over and ab....