TaxTMI 
TaxTMI 
2024 (11) TMI 427
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....f the case and in law, the Learned Commissioner of Income tax (Appeals) 52, Mumbai ['the Learned CIT(A)') has erred in upholding the initiation of reassessment and issue of notice u/s 148 of the income Tax Act, instead of quashing the same. 1(b). The Learned CIT (A) failed to address specific facts brought to his notice showing that the report of the investigation wing forming the basis for reopening of assessment was contrary to the facts in our case such as: a. Assessment order u/s 143(3) was passed earlier on 22/12/2017 wherein all the details. were available on record and no addition in relation to alleged business loss or alleged commission was made. There is no new tangible material. b. SEBI interim order dated 20.08.2015 referred in the Assessment order was in regards to illiquid stock options only. However our case relates to currency derivatives. Even that SEBI interim order was subsequently vacated. c. The exchange involved in the case of Aryav Securities Pvt Ltd was BSE, however in our case the alleged trading is related to United Stock Exchange. d. In para 6.9 of the Order u/s 250 the Learned CIT(A) state that "The as....
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....ting the same. a. The Learned CIT(A) completely ignored the fact that there was an action u/s 133A in the office premises of our group companies including Abans Securities Pvt Ltd on 03/12/2019 and no evidence relating to any manipulation of these alleged trades or unaccounted cash commission payment, etc were found during the course of such actions. b. The Learned CIT(A) has erroneously relied upon the case of 'Vijay Kumar Kheria vs ACIT', facts of which the case are entirely different from the Appellants case. In case of 'Vijay Kumar Kheria vs ACIT', the assessee himself has agreed that the was receiving commission for providing bogus entries, where in our case fact that no evidence was found related to alleged receipt of commission even during the action u/s 133A. c. The Learned CIT(A) has erroneously relied on the case of 'CIT v. Alag Securities Pvt Ltd', Facts of which are entirely different in as much as in that case evidence of change of commission was found but no such evidence was found related to any alleged payment of commission during the survey action u/s 133A or otherwise in our case. 4. On the facts and in t....
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.... illiquid stock options has resulted in nongenuine profit amounting to INR 2,30,63,250 by depleted trading stock options on the stock exchange and this cannot be part of the regular business activity of the assessee in trading/derivatives in shares/securities commodities/currency: - "The assessee has traded in 10 unique contracts and has undertaken both sell as well as buy trades in each of the contracts. It is relevant to note that the buy quantity and sell quantity for each of the 10 contracts in which trades have been undertaken by assessee is identical. Also, it is to be noted that each of the trades have been squared within the same day and also there is large difference between that the buy rate and sell rate. Further, upon data analysis, it may be noted that the time-gap in buy and sell trade ranges in minutes and seconds only. Also, it is seen that by trading in each of the 10 contracts enumerated in the table above, the assessee has consistently recorded profites for each contract. Also, it is seen that by trading in each of the 10 contracts enumerated in the table above, the assessee has overall profit of Rs. 2,30,63,250/- in the above ....
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....estigation, whether the assessee had entered into any such transaction and has ignored all the evidence placed before the AO in support of all the trade transactions. One very important fact which has been brought on record by the ld. Counsel for the assessee that assessee had done many trades during the year in currency derivatives and commodity derivatives, out of which only couple of trades have been selected by the ld. AO holding it to be nongenuine only because in such trades assessee has incurred loss and under same trade where assessee has shown profit has been accepted. As submitted bythe ld. Counsel, assessee is engaged in screen based electronic trading wherein it is not possible to chose or even know the counter party involved in any trade and the identities of the counter parties are not displayed on the screen at the time of the trading. Unlike in the case of stock market that the SEBI has circuit breakers limits (10%, 15% and 20%), however, no such limits are there in derivative markets and therefore, derivative markets are more volatile than the traditional stock market. Further, assessee had produced all the relevant information in respect of all the trades carried ....
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....ferred that assessee was engaged in booking of loss through dubious devise only for two transactions when all the transaction were done in same manner in currency options have been held to be genuine. Ld. AO should have at least analysed all the transactions and how come only two transactions are fictitious and rest all the other transactions conducted in which assessee had declared profit from the same stock exchange conducted in the same manner are genuine and only two transactions in which assessee had incurred minor loss are non-genuine. This shows that AO has just misinterpreted the Report to apply in assessee's case without independent analyzing the transactions. At least Id. AO should have conducted some enquiry qua these transactions on which assessee had claimed loss instead of blindly relying upon the Project Falcon' report which has nothing to do with trades in USE. Once the transactions are based on screen based electronic trading and the identities of the buyers and sellers are not displayed, then to presume that the transactions have been manipulated are nongenuine cannot be upheld. Thus, prima facie, there is no material that trade transactions in which asses....
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....he grounds challenging the validity of reassessment proceedings under section 147 of the Act. Since we have deleted the addition made on merits, therefore, the legal issues raised before us have been rendered academic and are kept open. 11. In the result, the appeal by the assessee for the assessment year 2015-16 is allowed. ITA No. 3648/Mum./2024 Assessee's Appeal- A.Y. 2018-19 12. In this appeal, the assessee has raised the following grounds: - "1. On the facts and circumstances of the case, the Learned Commissioner of Income tax (Appeals) - 52, Mumbai ['the Learned CIT (A)') erred in upholding the reopening of the Assessment under section 147 of the Income Tax Act 1961 (the Act) instead of quashing the same; 2. On the facts and in the circumstances of the case and in law, the Learned CIT (A) has erred in upholding the initiation of reassessment proceedings under section 148 by passing an order under section 148A (d) instead of quashing the same. a. The Original assessment order dated 15.09.2021 was after the survey action, the report of which formed the basis for reopening. b. The notice u/s 148A (b) did not enclos....
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.... 8. The Learned CIT(A) has erroneously relied upon the case of 'Chhagan Chandrakant Bhujbal vs ITO', facts of which are entirely different from the Appellants case. In case of 'Chhagan Chandrakant Bhujbal vs ITO' assessee opposed the reopening at the very end when show cause notice was issued, the decision of the High Court was mainly based upon this fact. In appellant's case this point was raised in the objection to reasons for reopening. h. The Learned CIT (A) failed to address that additions are made only on alleged non genuine purchase and sales of the appellant are not considered bogus. 5. The Learned CIT(A) failed to consider the specific facts of each alleged nongenuine entities: A) Manmish Traders Pvt Ltd. a. The name of the directors and shareholders mentioned in para 7.3.3 and para 7.3.4 were not the directors or shareholders of the company in AY 2018-19. ITA Nos. 3647 & 3648/Mum/2024 (A.Ys. 2015-16 & 2018-19) 11 b. The Learned CIT (A) has ignored the fact that the actual director of the company Mr. Hardik Gandhi did attend the summon. This fact is not commented upon by investigation wing in their r....
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.... 37,69,79,890 15. During the reassessment proceedings, it was found that M/s Asterpetal Trade and Services Private Limited does not have any sufficient source of funds to support such a huge turnover with a very low percentage of profit. Further, the shareholders of this company holding 50% of its shares are persons of little means and their financial position does not support the acquisition of this company. It was also noticed that all the activities like filing of ITR and even the handling of emails are being done from the premises of Abans Group of companies. Accordingly, this company was found to be not carrying out any genuine business activity. Similar, facts were noted in the case of M/s Manmish Traders Private Limited. Since the assessee was found to be one of the beneficiaries, which has received non-genuine purchase entries in its books of accounts during the year to the extent of INR 37,69,79,890 and the assessee failed to prove the genuineness of the purchase transaction with the above-mentioned entities, the AO vide order dated 09/02/2023 passed under section 147 of the Act made a disallowance @0.25% of the total purchase amount, which works out to INR 9,42,450 (....
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....nd raised by the assessee on this issue and upheld the addition made by the AO. Being aggrieved, the assessee is in appeal before us. 17. We have considered the submissions of both sides and perused the material available on record. We find that the coordinate bench of the Tribunal in a batch of cases pertaining to the assessee's sister concern in Abans Commodities (I) Pvt. Ltd. (supra), vide order dated 30/09/2024, while deciding a similar issue deleted the addition on account of nongenuine purchases. The relevant findings of the coordinate bench are reproduced as follows: - "24. We have heard the rival submissions and also perused the materials placed on record. It is seen that the Id. AO had treated the purchases from 6 entities as nongenuine and has applied profit rate of commission on such purchases @0.25%. He has accepted that these purchases are duly recorded in the books of accounts, and has not disturbed the purchases. However, according to him as per market practice there is commission rate of obtaining such entry at @ 0.25% which needs to be added. First of all in so far as the transactions of purchases from these parties are concerned, the same had not been ....
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....ere different. In so far as the shareholders were not men of means, already it has been brought on record that they were filing their regular income tax returns and have shown investment of share capital from their own sources. In any case, this cannot be the ground for treating the transaction as non-genuine. 25.1 Now, coming to the summons issued to the Directors, it has been stated that the summons were issued during the peak Covid 19 lockdown period and directors had actually responded their inability to attend due to lockdown which has been ignored. If the Id. AO has simply relying upon the comments of the investigation wing and he did not ask the assessee during the course of assessment proceedings to file their confirmations and he could have independently verified once the assessee had stated that all the Directors were available at the premises and ld. AO can ask for their attendance which ld. AO had failed to do so. In so far as books of accounts found in the audit report from the premises, the assessee's contention was that neither, the Investigation Wing nor the ld. AO had provided the evidence in support of such allegation nor any details of content of dat....