TaxTMI 
TaxTMI 
2025 (12) TMI 1329
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....ual finding of the AO that the assessee has set off loss against income from PGBP incurred by him on trading in commodities to the tune of Rs. 63,54,568/-." 3. The relevant facts giving rise to this appeal are that the assessee, a jeweler, is the proprietor of Aggarwal Jewellers. He filed his Income Tax Return ('ITR') on 29.03.2018 declaring Nil income (House Property income of Rs. 88,550/-, income of Rs. 9,57,895/- from jewellery business, loss of Rs. (-) 63,54,568/- from Commodity Business and income of Rs. 533/- under the head income from other sources). The case was selected for scrutiny under CASS for reasons that there were large cash deposits during demonetization period and there was abnormal increase in sales with lesser profitability as compared to preceding year. The Assessing officer ('AO') completed the assessment by making two additions, (i) Unexplained cash deposits of Rs. 1,10,78,500/- under section 69A of the Income Tax Act, 1961 ('Act') and (ii) Addition of Rs. 63,54,568/- under section 69C of the Act. Further, the AO disallowed the setting off of loss of Rs. 63,54,568/- derived from commodity trading. Aggrieved, the assessee filed appeal and got relief. Hence,....
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....siness loss. 6. We have heard both parties at length and have perused the material available on the record. We find merit in the arguments of the Ld. Counsel. The Ld. CIT(A)'s finding while deleting the addition of Rs. 1,10,78,500/- is worth reproducing herein under as the same is well reasoned finding: "6.2 I have carefully gone through the assessment order, grounds of appeal, facts of the case, written submission uploaded, remand report filed by the AO and rejoinder uploaded by the appellant. AO has pointed out that there are hardly any cash withdrawals found on perusal of the bank statement submitted by the appellant and doubted the whole of the cash deposits of Rs. 1,10,78,500/-. Whereas, in the last para, he has alleged the excess cash deposit of Rs. 88,80,829/- only. On the contrary, appellant claimed that cash deposited was out of cash withdrawals and cash available with him. The Appellant also submitted that finding of the AO is incorrect and without properly appreciating the material available on record. 6.3 In the background of the findings of the Assessing Officer and submissions of the Appellant, it is apposite to find out correct position of cash a....
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....t cash deposits into bank out of previous withdrawals cannot be doubted unless the AO has any evidence to prove that the cash so withdrawn previously has been used for other purposes by the Assessee. On this issue, appellant had relied on the decision of ITAT, Hyderabad in the case of ITO Vs Shri M. Prabhakar, [Appeal no. 1727/Hyd/2014] as well as Umacharan Shaw & Bros vs CIT (37 ITR 271) (SC), CIT Vs Anupam Kapoor (166 Taxman l78)(P&H), Dhakeswari Cotton Mills Ltd Vs. CIT (26 ITR 775) (SC), Delhi Bench of ITAT in Sanjeev Kapoor Case: ITA 2019/Del/2010 and Asst. CIT VsBaldev Raj Charla & Others (121 TTJ, 0366). 6.5 In response to finding of the AO in Para 1 of point no. 3 of the assessment order that "The case of the assessee selected for complete scrutiny for the reason large cash deposit during demonetization period and abnormal increase in sales with decrease in profitability as compared to preceding previous year", it has been submitted by the appellant that in comparison to immediately preceding year, sales and profit have increased 74% and 154% respectively. The Appellant has also attached comparative chart of the financial results for FY 2015-16 along with ITRs. AO ....
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....uly disclosed in the books of account and or statement of affairs of the appellant assessee unless proved otherwise. Before us, the Revenue has not brought any material on the record to demonstrate that any transaction appearing in any of the bank accounts (owned either in individual capacity or in proprietary concern) of the appellant assessee is unexplained. Thus, we do not find any infirmity, on this issue, in the order of the Ld. CIT(A). Therefore, the 1st ground raised by the Revenue fails accordingly. 8. The last issue is with respect to the taxability of Rs. 63,54,568/- under section 69C of the Act. We find merit in the arguments of the Ld. Counsel. The Ld. CIT(A)'s finding while deleting the addition of Rs. 63,54,568/- is worth reproducing herein under as the same is well reasoned finding: "6.9 I have carefully considered the facts of the case, finding of the AO in the assessment order as well as in the remand report, submissions made by the Appellant along with additional evidences furnished during appellate proceedings and through rejoinder. Appellant submitted that he is also been in the business of commodity trading through two brokers namely M/s Sampoorna C....
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....ge Board of India (SEBI) in the case of M/s Fairwealth and Multi Commodity Exchange of India Limited (MCX), in the case of M/s Sumpoorna. 6.14 Audited Financial statement of Sumpoorna Comtrade Pvt. Ltd., (available at page no. 11 - 14 of the rejoinder) through which the Appellant did major transactions and incurred a loss to the tune of Rs. 64,11,436/- would show that the company had income from operations of over Rs. 2.1 crores and positive net worth. Similarly, audited financial statements of M/s Fairwealth Commodity Broking Pvt. Ltd. for the same year (available at page no. 229 - 248 of the rejoinder) would show that the company had an income from operations to the tune of Rs. 4.24 crores with a positive net worth. 6.15 Financial results of both the companies for the relevant year i.e. FY 2016-17 pertains to the assessment year under consideration, would show that both the companies have earned reasonably good income from operations i.e. from broking business. On perusal of Auditors Reports, no adverse comment was seen in the reports. 6.16 It is seen from the order dated 24-08-2021 of Multi Commodity Exchange of India Limited (MCX) (available at page n....
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....culative of Rs. 63,54,568/- as mentioned in the assessment order, it is noticed that payments made to the commodity brokers are through the bank accounts of the appellant which is duly reflected in the cash flow and bank statements furnished by the appellant. The payments made are tallied with the corresponding receipts appearing in the copy of accounts of the brokers. Hence, finding of the AO that payment made to brokers are out of undisclosed sources is incorrect. Through the rejoinder, appellant furnished various documents mentioned above in this order, would establish the identity of both the broking companies. The documents furnished by the appellant would also show that both the broking companies were in business operation during the year under consideration. The regulators i.e. SEBI and MCX cancelled license/expelled the broking companies for the irregularities found during subsequent financial years. All these information about these companies are available on public domain, however, AO had given his finding merely on the basis of non-service of notices u/s 133(6) during remand proceedings without appreciating the whole facts and circumstances of the case. Hence, finding of....