TaxTMI 
TaxTMI 
2012 (4) TMI 851
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....a 2 page 2 are as under :- "2. Brief facts of the case are that the assessee Shri Vinod Singhvi is engaged in a business of brokerage & commission in the name of M/s Vinod & Company. He also derives income from property in the name of M/s Siddrath. M/s Vinod and Company is a member of commodity exchanges MCX and NCDEX. It came to the notice of the department that some of the brokers are indulging in manipulation of the commodities of future market by way of client code modification and by trading in clients name in multiple commodities. In this connection search was conducted on M/s Vinod and Company on 25/03/2008. Search operations were also carried out at the residential premises of assessee group and simultaneously survey operations were also carried out at various business premises of the group. The assessee filed the return of income on 31-10-2006 declaring income of Rs. 96,72,421/- and subsequently in response to notice u/s 153A declaring income of Rs. 99,80,150/-. The assessing officer computed the total income at Rs. 2,31,66,885/- by passing order u/s 144 r.w.s 153A by making addition under the following heads, which are challenged before me in the g....
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....e course of search statement of the assessee was recorded in which the assessee admitted that six client codes belong to him. The assessee further admitted that in about 30 accounts client code modification were made for shifting profit or loss. After considering the statement recorded at the time of search, the assessee computed income earned from trading through dummy client codes and declared the additional income of Rs. 3,07,729/-. 6.1.1 The AR further submitted that the A.O. provided information available with him to the assessee for the first time on 08/12/2009 and called explanation on 11/12/2009. The information provided by the AO was not only incomplete but also voluminous and a very short time i.e. of effective 2 days was provided to submit explanation. The assessee vide his letter dated 11/12/2009 submitted all the required information to the AO. The AR further submitted that before the AO issue was discussed in detail and factual incorrectness / inaccuracies in the data provided was pointed out. It was further pointed out to AO that since he had not provided complete data and details as such explanations on some of the issues which required deeper scrutiny....
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....r of computing income from dummy client codes. He treated MTM profit / loss of the codes contained in the CD for which confirmation of accounts were not filed as belonging to the assessee. In respect of the codes which were treated as belonging to the assessee (for the reason of non-filing of confirmation of accounts) and which were not declared by the assessee in his return of income, the A.O. made an addition of MTM profit after allowing set-off of brokerage, service tax and other charges which are part of normal business income. These codes are listed in Annexure 'A' to the impugned order. The AR further argued that the way in which the AO made arbitrary additions are against all the canons of justice; it was submitted by the AR that for determining income in respect of client codes which were admitted by the assessee as belonging to him and in respect of which the assessee had himself declared income in his return of income, the AO compared adjusted MTM income with the income declared by the assessee in his return of income and where the adjusted MTM income was more than the income declared in the return, the A.O. made an addition of the difference (See Annexure 'B' of impugned....
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....4884 488 737869 743241 334584 G4 347400 0 347400 722 74 4621 5417 341983 KBC 9116930 0 9116930 246528 25146 777304 1048978 8067952 BLI 3807232 0 3807232 664501 67779 1838791 2571071 1236161 BCO -188930 0 -188930 10257 1046 32340 43643 -232573 MCC 20623056 0 20623056 1560439 159165 4621064 6340668 14282388 CDC 1195785 0 1195785 18369 1874 90592 110835 1084950 JKC 1167629 0 1167629 101435 10346 319825 431606 736023 JMI 9241170 0 9241170 347757 35471 1096477 1479705 7761465 CBC 388359 0 388359 423982 43246 1178079 1645307 -1256948 VCO -888100 0 -888100 0 0 0 0 -888100 CSL -5135883 0 -5135883 533530 54430 1168432 1756392 -6892275 NCI 3677300 0 3677300 33865 2454 275799 312118 3365182 JMM -2699100 0 -2699100 15775 1609 49738 67122 -2766222 CNC -2471176 0 -2471176 65810 6713 135408 207931 -2679107 JKF ....
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....p;Other Charges 14954560 -20477473 Income as per MTM basis adopted by the A.O. for computing income earned from the dummy client codes 1993618 Short income declared by the assessee -2969808 6.1.7 That as such there was no basis for making an addition of Rs. 51,63,595/-. 6.1.8 That the A.O. ignored the client codes viz. JMA and CE3 where the profits declared by the assessee were in excess to the adjusted MTM income. 6.1.9 That the A.O. treated client codes JMA and CE3 as belonging to assessee. Further, A.O. is considering adjusted MTM income of each client code as belonging to the assessee than there is no reason whatsoever for not treating the MTM losses of JMA and CE3 codes as that not of assessee. When difference of adjusted MTM income and profit declared by the assessee is added to the total income of assessee wherever adjusted MTM income is more than income declared by the assessee than the A.O. ought to have allowed the credit of excess income declared by the assessee in his return of income in comparison to MTM losses. 6.1.10 That once the A.O. reje....
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....ation. The AO has adopted pick and choose method and has not considered all the I.D. code numbers found in the seized material. The AO has ignored I.D. codes of JMA and CE3 whereas other I.D. codes have been accepted by the AO and on the basis of other I.D. codes whatever the transactions were found either of loss or profit, they were taken as it is and on that basis the addition has been made by the AO at Rs. 51,63,595/-. If the remaining two I.D. codes of JMA and CE3 are taken then the total loss was of Rs. 29,69,808/- instead of Rs. 51,63,595/- . It was submitted that a chart has already been filed before AO as well as before ld. CIT (A) which has also been tabulated in the order of ld. CIT (A) at pages 11 & 12. Attention of the Bench was also drawn at page 17 of the written submission where all these details are tabulated. 9. On the other hand, the ld. D/R strongly placed reliance on the order of AO and ld. CIT (A). It was submitted the AO has adopted a very reasonable view. On whatever transactions were confirmed, no adverse inference was drawn by AO. However, where no confirmation could be filed only those transactions have been treated as belonging to the a....
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....as accepted all the codes except two codes i.e. JMA and CE3. This approach should not have been adopted. Whatever the loss figure was recorded in the ID codes that should have been taken into consideration and whatever the profit items are recorded in those papers that has to be taken into consideration and net of all the Profit & Loss figure has to be considered for the computation of undisclosed income. If all these transactions recorded under these codes are taken into consideration, then net profit comes to Rs. 29,69,808/-. The assessee is not objecting the various figures of all the codes as he has accepted that they are correct. These are total of 8 ID codes, 6 ID codes have been accepted by the AO on which the addition arrived at Rs. 51 lacs or odd and if remaining two ID codes JMA and CE3 are taken into consideration, the net figure of profit comes to Rs. 29,69,808/-. Therefore, we direct the AO to adopt this figure of Rs. 29,69,808/- instead of Rs. 51,63,595/-. 11. Ground Nos. 7, 8 & 9 relate to confirming the addition of Rs. 16,78,107/- as income from commission earned @ 2% on profit earned through clients code modification. 12. The A....
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....de has exceeded these prescribed limits than we have to assign separate code for transactions booked in excess of the prescribed limit so as to restrict the commodity quantity as per norms of exchange. Such modifications are also in regular course of business and for the interest of the clients. iii. That any modification of code if requires is to be made on the same day itself and cannot be made after that date. Therefore, there is no question of transferring loss and profit from one account to another. iv. That in some cases there is a profit as per NCDEX whereas as per our books there is loss whereas in some cases there is a difference between the figures shown by the Exchange and in our books of accounts. The main reason for the difference is due to limit of quantity purchased was transferred in another code as per the margin regulations of exchange but the actual profit or loss has gone to the respective party. v. That at the time of heavy fluctuations, the exchanges increases margin requirement heavily and to reduce the incidence of margin, the purchase or sale of different codes is made in the exchange in the same code but since there is no actual ....
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....using the material on record, we find that assessee deserves to succeed on this ground. We noted that earning of commission has been held on the transaction on MTM basis on account of ID client modification. The AO has treated these transactions on account of ID code modification relating to assessee. When he treated all these transactions related to assessee, then there is no question of charging any commission on these items. If the department treated these transactions relating to other parties then the profit or loss as the case may be on account of those parties on behalf of the assessee has booked the profit or loss, then that amount has to be reduced for the purpose of computation of commission income. Once all the transactions have been held belonging to the assessee only, then in our considered view, there is no question of making any further addition on account of commission. We have confirmed the finding of AO in respect of those transactions that they belong to the assessee only. Even in the remand report, the AO has given his comments that if the assessee agrees that the addition of Rs. 51,63,595/- has been rightly made then commission to that extent can be consid....
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.... assessee in the accounting year and assessee has legal obligation to explain the nature and source of such credit entries. However, they were not explained. Accordingly he treated those credit entries as unexplained cash introduced by assessee and against the same to the income of the assessee which was Rs. 61,30,979/-. Detailed written submissions were filed before ld. CIT (A). It was submitted that all the ID code transactions have been treated as belonging to the assessee. There were certain transactions showing credit entries. However, assessee could not file the confirmation of the parties in whose name those entries were appearing. The AO has not accepted that transactions in the name of third party are belong to third party as AO has held that all those transactions were related to the assessee only. Accordingly it was submitted that whatever the profits on those account have been earned by the assessee that has to be considered and set off has to be allowed. It was also submitted that a periodical statement has to be prepared and whatever the amount is available on account of profit on ID code transactions, on that amount credit has to be given to the assessee. Howeve....
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....llowance of expenses under the head telephone, traveling, conveyance and depreciation to the extent of Rs. 55,277/-. 25. The AO disallowed Rs. 1,10,554/- @ 1/5th on account of telephone, traveling, conveyance etc. The ld. CIT (A) restricted it at 1/10th. 26. We find no unreasonableness in the finding of ld. CIT (A), therefore, we confirm the disallowance sustained by ld. CIT (A). 27. There is no other ground in the appeal of the assessee. 28. Now we will take up the appeal of the department. 29. Ground No. 1 is against accepting assessee's argument while calculating the amount of commission @ 2% AO has committed mistake by taking separate figures of MTM code and JKF code profit. 30. We have already disposed off this ground while disposing the appeal of the assessee and we have deleted the addition on account of commission. Therefore, this ground of the department has become infractuous in nature which does not require any adjudication. 31. Ground Nos. 2 & 3 relate to work out the quantum of telescoping benefit to be allowed to the assessee. 32. We have already disposed off these ground while disposing the ground of the assessee. Telescopi....