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TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 96
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....er, information has been flagged in insight portal of the Department, under the category "High risk CRIU/VRU cases" for the financial year 2017-18 in the case of the assessee having traded in cryptocurrency. The information is summarized as under: "In this case, information was received through insight portal from the DDIT/ADIT(Inv.), 2(1), Ahmadabad in respect of Transaction in Crypto currency. As per information received it is seen that the assessee had made the transactions in crypto currency during various Financial Years, the details of the same is as under: F.Y. 2016-17 F.Y. 2017-18 Buy (in Rs. ) Sell (in Rs. ) Buy (in Rs. ) Sell (in Rs. ) 1602003 496195 1752838 2901111 2.1. A summons under section 131 was issued seeking details of transactions made in crypto currency, its manner of accounting in his books of accounts and source of funds used for the transactions. However, no response was received from the assessee. Therefore, it was clear that the gains from crypto currency transactions and source of funds for these transactions were not disclosed to the Income Tax Department and not offered to tax for A.Y. 2018-19. Before forming th....
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....9,696/- @8% of turnover i.e. Rs. 4,96,195/- of cryptocurrency transactions made during AY 2017-18, which has been duly accepted by you while framing the assessment for AY 2017-18. The relevant para 4.3 of assessment order passed for AY 2017-18 is reproduced as under: "4.3............... .........The assessee has admitted to selling cryptocurrency worth Rs. 4,96,195/- and purchasing cryptocurrency of Rs. 16,02,003/- during the course of assessment proceedings and has offered the cryptocurrency receipts as business receipts considering the deemed profit @ 8% of receipts i.e. Rs. 39,696/- (8% of Rs. 4,96,195/-). The assessment is completed by considering the submissions of the assessee and material available on record and the fact that the assessee himself has agreed to the addition of Rs. 39,696/- on account of assuming the profit from cryptocurrency transactions as presumptive income. Thus, an amount of Rs. 39,696/- deemed profit earned from the cryptocurrency transactions is added to the business income of the assessee during the year under consideration. (Addition of Rs. 39,696/-)" (Copy of order is attached herewith as per Annexure - 1) Similar....
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....ut escarpment of income. Also, to end up the litigation, we have already offered income of Rs. 2,32,089/- applying presumptive provisions of Income Tax Act, 1961. In view of above submission, I kindly request you to restrict proposed addition to Rs. 2,32,089/- as income earned from sale of cryptocurrency transactions for the year and finalize the assessment accordingly. Kindly appreciate above submission." 2.4. Though the above submissions of the assessee are reproduced in the reassessment order, but the Ld. AO held that the assessee failed to explain the source of buying of crypto currencies amounting to Rs. 17,52,838/- therefore made addition u/s.69C of the Act and also estimated at 8% i.e. Rs. 2,32,089/- as the sale proceeds from crypto currencies transaction of Rs. 29,01,111/- and demanded tax thereon. 3. Aggrieved against the reassessment order, the assessee filed an appeal before Ld CIT[A] who confirmed the additions made by the AO by observing as follows: "... ... 5.1. On perusal of the assessment order and the case records, it is evident that the case was reopened under section 147 on the basis of credible information received through the Insight por....
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....4. Aggrieved against the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The Ld. Assessing Officer has erred in law and on facts in reopening the case of the Appellant Invoking provisions of Section 147 and 148 of the Act. On facts and circumstances of the case, there is not at all any escarpment of income on part of Appellant. It is therefore submitted that the whole reopening of assessment is bad in law and void ab initio and the order passed u/s 144 r.w.s. 147 of the Act be quashed and set aside accordingly. 2. The Learned CIT (Appeals) has erred in law and on facts in confirming the action of A.O. reopening of appellant's case relying upon the incomplete information received from the Investigation Wing. It is submitted that the information received did not contain any information about Crypto Currency Name, details of broker, Date of purchase/sale, Quantity, Amount of Gain/Loss incurred etc. and without any further independent exercise or application of mind, the Ld. AO has reopened the case. Thus the addition made relied upon incomplete information is incorrect both on facts as well as on law and the same b....
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....ubmitted that on facts and circumstances of the case, the provisions of Section 69C and Section 115BBE of the Act are just not applicable in case of Appellant. Therefore the incorrect demand raised levied tax at special rate provided u/s 115BBE of the Act is incorrect and the same be deleted. The same be held now. 8. The order passed by the Ld. CIT(A) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 5. Ld. Counsel for the assessee in support of its grounds submitted that the assessing officer is not correct in making addition of Rs. 17,52,838/- as unexplained expenditure on account of source of purchase of crypto currency. But the very same assessment unit in the case of the assessee for the earlier Asst. Year 2017-18 accepted the presumptive deemed profit at 8% of the sale of 4,96,195 crypto currencies relevant to the Financial Year 2016-17 which was also reopened by issuing notice u/s. 148 of the Act. When the assessing officer accepted profit from crypto currencies transactions as presumptive income of Rs. 39,686/-, the same ought to have been adopted for the subsequent Asst. Year namely 2018-19 wherein asse....