TaxTMI 
TaxTMI 
2026 (8) TMI 1339
X X X X Extracts X X X X
X X X X Extracts X X X X
.... account of money market oversold position of Rs. 1021,33,43,699/- 2. The Ld. CIT(A) has erred in enhancing the total income of the assessee by Rs. 159,72,02,056/- being money market oversold position in respect of 11.5% Central Loan 2007. 3. The Ld. CIT(A) has erred in confirming the addition on account of unexplained money (payment made to SBI) amounting to Rs. 524,53,68,500/- 4. The Ld. CIT(A) has erred in confirming the determination of loss from money market trading at Rs. 32,94,908/- 5. The Ld. CIT(A) has erred in confirming the addition on account of money market difference earned by the appellant amounting to Rs. 20,76,95,398/-. 6. The Ld. CIT(A) has erred in not deleting the addition on account of interest on money market securities amounting to Rs. 143,66,88,450/-. 7 The Ld. CIT(A) has erred in confirming the addition on account of profit on transactions with Mazda Industries amounting to Rs. 2,81,00,000/- Share Market transactions 8. The Ld. CIT(A) has erred in confirming the addition on account of income from dividend and interest of Rs. 2,25.59.454/- 9. The Ld. CIT(A) has erred in confirmi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aised by the revenue is as under: "On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Rs. 13,91,00,000/- on account of alleged liabilities shown as 'other income not shown in the books' on the basis of the review of unaudited accounts prepared by M/s. Vyas & Vyas, from the audit report in case of the assessee's family members wherein it was found that the interest stood quantified by the Auditors." ITA No. 42/MUM/2024 (AY:1993-94) 3. Facts of the case, in brief, are that the assessee did not file return of income for the AY 1993-94. The assessee, who is now deceased, was an individual and was the sole proprietor of the brokerage firm, M/s. Harshad S. Mehta. The said firm was a registered broker in the Bombay Stock Exchange. It was engaged in the business of trading and brokerage in capital and money markets. For the year under consideration, i.e. AY 1993- 94, the assessee did not file his return of income purportedly due to several difficulties faced by him. The assessment was completed u/s. 144 of the Act on 29.03.1996 determining the total income of Rs. 1,396.02 Cr. The assessee filed appeal against the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 1021,33,43,699/- on account of money market oversold position (MMOP). The AO, in the first round of litigation, has stated that the details about the transactions of the assessee in money market has been obtained by him from banks, financial institutions, companies and brokers. He has also gathered the details from the transactions as per bank accounts of the assessee as provided by the RBI as well as contract notes and deal files furnished by the assessee. Based on such information, the AO determined the position of opening stock, purchase, sale and closing stock. He also referred to the statements of the assessee and Shri Pankaj Shah (employee of the assessee) recorded during the course of search in the month of February and March, 1992. The AO arrived at a conclusion that in respect of eight securities, the assessee had negative closing stock. The value of such negative closing stock was determined at Rs. 1021,33,43,699/-. The said details are compiled in Annexure M-1 to the assessment order. The said annexure and the typed copy of relevant portion of Annexure M-1 are available in paper book filed by the assessee. However, such details made available to the assessee vide Ann....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on the order passed by his predecessor dated 24.03.2010 in the second round of litigation. Although in respect of certain small amounts, the CIT(A) has given a direction to the AO, the addition has primarily been confirmed by the CIT(A). 8. Aggrieved by the order of the CIT(A), the assessee has filed appeal before the Tribunal. The appellant has filed factual and legal paper books in support of the grounds raised in the appeal. The Ld. AR submitted that the entire addition is not only illegal and unsustainable but the same is the result of non-application of mind by the lower authorities. The business of the assessee was carried out only for 2 months and the assessee could not have earned such huge income as assessed by the AO in the impugned order. The alleged oversold position in 8 securities is non-existent and the same is the result of lack of appreciation of facts of the case. The detailed scrip wise explanation filed by the Ld. AR is reproduced below for ready reference; "(i) 9% Hudco Bonds 8. As Annexure M-1 captures only sale transaction of Face Value of Rs. 15 Cr. in respect of 9% Hudco Bonds (27/03), there is a short fall of Rs. 14.26 Cr. (M.V.) for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the AO and the addition has not been deleted. It would be interesting to note that the AO has neither given effect to the order of the CIT(A) dated 19.12.2023 nor has rectified the above error. In short, the above addition still continues in the record of the Department and the assessee is shown defaulter to the extent of demand on above addition. (v) The above submission applies not only in respect of oversold position of 9% Hudco Bonds, but it applies also to oversold position in respect of Units 1964 Scheme, 17% NTPC Bonds, 11.5% Central Loan 2010 and 9% IRFC Bonds as is explained hereinafter." (ii) 9% Coal India 10. As per the details of purchase and sales of 9% Coal India Bonds (PBP 145, 146), assessee has sold bonds having face value of Rs. 11.50 Cr. and Rs. 15 Cr. and there was no opening stock or purchase. The oversold position has been arrived at F.V. 26.50 Cr. (M.V. 23.43 cr.). In this regard, it is submitted that in respect of both the above transactions, the physical delivery of bonds was not given and, hence, there is no oversold position. Since the assessee had received the money under the above transactions of sale of securities but securi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....506.53 Cr. to Standard Chartered Bank (successor to Grindlays Bank). The Custodian in turn wrote to the SBI on 26.09.2017 (PBP 204) directing the SBI to make the above payment. The payment in fact was made on 27.09.2017 through the bank account of the assessee (PBP 208). 13. It would be relevant to note that similar set off in respect of decrees granted by the court have been given to the assessee in A.Y. 1992-93. Reliance is placed upon the discussion made by the CIT(A) in his order for A.Y. 1992-93 (PBP 483). The said order of the CIT(A) has been given effect by the AO after due verification wherein the relief has been granted by the AO himself (PBP 547). Further, the order of the CIT(A) for A.Y. 1992-93 has been upheld by the Tribunal after a detailed discussion (PBP 370-375). 14. Thus, it is established that no delivery has been effected pursuant to the above referred transactions and the said fact has been established with the help of series of documents discussed hereinabove. Therefore, there cannot be any oversold position in the above security. (iii) Units 1964 Scheme 15. The details of purchase and sale transactions in Units 1964 Scheme ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilable at PBP 212. 18. On perusal of the details of purchase and sale on PBP 211, it can be observed that there are two sales transactions, one on 13.04.1992 of F.V. 50 Cr. having a market value of Rs. 49,90,95,890/- and the other on 20.04.1992 of F.V. 100 Cr. having market value of Rs. 100,09,52,054/-. It is submitted that both the above transactions are with National Housing Bank and the assessee had not given the delivery in respect of both the transactions. In this regard, reliance is placed upon the detailed submissions made in respect of 9% Coal India as well as Units 1964 Scheme hereinabove. Both the above transactions are mentioned in the FIR filed by NHB (PBP 166, 167 at Sr. no. 12 and 13). Since the delivery was not given in respect of both the above transactions, these have to be excluded while working out the closing stock position. It is submitted that if the above sale transactions of F.V. of Rs. 150 Cr. are ignored, the entire oversold position gets wiped out. (v) 11.5% Central Loan 2010 19. The AO has given the details of purchase and sale of 11.5% Central Loan 2010, which is placed on PBP 213. The final position of the oversold position i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the subject matter of addition in the subsequent year by way of indirect route of adopting negative opening balance. It is submitted that the transactions giving rise to negative stock were those of the earlier year and, hence, by no stretch of imagination, an addition can be made in the year under consideration. 22. In any case, it has been accepted by the AO that delivery of securities was not made in respect of the above transactions even in the last year and to compensate the non-delivery, equivalent payment was made by the assessee in the year under consideration and, hence, no addition can be made on account of oversold position. It would be relevant to recall that the entire addition of oversold position is based on the assumption that transactions are delivery based. It is an admitted position that no delivery was made in the last year and it is nobody's case that delivery has been made in the year under consideration. Therefore, the opening stock cannot be taken at a negative figure. 23. In fact, the issue of the negative opening balance came up for consideration before the Tribunal for A.Y. 1992-93. In that year, the AO, in respect of the same security i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 85 Cr. If both the above figures, i.e. Rs. 454 Cr. + 85 Cr. (aggregating to Rs. 539 cr.) is considered, the entire oversold position of Rs. 539 Cr. would be wiped out. 28. Without prejudice to the above and in addition to the above, the AO has erred in not only taking the opening balance as negative figure of F.V. 454 Cr. but he has also erred in not taking the positive opening balance as finally arrived at as a closing balance in A.Y. 1992-93. It is submitted that as per the similar annexure, being Annexure M-2 (PBP 550), prepared for A.Y. 1992-93, the negative closing balance of 11.5% Central Loan 2010 was F.V. 595.61 Cr. As the said oversold position was contested by the assessee, the Tribunal has adjudicated the same in its order for A.Y. 1992-93 at para 9.48 (PBP 376-378). As per the said order, the surviving negative balance of Rs. 29.70 Cr. was unsustainable as the AO had wrongly considered the opening negative balance of Rs. 103.39 Cr. It is submitted that once the said opening negative balance is removed, the surviving negative closing balance of Rs. 29.70 Cr. for A.Y. 1992-93 would turn into a positive balance of Rs. 73.65 Cr. The AO, while preparing the annex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 3,25,50,000/- (PBP 291). The date of the transaction has been mentioned by the AO as 08.04.1992. It is submitted that the said transaction of receipt of money is nothing but loan received in running account from M/s. V.B. Desai, another well-known money market brokerage firm. The said amount has been received on 08.04.1992 and deposited in Grindlays Bank, M.G. Road branch. The necessary entries have been passed into the ledger accounts of M/s. V.B. Desai (PBP 292) and ANZ Grindlays Bank (PBP 293). It is submitted that there is no such transaction as reported by the AO If the AO has any such evidence, the same ought to have been brought on record. In the absence of such evidence, the transaction cannot be assumed nor the oversold position. Considering the above, the addition needs to be deleted. (viii) 9% IRFC Bonds 32. The details of purchase and sale of 9% IRFC Bonds have been compiled by the AO and the same is appearing on PBP 295. The final oversold position is of F.V. 113 Cr. having market value of Rs. 101,02,11,739/-. As stated hereinabove, the AO has rectified the calculation of oversold money market position vide letter dated 17.08.2010 (PBP 142-144), ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the said assumption is unsustainable. This issue has been discussed subsequently herein below wherein it has been pointed out that the Tribunal, in assessee's own case, has taken a view that the assumption about the delivery is incorrect. Apart from this, it has been held that the money market securities are interchangeable and, hence, one security can be used in respect of transaction of other security. This has also been discussed subsequently hereinbelow. Considering the facts and circumstances in totality, the balance addition in respect of F.V. 27 Cr. also needs to be deleted. 36. Thus, the oversold position in respect of each of the 8 securities have been explained hereinabove. In addition, following further submission is being made. 37. It would be worthwhile to note that the AO had gathered voluminous details about the transactions effected by the assessee from several counter parties. While all the particulars like date, name of security, rate etc. have been collected by the AO, the most vital details about the delivery in pursuance to the transactions has not been gathered by the AO Instead, the AO has adopted an easy and convenient path of presuming....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The Ld. AR also submitted, without prejudice to the above, that even if any addition has to be made on account of oversold position in securities, only the profit element arising out of sale of security is to be added and not the entire amount. This has been so held by the CIT(A) in the case of assessee for A.Y. 1992-93 and the same has been upheld by the Tribunal. 11. The Ld. AR has also mentioned about the conduct of the Department. It was submitted that several relied upon documents have not been provided during last three decades in the assessment and appellate proceedings. Even during the present proceedings, the matter was adjourned on several occasions. Finally, when the matter was fixed for hearing on 31.12.2024, the Bench directed the DR to furnish the list of the documents relied upon by the AO which are required for the purpose of adjudication of the appeals. Specific mention was made about the evidence of delivery of securities. Attention was drawn to the proceeding sheet entry dated 06.12.2024 before the Tribunal. In compliance to the same, the assessee filed a letter dated 01.01.2025 to the Special Counsel wherein, in respect of ground No. 1, the following relied u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elied upon the orders of lower authorities. He submitted that adequate and reasonable opportunity of hearing was given to the assessee and the details requested for were provided to him. The assessee knows his business affairs more than anyone else but he deliberately avoided to provide necessary details and is unnecessary putting all blame on the department. The conduct of assessee was totally non-cooperative and he was all through waiting for the Department to unearth his unrecorded transactions, about which he was fully aware. Putting blame on Department without rebutting the evidence painstakingly gathered by the Department should not be entertained. He, therefore, requested to sustain the addition made by the AO, which has been rightly upheld by the CIT(A). 13. We have heard both sides and perused the materials on record. We have also carefully gone through the orders of lower authorities including those for AYs 1990-91, 1991-92 and 1992-93. We have also carefully perused the decisions relied upon by the Ld. AR including the orders of the Tribunal in appellant's own case for AY 1990-91, 1991- 92 and 1992-93. The Ld. AR submitted that the amount of addition made at Rs. 1021.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....included negative Opening balance of Rs. 103.39 crores. If the said negative opening balance is excluded and taken as nil, the oversold stock balance will get 135 reduced The Ld. CIT-DR even though vehemently contended but could not draw our attention towards the evidence or the material from which the negative opening balance of Rs. 103.39 crores is taken. Since the addition has been made on the basis of the M-2 made by the AO, therefore the onus lies on the AO to prove how this figure had been arrived at or taken. The contention of the Ld. Counsel is that it should be taken as 'Nil'. In the absence of any cogent material or evidence to support the said negative balance, we are of the view that the addition of Rs. 29,70,53,629/- cannot be survived. It is a settled law if the revenue wants to tax any income, the onus is on the revenue to prove that the assessee has earned income. Even otherwise, for the negative opening balance, addition cannot be made as per the provisions of Section 69 of the Act in the impugned assessment year. If an addition has to be made that has to be made in the earlier assessment year from which negative opening balance has been brought forward. We....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ivery of the impugned bonds, the Hon'ble Special Court and the Hon'ble Supreme Court would not have directed the assessee to make the payment. Hence, there was no oversold position in respect of the impugned securities. The order of CIT(A) is, accordingly, set aside and the AO is directed to delete the above addition. 13.6 The next addition pertains to oversold position of 9% Hudco Bonds. The Ld. AR submitted that no details were given about the purchase and sale of 9% Hudco Bonds until 2009. Subsequently, the particulars of sale and purchase had been given, which is at page 140 of the paper book, as per which, there is purchase and sale of face value of Rs. 15 Cr. each and hence, there is no oversold position. The same is also evident from page 143 of the paper book which is addressed to M/s Dave and Girish & Co., the Special Auditor appointed in this case. In view of the above, the order of CIT(A) is set aside and the AO is directed to delete the addition of Rs. 14.28 Cr. 13.7 The next issue pertains to addition of MMOP of Rs. 96.91 Cr. and Rs. 27.01 Cr. in respect of 11.5% Central Loan 2010 and 9% IRFC Bonds respectively. The Ld. AR submitted that the AO has not considered....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee by submitting any tangible evidence on record. Hence, the amount of loan received by the assessee cannot be added as sale transaction or MMOP. Accordingly, the AO is directed to delete the amount. 14. In the result, ground No.1 is allowed. 15. Ground No. 2 pertains to the addition of Rs. 159,72,02,056/- on account of money market oversold position(MMOP) in respect of 11.5% Central Loan 2007. The above addition was not made by the AO in the original assessment proceedings. However, during the course of the hearing before the CIT(A) in the second round of litigation, the CIT(A) has enhanced the income of the assesse by Rs. 159,72,02,056/-. According to the CIT(A), in the oversold money market securities calculation for A.Y. 1992-93, there was an oversold position of Rs. 601.21 Cr. on account of 11.5% Central Loan 2007 and 11.5% Central Loan 2010. The said amount of Rs. 601.21 Cr. was not considered for the purpose of addition in A.Y. 1992-93 as delivery was not given in respect of the transactions involving above referred two securities. However, in the assessment order in A.Y. 1993-94, the AO has observed that the source of the payment of Rs. 601.21 Cr. made to SBI has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he negative balance of 11.5% Central Loan 2007 (Rs. 159.72 Cr.). The addition under consideration refers to the above amount of Rs. 159.72 Cr. 16.2 The Ld. AR also submitted that the above addition in respect of 11.5% Central Loan 2007 stands on an identical footing to that of 11.5% Central Loan 2010 wherein the negative opening balance of F.V. 454 Cr. has been considered by the AO. Arguments in respect of the negative opening balance of F.V. 454 Cr. has been made while dealing with ground No. 1 of the instant appeal. Since the facts of the two additions are identical, the Ld. AR strongly relied upon the submissions made by him on the issue of "11.5% Central Loan 2010." The Ld. AR also submitted that the issue is fully covered in favour of the assessee vide order of the Tribunal in the case of the assessee for A.Y. 1992-93 (supra). He, accordingly, submitted that the impugned addition is unsustainable and deserves to be deleted. 17. On the other hand, the Ld. Special Counsel supported the orders of lower authorities. 18. We have heard both sides and perused the materials on record. We have also carefully gone through the decisions relied upon by the Ld. AR. This addition w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the negative closing balance at Rs. 573.07 crores included negative Opening balance of Rs. 103.39 crores. If the said negative opening balance is excluded and taken as nil, the oversold stock balance will get 135 reduced The Ld. CIT-DR even though vehemently contended but could not draw our attention towards the evidence or the material from which the negative opening balance of Rs. 103.39 crores is taken. Since the addition has been made on the basis of the M-2 made by the AO, therefore the onus lies on the AO to prove how this figure had been arrived at or taken. The contention of the Ld Counsel is that it should be taken as 'Nil'. In the absence of any cogent material or evidence to support the said negative balance, we are of the view that the addition of Rs. 29,70,53,629/- cannot be survived. It is a settled law if the revenue wants to tax any income, the onus is on the revenue to prove that the assessee has earned income. Even otherwise, for the negative opening balance, addition cannot be made as per the provisions of Section 69 of the Act in the impugned assessment year. If an addition has to be made that has to be made in the earlier assessment year from which nega....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e as under; i) Payments made through bank account with Grindlays Bank; Sr. No. Date Amount (In Rs. Cr.) 1. 13.04.1992 243.18 2. 18.04.1992 * 97.98 3. 18.04.1992 9.00 4. 18.04.1992 35.00 5. 20.04.1992 125.00 6. 20.04.1992 35.00 7. 21.04.1992 21.00 8. 21.04.1992 2.23 9. 24.04.1992 6.35 ii) Payment made directly by Syndicate Bank Sr. No. Date Amount (In Rs. Cr.) 10. 21.04.1992 47.76 Total 622.52 * This payment has been held to be explained by the CIT(A) and no enhancement has been made in this regard. iii) The Ld. AR submitted that each and every amount deposited in the bank account with Grindlays Bank and the payment made through Syndicate Bank is explained and represents disclosed transactions of the assessee. In respect of the payments made from the bank account with Grindlays Bank, the CIT(A) has held the said payments to be unexplained because the corresponding amounts deposited in the said bank account have not been explained by the assessee. The list of such alleged unexplained credits and the reason for holding it to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....standable in as much as no details or particulars has been referred to by the CIT(A). (iii) The deposit of Rs. 99.00 Cr. (sic 99.775 cr.) made on 13.04.1992 represents sale proceeds of Units of F.V. 6.5 Cr. (contract no. 920413-B15). This deposit made on 13.04.1992 represents sale proceeds of Units of F.V. 6.5 Cr. (contract no. 920413-B15). It would be interesting to note that the said sale transaction has been acknowledged and duly accepted by the AO himself while preparing the Annexure M-2 to the assessment order. Attention is invited to the PBP 209 wherein the AO has considered the above sale transaction and has given complete particulars like date, face value, contract value and name of security. Apart from this, since the delivery against the above sale transaction was not given, the above sale transaction has been made part of the FIR filed by the NHB (PBP 166 - Sr. no. 1). Further, the CIT(A) is also not disputing the above sale transaction. The limited objection of the CIT(A) is 'not in Deal file'. It is submitted that the objection of CIT(A) is not understandable in as much as no details or particulars has been referred to by the CIT(A). In any case, the receipt o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ady been given while dealing with Gr. No. 1 hereinabove. Since the sale transactions have been confirmed by NHB, the sale proceeds cannot be treated as unexplained. The objection of the CIT(A) that no details given is factually incorrect inasmuch as the AO has taken into consideration the above referred two sets of transactions while calculating the oversold position. The attention is invited towards PBP 295, 145 wherein the AO has tabulated the transactions of sale in 9% IRFC and 9% CIL, which includes the transactions under consideration. (vi) The deposit of Rs. 10.24 Cr. made on 13.04.1992 represents sale proceeds of 17% NTPC Bonds of F.V. 10 Cr. (contract no. 920413-B19). The said sale has been made by the assessee to SBI Capital Market Ltd. The above sale made by the assessee to SBI Capital Market Ltd. gets duly confirmed by the record of SBI Capital Market Ltd. which came to be filed by them before the Hon'ble Special Court. The above transaction has been recorded in the Deal diary of SBI Capital Market Ltd. which has been made part of criminal case document no. 04 of 1993 (PBP 468, 472). Therefore, the above transaction gets duly established and cannot be doubted. C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....04.1992 whereas none of the payments have been made to SBI on 16.04.1992. (xi) Similarly, the deposit of Rs. 4.76 Cr. made on 16.04.1992 represents sale proceeds of CIL Bonds of F.V. 5 Cr. (contract no. 920416-B22). Here again, since no payment has been made to SBI on 16.04.1992, detailed explanation has not been given. (xii) The deposit of Rs. 32.55 Cr. made on 18.04.1992 represents sale proceeds of 9% IRFC Bonds of F.V. 36 Cr. (contract no. 920418-B49). It would be interesting to note that the said sale transaction has been acknowledged and duly accepted by the AO himself while preparing the Annexure M-2 to the assessment order. Attention is invited to the PBP 295 wherein the AO has considered the above sale transaction and has given complete particulars like date, face value, contract value and name of security. Further, the CIT(A) has not raised any objections whatsoever in respect of the above sale transaction (kindly see the remarks column on PBP 123). In any case, the receipt on account of sale of security cannot be held to be unexplained money. It would also be relevant to note that the AO has also calculated the income on account of money market....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6,027.40) has been received by the assessee from them on 18.04.1992. The Deal slip in respect of the said transaction is enclosed at PBP 556. In light of the above deal slip, the objection of the CIT(A) that the transaction is not in deal file, is irrelevant. (xvii) The deposit of Rs. 15.02 Cr. made on 20.04.1992 represents sale proceeds of 17% NTPC Bonds of F.V. 15 Cr. (contract no. 920420-B10). It would be interesting to note that the said sale transaction has been acknowledged and duly accepted by the AO himself while preparing the Annexure M-2 to the assessment order. Attention is invited to the PBP 211 wherein the AO has considered the above sale transaction and has given complete particulars like date, face value, contract value and name of security. Further, the CIT(A) has not raised any objections whatsoever in respect of the above sale transaction (kindly see the remarks column on PBP 123). In any case, the receipt on account of sale of security cannot be held to be unexplained money. It would also be relevant to note that the AO has also calculated income on account of money market trading profit/loss, money market difference earned and interest on money....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eparate entries of the two in Deal file is illogical. It is interesting to note that the computer programme in those days was not equipped to capture the figure of Rs. 100 Cr. Therefore, the above transaction of Rs. 100.09 Cr. was split into Rs. 99 Cr. and Rs. 1.09 Cr. However, in the bank statement, the full amount is correctly reflected. It may be noted that the CIT(A) has taken the two entries from the assessee's books of account wherein the same contract number is mentioned. This also establishes the contradictory approach of the CIT(A) who has conveniently rejected the books of the assessee whenever it supported the case of the assessee. Further, the AO has taken into consideration the above transaction while calculating the oversold position in 17% NTPC Bonds. The attention is invited towards PBP 211 wherein the AO has tabulated the transactions of sale in 17% NTPC Bonds, which includes the transactions under consideration. (xxi) The deposit of Rs. 46.47 Cr. made on 20.04.1992 represents sale proceeds of 5,000 ACC shares @ Rs. 5,975/- per share, 25,000 Apollo Tyres Ltd. shares at Rs. 350/- per share and 10 lacs Reliance Industries Ltd. shares at Rs. 400/- per share. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of 18,000 shares of ACC Ltd. @ Rs. 6,000/- per share and 4,43,950 shares of Apollo Tyres Ltd. @ Rs. 252/- per share received from Pallav Sheth. Both the above transactions are appearing in break-up of Annexure S-1 prepared by the AO himself (PPB 565). The details of these RF transactions are also matching with the ledger account of Pallav Sheth, which is enclosed at PBP 566. Thus, there cannot be any doubt about the above receipt. (xxvi) The deposit of Rs. 10.26 Cr. made on 21.04.1992 represents sale proceeds of 17% NTPC Bonds of F.V. 10 Cr. The securities have been sold to M/s. P. R. Subramaniyam & Sons and for which the payment of Rs. 10,26,91,780.82 has been received by the assessee from them on 21.04.1992. The Deal slip in respect of the said transaction is enclosed at PBP 563. In light of the above deal slip, the objection of the CIT(A) that the transaction is not in deal file, is irrelevant. (xxvii) The deposit of Rs. 2.50 Cr. made on 21.04.1992 represents amount transferred from Bank of India, Stock Exchange Branch bank account of assessee's wife Jyoti Mehta. It is nobody's case that the said bank account is undisclosed. Since both the bank accounts are dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ransaction has been acknowledged and duly accepted by the AO himself while preparing the Annexure M-2 to the assessment order. Attention is invited to the PBP 295 wherein the AO has considered the above sale transaction and has given complete particulars like date, face value, contract value and name of security. Further, the CIT(A) is also not disputing the above sale transaction. The limited objection of the CIT(A) is 'not in Deal file'. It is submitted that the objection of CIT(A) is not understandable inasmuch as no details or particulars has been referred to by the CIT(A). In any case, the receipt on account of sale of security cannot be held to be unexplained money. It would also be relevant to note that the AO has also calculated the income on account of money market trading profit/loss, money market difference earned and interest on money market securities. All these incomes have been calculated by him based on purchase and sale of securities, inter alia, tabulated on PBP 295." 20.1 According to the Ld. AR, it is evident from the above that none of the deposits made in Grindlays Bank account is unexplained. Apart from this, it is unimaginable that the assessee would have....
X X X X Extracts X X X X
X X X X Extracts X X X X
....were reversed on the next day and the payment of Rs. 47,80,63,924.52/- (Principal amount of Rs. 47,76,44,931.51 and interest thereon for 1 day) was made by the assessee to Syndicate Bank. This payment of Rs. 47,80,63,924.52 is duly reflected in the bank account of the assessee. The Ld. AR submitted that this receipt along with cheque number has been confirmed by SBI wherein the name of Syndicate Bank is clearly appearing. The solitary reason given by the CIT(A) is that the SBI has received another cheque of Rs. 21 Cr. on 21.04.1992 wherein the cheque number is appearing whereas against the impugned payment received from Syndicate Bank, the cheque number and the amount is blank. In this regard, the Ld. AR submitted that the above observations of the CIT(A) is factually incorrect and on perusal of the statement given by SBI, the particulars like date, cheque number, name of the bank and the amount are clearly mentioned in respect of the above transaction. The CIT(A) has observed that the amount of Rs. 21 Cr. is not matching with the amount under consideration of Rs. 47,76,44,931/- and the receipt of Rs. 71 Cr. (Rs. 47,76,44,931.51 + 2,23,55,068.49 + 21,00,00,000/-) on 21.04.1992 is n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Bank account was generated mainly due to proceed of sale of securities (without delivery) of Rs. 506.54 Cr. to National Housing Bank.) The CIT(A) enhanced the income of the assessee by holding that the source of the amount paid by Harshad Mehta to SBI is not explained except to the extent of Rs. 97.98 Cr. The CIT(A) made the addition of Rs. 524.53 Cr. (Rs. 622.51 Cr. - Rs. 97.98 cr.) (Gr. No. 3). 4. Later, NHB recovered the money from Grindlays Bank, who in turn claimed it from Harshad Mehta. Under the orders of Special Court and Supreme Court, Harshad Mehta paid the amount to Grindlays Bank. The AO has presumed that there was delivery of security by Harshad Mehta to National Housing Bank in respect of sale of securities to NHB. The AO ignored the claim made by NHB/Grindlays Bank against Harshad Mehta, which has been upheld by the Special Court and Supreme Court. The said assumption of AO has resulted into oversold position for which addition has been made to the total income of the assessee in A.Y. 1993-94 (part of Gr. No. 1). 20.5 Apart from this, the Ld. AR has submitted that several relied upon documents have not been provided during last 30 years in the assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nk account. He has given details of all the deposits in these two accounts and submitted that all of those are out of disclosed transactions, being the sale proceeds of securities, bonds, units etc. It also includes amount transferred from bank account of assessee's brother, Shri Ashwin S. Mehta as per the details provided in the submission reproduced above at para 19 at serial (i) to (xxxii). The Ld. AR submitted that all these transactions are duly recorded in the regular books of account and hence, the same cannot be added as unexplained. The Ld. Counsel for the revenue has not rebutted the assertion of the Ld. AR with tangible evidence. The revenue has also not provided the documents relied upon by it to the appellant despite specific request made by the appellant in this regard and the direction issued during the current proceedings by the Tribunal. The underlying evidence to support the impugned addition is evidently absent in the multiple proceedings that have been ongoing for the last three decades. Hence, the order of CIT(A) is set aside and AO is directed to delete the addition. The ground is, accordingly, allowed. 22. Ground No. 4 pertains to the determination of mone....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ded before the CIT(A) that the difference tabulated in the Annexure M-3 of the assessment order is in fact payments made by the assessee and not the receipt of the assessee. Such contention of the assessee has been recorded by the CIT(A) in the impugned order. However, instead of deleting the addition on this account, he has confirmed it by giving reasons in respect of each of items tabulated in Annexure M-3. 27. The Ld. AR, at the outset, submitted that the entire annexure M-3 has been prepared on erroneous impression of the AO that the amounts consisting of Rs. 20,76,95,398/- are receipts of the assessee. As a matter of fact, all these amounts are payments made by the assessee and are accordingly appearing in the bank statement of the assessee. In fact, such contention of the assessee has not been rejected by the CIT(A). It seems that the mistakes have occurred due to the information given by the counter parties who would have described the transaction as amount received by them. Naturally, therefore, the amounts received by the counter party would be the amounts paid by the assessee from his bank account and, therefore, cannot be the income of the assessee on account of diffe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the purchaser of the security i.e. Bank of America. The CIT(A) has observed that 'the appellant is required to explain as to how these transactions have emanated and the entire sequence of transactions and also as to how its claim of payment of interest is a valid one'. It is submitted that the objection raised by the CIT(A) is not understandable. The CIT(A) has not rejected the submission of the assessee that amount is not received but paid nor issued any notice of enhancement to convert the addition under some different head nor he has pointed out as to on what account and under which head the addition is sustained. c. Payment of Rs. 55,62,150/- made on 06.04.1992 from UCO Bank This payment has been made from the bank account with UCO bank (PBP 568) to Standard Chartered Bank being the difference paid on the transactions entered into between BOI mutual fund and Standard Chartered Bank. This has been duly confirmed by the Standard Chartered Bank (PBP 287 - Sr. no. 42). The CIT(A) has observed that 'the appellant has not brought contemporaneous or independent evidence'. The CIT(A) has not rejected the submission of the assessee that amount is not received but ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e amount of Rs. 49,250/- is credit amount, for which no addition has been made (in fact addition has been reduced) and, hence, not discussed. 27.4 The Ld. AR also submitted that several relied upon documents have not been provided from the beginning of the original assessment proceedings and consequent appellate proceedings. He referred to the letter dated 01.01.2025 by the assessee to the Ld. Special Counsel to provide the following: "Ground No.5 9) The basis of observations made in remarks column on page no. 127 - 130 of the impugned order of the CIT(A) dated 19.12.2023. 10) Letters received from the counter parties including the banks in respect of the transactions tabulated on the above referred pages." 27.5 He submitted that despite the above request, the Department has not produced the requisite details. He requested, in view of the above facts, that inference has to be drawn against the Department. 28. On the other hand, the ld. Special Counsel relied on the orders of lower authorities. 29. We have heard both sides and perused the materials on record. We have also carefully gone through Annexure M-3 at PBP 567 and letters of Standard Ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the case of the assessee. The CIT(A) has, however, held that since the accounts of the assessee has been rejected, the assessee cannot be said to be following cash system of accounting. 31. The Ld. AR submitted before us that the AO has presumed that the stock of securities determined by him have been actually owned by the assessee; that the same has been registered in the name of the assessee; and that assessee has received the interest from the respective government and other authorities. The AO has neither obtained/verified his working from the respective government or other authorities nor has he cross-checked the receipt of interest from the assessee's bank account. He submitted that while making addition on account of "money market oversold position", money market interest, money market difference etc., the AO has obtained all the particulars of money market transactions of the assessee from the RBI, different banks, other brokers etc. and also cross checked, in some cases, such details with the bank account of the assessee. However, no such exercise has been done while making the impugned addition. 31.1 The Ld. AR also submitted that the issue under consideration is sq....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the assessee is following Hybrid system of accounting (PBP 1), which is different that the conclusion arrived at by the CIT(A). (d) The assessee has relied upon the finding of the Tribunal in A.Y. 1992-93 and in the said case also the books of account were rejected and hence, there are no distinguishing feature between A.Y. 1992-93 and the year under consideration. At this stage, it would be interesting to note that the above addition of Rs. 143.66 Cr. was also challenged before the CIT(A) in the second round of litigation. While disposing of the said ground, the CIT(A), in the second round of litigation at PBP 102, para 10.4, had observed that the similar addition has been made in A.Y. 1992-93. He has further observed that the grounds of addition, the appellant's submissions and facts of the assessment year are similar. Accordingly, he has followed the decision taken by him in A.Y. 1992-93 and upheld the addition. He has further observed that the discussion made by him in A.Y. 1992-93 is to be taken as a part of the order passed by him. The important point to be noted is that when the issue of interest on money market security was decided against the assessee, the CI....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Once, it is held that the nature of security was tax-free, there is no question of taxing interest on it and, hence, the CIT(A) ought not to have set aside the matter to the file of the AO. Similarly, in respect of other items wherein the relief has been sought, the CIT(A) either rejected the contention without looking at the details furnished to him or has simply set aside the matter to the AO with a direction to verify. It was submitted that the CIT(A) ought to have granted the relief based on the detailed submissions made before him. 31.5 Lastly, the Ld. AR submitted that several relied upon documents have not been provided from the beginning of the original assessment proceedings and consequent appellate proceedings up to the level of the Tribunal. He referred to the letter dated 01.01.2025, by the assessee to the Ld. Special Counsel to provide the following: "11) Letters received from PS Us and other issuing authorities in respect of the securities mentioned in Annexure M-2 to the assessment order including the details of payments of interest made by them to the assessee. 12) Any positive evidence suggesting the payment of interest on money market securit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat year, the issue was decided against the assessee by the CIT(A) on the ground that the assessee had not maintained any books of account, and therefore, there was no question of following cash system of accounting. The said order of the CIT(A) was upheld by the Tribunal in ITA No.8024/Mum/1994 through their order dated 30.6.2004. The learned Chartered Accountant submitted that the facts pertaining to the assessment year 1988-89 are not applicable for the assessment year under appeal. In assessment year 1988-89, the Tribunal has rejected the stand of the assessee regarding the cash system of accounting. In that year, the CIT(A) had relied on the decision of the Calcutta High Court in the case of CIT Vs. Hindustan Motors Limited [202 ITR 839). The CIT(A) has also observed that the assessee's stand cannot be accepted in the absence of books of account. In a short order, the learned Chartered Accountant submitted that, the Tribunal declined to interfere in the findings arrived at by the CIT(A). 5.23 The learned Chartered Accountant submitted that the issue considered by the Calcutta High Court in the case of Hindustan Motors Limited, were entirely different and it was no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e has maintained books of account or not, if the assessee follows cash system to recognize income from interest and realize interest income only on actual receipts, the said system should be accepted and the interest should be considered only for actual receipts. Therefore, we find that the emphasis on the rejection of books of account, are overplayed by the authority. 5.28 The assessee is consistently following the cash system of accounting in respect of interest income. That is, he is recognizing interest income only on actual basis. This consistent position should not be overlooked on the ground that the other relatives of the assessee are recognizing interest income on mercantile basis. Therefore, in the facts and circumstances of the case, we find that the lower authorities were not justified in assuming interest income in the hands of the assessee on mercantile basis. 5.29 In the facts and circumstances of the case, we delete the addition." 32.1 The Tribunal in assessee's own case for AY 1992-93 in ITA No.5702/Mum/2016 dated 14.01.2019 has also referred to its earlier decision and has approved the cash method of accounting followed by assessee in respect ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rding the transaction with Mazda Industries Ltd., as submitted by the Ld. AR, is tabulated below. Details of transactions in 9% Coal India Ltd. Sr. No. Date of transaction Face Value Seller Buyer Amount (In Rs.) Profit of the assessee (In Rs.) 1. 28.03.1992 40 Cr. V.B. Desai Grindlays (RT) 37,28,54,794 1,68,00,000 2. 28.03.1992 40 Cr. Grindlays (RT) Mazda 38,96,54,794 3. 16.04.1992 40 Cr. Mazda Grindlays (RT) 36,14,79,452 25,00,000 4. 16.04.1992 35 cr. Grindlays (RT) Citi bank 31,62,94,520 5 Cr. -do- SBI Cap 4,76,84,931 36,39,79,452 Total 1,93,00,000 34.1 According to the Ld. AR, it is evident from the above details that Mazda Industries Ltd. had purchased 9% CIL bonds of F.V. 40 Cr. on 28.03.1992 at Rs. 38.97 Cr. The same has been sold by Mazda Industries Ltd. on 16.04.1992 at Rs. 36.15 Cr. In the above sequence of events, Mazda Industries Ltd. has incurred a loss of Rs. 2.81 Cr. It would be relevant to note that the above referred security had an interest payment date of 01.04.1992 and, hence, Mazda Industries Ltd. would have received half yearly intere....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... transaction of 9% IRFC Bonds with Mazda Industries Ltd. However, he had entered into transaction with the said party in respect of 9% CIL Bonds. Mazda Industries Ltd. had purchased 9% CIL Bonds of FV of Rs. 40 Cr. on 28.03.1992 for a consideration of Rs. 38.97 Cr. The same was sold by it for Rs. 36.15 Cr., thereby incurring loss of Rs. 2.81 Cr. However, Mazda Industries Ltd. have received half yearly interest of Rs. 1.80 Cr. on 01.04.1992 on this transaction. Since Grindlays Bank acted as routing bank for assessee, the assessee had earned income of Rs. 1.68 Cr. on account of the transaction between V.B. Desai and Mazda Industries Ltd. Similarly, the assessee earned Rs. 25,00,000/- in the transactions between Mazda Industries Ltd. and CITI Bank/SBI Capital Market. The assessee had requested to supply the details in this regard vide letter dated 01.01.2025 (supra) to the Ld. Special Counsel. However, the same was not provided to the assessee during the assessment or appellate proceedings or even during the proceedings before the Tribunal. In view of the above facts, the order of CIT(A) cannot be upheld and the AO is directed to delete the same. However, the issue is remanded back to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ined at para 4.1, page 40 of the assessment order as against addition of Rs. 2,25,59,454/- while computing the total income. It was also submitted that in the assessment order passed by the AO, the income from dividend and interest was determined by applying published details of dividend and interest declared on the June holding of the appellant arrived at by him. 37.3 The Ld. AR submitted that the impugned holding was determined by the AO on the basis of the holding determined in AY 1992-93 and the information with respect to the purchases of the assessee after 01.04.1992. He submitted that the details of published rates of dividend and interest declared as well as the June holding of the assessee have not been provided to him even though requested to the AO/CIT(A). The Ld. AR also submitted that dividend and interest cannot be taxed on presumptive basis. The dividend and interest paid by the company was duly credited to the bank account of the appellant. Since, the appellant was notified w.e.f. 08.06.1992, most of the dividend/interest receipts were deposited by the Custodian under the orders of Hon'ble Special Court. No company would ever pay such income in cash and therefore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and deposited in the bank account of appellant. Therefore, the amounts deposited in the bank account of the appellant ought to be treated as dividend / interest earned and received by the appellant. Hence, the addition made by the AO on presumptive basis deserves to be deleted. Without prejudice to the above, the Ld. AR submitted that the actual amount of dividend and interest received during the year by the appellant was Rs. 9,05,030/-. Since, the appellant was following cash method of accounting, only the amount actually received by him could be taxed. In this regard, the Ld. AR relied on the decision of the Tribunal in appellant's own case for AY 88-89 in ITA No. 5518/Mum/ 2007 dated 02.01.2008 and in ITA No. 5702/Mum/2017 dated 14.01.2019 wherein, in the context of interest on money market, the ITAT accepted the cash method of accounting followed by the appellant. Thus, in the facts of appellant's case and taking into account the method of accounting followed by the appellant, only that dividend can be brought to tax which have been actually received by the appellant and the same cannot be compared with the other assessee's who follow mercantile system of account. The appellant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the year; (ii) the holding of the assessee in shares and securities in the month of June, which was considered by the AO as the base for the purpose of calculating dividend and interest income and (iii) the published rates of dividend and interest declared by the companies and the working of the divided and interest income in respect of each scrip aggregating to Rs. 2,25,59,454/-. Such details were not provided by revenue to affirm the addition made by the AO. Hence, the addition is liable to be deleted. In this regard, the Ld. AR has relied on the following decisions of group cases, namely, (i) Pratima Mehta for AY 1992-93 in ITA No.416/Mum/2023 dated 26.10.2023, (ii) Hitesh S. Mehta for AY 1992-93 in ITA No.6026/Mum/2017 dated 31.08.2020, (iii) Deepika A. Mehta for AY 1992-93 in ITA No.379/Mum/2023 dated 05.04.2024 and (iv) Deepika A Mehta for AY 1989-90 in ITA No.3269/Mum/2015 dated 24.10.2016. Since the details and supporting evidences were not provided by the AO, the addition is liable to be dismissed in view of the above decisions. 39.2 The Ld. AR also submitted that no addition can be made on estimated basis. He submitted that assessee had received dividend interest incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t order. The AO arrived at the conclusion that in respect of 10 securities, the appellant had sold shares during the year and earned trading profit of Rs. 58,16,25,124/-. He also held that in respect of 7 scrips, the appellant had a negative closing stock and the value of such negative closing stock was determined at Rs. 138,68,35,985/-. 40.1 The above issue was adjudicated on merits for the first time by the CIT(A) in the 2nd round of litigation vide appellate order dated 24.03.2010. The CIT(A), in the impugned order dated 19.12.2023 passed in the 3rd round of litigation, has again confirmed the addition without giving any relief. The CIT(A), while deciding the said issue against the appellant, followed the order of his predecessor for AY 92-93 passed on 24.03.2010. He also observed that the claim of the appellant that the transactions were carried out on behalf of other parties cannot be accepted unless all the documentary evidences are furnished and verified by the AO. He also disregarded with the claim of the appellant that the transactions were carried out on behalf of the family members. The CIT(A) also rejected the contentions of the appellant with respect to the transact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e on account of share market trading profit deserves to be deleted. 40.4 The Ld. AR also submitted that during the course of hearing before the Tribunal, the Ld. DR was directed to provide all evidences based on which additions were made in the impugned assessment order. The Ld. DR had provided copy of the letter dated 29.05.2025 which referred to the reply dated 11.06.2018 filed by AO before ITAT during the proceedings for AY 92-93. The letter shows that the same relates to the proceedings for AY 92-93 and the averments made therein does not deal with proceedings for AY 93-94. Moreover, it was argued that the said contentions of Revenue in the said letter dated 11.06.2018 were considered by Tribunal while deciding the appeal for AY 1992-93. The Ld. AR also submitted that vide letter dated 01.01.2025, the Ld. Special Counsel was requested by the assessee to furnish "Information and evidence received from Reserve Bank of India, Bombay Stock Exchange and third parties about the transactions of purchase and sale in stock market and payment thereof by the assessee." However, no details were provided till completion of the hearing. 40.5 Without prejudice to the above, the Ld. AR s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... - - Total 50 1,66,200 17,382 9,97,20,000 CASTROL 5 13-05-1992 V B Desai 75,750 1,350 - 10,22,62,500 23,53,311 Total - 10,22,62,500 TATA STEEL 6 27-04-1992 CITI Bank 1,00,000 575 5,75,00,000 19,21,370 Total 1,00,000 - 5,75,00,000 TISCO (RT) 7 07-04-1992 Pannalal Kejriwal 150 - 689 1,03,350 07-04-1992 Pannalal Kejriwal 50 - 644 32,202 21-04-1992 Pannalal Kejriwal 50 - 679 33,943 21-04-1992 Pannalal Kejriwal 6 - 348 2,086 05-05-1992 Pannalal Kejriwal 50 - 654 32,700 05-05-1992 Pannalal Kejriwal 10 - 751 7,513 05-05-1992 Pannalal Kejriwal - 3,300 302 - 9,96,270 2,12,304 Total 316 3,300 2,11,794....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 60,000 10,000 60,00,00,000 34,34,77,592 2. V B Desai 63,500 5,550 35,24,25,000 3. Canara Bank 5,000 5,975 2,98,75,000 4. Hiten P Dalal 19,000 7,200 13,68,00,000 5. Pallav Sheth 18,000 6,000 10,80,00,000 Total... 1,65,500 122,71,00,000 40.8.2 In respect of the aforesaid sale of 60,000 shares, the Ld. AR submitted that the said transaction represents Ready Forward ("R/F") transaction undertaken by the Appellant with VBD for their clients, M/s. All Bank Finance Ltd. (a subsidiary of all Allahabad bank) ('AllBank'). Hence, the purchase transactions and its reversal do not constitute purchase and sale of shares resulting into profit/ loss in the hands of the appellant. The Ld. ARsubmitted that R/F transactions are in the nature of short-term loan from one bank to another bank disguised in the form of security transaction. It was submitted that in case of R/F deal, the borrowing bank sells the security to another bank and receives the consideration. These securities are agreed to be bought back at a fixed price at the end of the period of the loan at slightly high price. The difference....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent by it under the said R/F transaction. This Petition was adjudicated and disposed of by the Hon'ble Special Court vide its order dated 01.11.2002. The copy of the suit and the order passed has been filed before the ITAT in the paperbook. 40.8.4 Without prejudice, the details of transactions alleged to be unexplained by the AO also includes the purchase transactions for 60,000 shares of ACC Ltd. at the price of Rs. 62,10,00,000/-. If the contentions of the appellant that the sale of 60,000 shares represented R/F deal and not sale transaction was not accepted, the Appellant ought to be granted deduction of the cost of these shares which was also determined by the AO in the assessment order. If the cost of Rs. 62.10 crores was considered and allowed as deduction, it would transpire that the appellant had suffered loss in the said transaction. Hence, even on the said count, the addition made by the AO on account of alleged profit from transactions in 60,000 shares of ACC Ltd. was incorrect and unjustified. 40.8.5 With respect to the transaction in 63,500 shares of ACC Ltd, the AO has held that the transaction constituted sale of shares by the Appellant to VBD on 13.05.1992. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecting the receipt of the funds from Canbank Financial services, (iii) ledger A/c. of M/s. J. H. Mehta in the books of the Appellant for AY 93-94 and (iv) letter issued by M/s. J. H. Mehta dated 31.07.2009 confirming the said transactions undertaken by them with Canbank Financial Services. The Ld. AR also relied upon a letter dated 29.10.1994 addressed by Canbank Financial Services to the AO filed in the course of legal proceedings before the Hon'ble Special Court which revealed the details of the above transactions alongwith several other transactions wherein the appellant has been held to be a broker and not the party to the transaction. In view of the above, the addition made by the AO on account of sale of 5,000 shares of ACC Ltd. for the value of Rs. 2,98,75,000/- in the hands of the appellant was incorrect. 40.9.1 With respect to transactions in 19,000 shares with Hiten Dalal and 18,000 shares with Pallav Sheth, as per the details provided by the AO, a transaction was carried out on 16.04.1992 for sale of 19,000 shares of ACC Ltd. with Hiten Dalal. These details also show a transaction carried out on 20.04.1992 for sale of 18,000 shares of ACC Ltd. with Pallav Sheth. Howev....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The Ld. AR submitted that the above referred transactions do not represent sale of shares by the appellant. The detailed explanation in respect of each of the transactions is given below. 40.10.4 The Ld. AR submitted that the details reflect 5 different transactions of sale of RIL shares aggregating to 3,00,000 shares (1,92,770+7,230+41,900+8,100+ 50,000) made by the appellant. It was submitted that during the year, the appellant had sold 3,00,000 shares of RIL belonging to its client M/s. Harsh Estates Pvt. Ltd. to Citibank at different rates. The details of the said transactions are given below: Sr. No. Date of transaction No. of shares Rate Sale value 1. 02.04.1992 50,000 447.50 2,23,75,000 2. 07.04.1992 50,000 395 1,97,50,000 3. 08.04.1992 2,00,000 415 8,30,00,000 40.10.5 Since the said shares were sold by the appellant in the capacity of broker acting for and on behalf of M/s. Harsh Estates Pvt. Ltd., the same cannot be held to be sale of shares of the appellant. In support of the same, the appellant filed the following evidences: a) Ledger A/c. of Citibank in the books of the appellant for AY 93-94. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2, M/s. J. H. Mehta had sold 10,00,000 shares of RIL belonging to its clients to Canbank Financial Services @ 400/- for an aggregate consideration of Rs. 40,00,00,000/-. The said shares sold by M/s. J H Mehta belonged to Growmore Research & Assets Management Ltd., Cascade Holdings Pvt. Ltd. and Fortune Holdings Pvt. Ltd. The Ld. AR has also filed the following evidences before the ITAT to establish that the transaction does not pertain to the appellant. a. Ledger A/c. of Canbank Financial Services in the books of the M/s. J. H. Mehta for AY 93-94. b. Breakup of the receipt of Rs. 46,47,85,000/- by the Appellant on behalf of M/s. J.H. Mehta c. Ledger A/c. of M/s. J. H. Mehta in the books of the Appellant for AY 93- 94 d. Ledger A/c. of the Appellant in the books of M/s. J. H. Mehta for AY 93- 94 e. Contract note dated 08.04.1992 issued by M/s. J. H. Mehta to Canfina. f. Ledger A/c. of Growmore Research and Assets Management Ltd. in the books of the M/s. J. H. Mehta for AY 93-94. g. Contract note dated 08.04.1992 issued by M/s. J. H. Mehta to Growmore Research and Assets Management Ltd. h. Computation of income a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ries show that the subject transaction of sale of 15,00,000 shares of Reliance Industries Ltd. was undertaken by Citibank through broker, Hiten P. Dalal and not by the appellant. On 10.04.1992, the appellant has received Rs. 60 crores from Hiten P. Dalal as loan against shares of various companies. The said receipt was also duly reflected by the appellant in the books of account. In view of the above, the transaction of sale of 15,00,000 shares of RIL cannot be added in the hands of the appellant. 40.10.14 With respect to the transaction in 4,33,000 shares, the Ld. AR contended that the AO has not provided the evidence gathered by him from third parties on the basis of which it has been alleged that the appellant had sold 4,33,000 shares to Hiten Dalal. Hence, no explanation can be provided unless the evidences relating to the said transaction is provided by the AO. No addition can also be made due to failure of the AO to provide the underlying evidences. 40.11 Apollo Tyres Ltd. ('APL'): The Annexure S-1 captured sale transactions in respect of 4,74,700 shares of APL based on information received from 3rd parties. According to the AO, there was opening stock of 18,59,754 shar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 29.10.1994 addressed by Canbank Financial Services to the AO filed in the course of legal proceedings before the Hon'ble Special Court which reveals the details of the above transactions along with several other transactions wherein the appellant has been held to be a broker and not the party to the transaction. In view of the above, the addition made by the AO on account of sale of 25,000 shares of APL for the value of Rs. 87,50,000/- in the hands of the appellant was improper. 40.11.3 With respect to transaction in 4,43,950 shares and 750 shares in APL, as per the details provided by AO, a transaction was carried out on 20.04.1992 for sale of 4,43,950 shares of APL with Pallav Sheth. Similarly, the details also show a transaction was carried out on 28.04.1992 for sale of 750 shares of APL with Rajesh H. Shah. However, no such sale transactions have been carried out by the appellant. The AO has not provided the evidence gathered by him from third parties on the basis of which it has been alleged that the appellant had sold 4,43,950 shares of APL to Pallav Sheth and 750 shares to Rajesh Shah. Unless the said evidences are provided, the appellant cannot explain the said tra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns in Castrol (I) Ltd. gathered by the AO from the enquiries with the third parties is as follows: Sr. No. Name of the party No. of shares Rate Sale value Addition on account of trading profit 1. V. B. Desai 75,750 1,350 10,22,62,500 23,63,311 Total... 75,750 10,22,62,500 40.13.1 The explanation provided by the appellant in respect of the said transaction was identical to the explanation provided in respect of shares of ACC Ltd. and transactions with AllBank Finance Ltd. The Ld. AR also relied upon the affidavits filed by the various shareholders to whom these shares belonged to. In light of the above submissions, he submitted that the said transaction in the shares of 75,750 shares of Castrol Ltd. for the sale consideration of Rs. 10,22,62,500/- cannot be held as sale of shares of the appellant. 40.14 Tata Steel Ltd.: The Annexure S-1 captured sale transactions in respect of 1,00,000 shares of Tata Steel Ltd. based on information received from 3rd parties. According to the AO, there was opening stock of 5,500 shares of Tata Steel Ltd. as per the assessment order for AY1992-93. The details of the trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons in respect of 3,300 shares of TISCO (RT) based on information received from 3rd parties. The said information also reflected purchase of 316 shares by the appellant. The details of the transactions in TISCO (RT) gathered by the AO from the enquiries with the third parties is as follows: Sr. No. Name of the party No. of shares Rate Sale value Addition on account of trading profit 1. Pannalal Kejriwal 3,300 301.90 9,96,270 2,12,304 Total... 3,300 9,96,270 40.15.1 As per the details provided by the AO, a transaction was carried out on 05.05.1992 for sale of 3,300 shares of TISCO (RT) with Pannalal Kejriwal. However, no such sale transaction has been carried out by the appellant. The AO has not provided the evidence gathered by him from third parties on the basis of which it has been alleged that the appellant had sold 3,300 shares of TISCO (RT) to Pannalal Kejriwal. Unless the evidence based on which the additions are made are provided to the appellant, no such addition can be sustained. 40.16 Andhra Valley: The Annexure S-1 captured sale transactions in respect of 500 shares of Andhra Valley based on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re S-1 captured sale transactions in respect of 1,70,000 shares of L & T based on information received from 3rd parties. According to the AO, there was opening stock of 2,38,990 shares of L & T as per the assessment order for AY 1992-93. The details of the transactions in L & T gathered by the AO from the enquiries with the third parties is as follows: Sr. No. Name of the party No. of shares Rate Sale value Addition on account of trading profit 1. Canara Bank 1,70,000 153.88 2,61,60,000 (-) 1,09,58,200 Total... 1,70,000 2,61,60,000 (-) 1,09,58,200 40.18.1 The details provided by the AO shows that a transaction was carried out on 20.04.1992 for sale of 1,70,000 shares of L & T with Canara Bank. On verification of the records, it transpired that on 20.04.1992, M/s. J. H. Mehta had sold 1,70,000 shares of L & T to Canbank Financial Services (Subsidiary of Canara Bank) @ Rs. 150.88 per share for an aggregate consideration of Rs. 2,61,60,000/-. It appeared that the said transaction has been reported in the name of the appellant. The Ld. AR submitted that sale transaction does not pertain to the appellant and hence no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the impugned addition is not justified as evidences in support thereof where not brought on record in spite of multiple requests made to the AO and CIT(A) by the assessee. It was also submitted that though inspection for AY 1992-93 was allowed, inspection for the subject AY 1993-94 was not allowed. The appellant also submitted that though summary of transaction in shares with 3rd parties were provided, but the underlying evidences based on which the summary was prepared were never provided to the assessee. The appellant has given the details of correspondence between him and the AO wherein several requests were made but the details were not provided by the AO. In this regard, he has relied on the decision in case of Hitesh S. Mehta (supra) where the Tribunal observed that if the AO does not provide the material, the addition cannot be made and hence, the issue was set aside to the file of AO. The Hon'ble High Court has upheld the finding of the Tribunal. We also find that in cases of other family members, namely, Pratima H. Mehta (supra) and Deepika A. Mehta (supra), similar view was taken by the Tribunal. We also note that during the course of hearing before the Tribunal, dire....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n. The Allahabad Bank filed a claim for recovery before the Hon'ble Special Court so as to recover the amount lent under the RF transactions. 42.4 The ld. AR submitted, in the alternative, that the alleged transaction includes purchase of 60,000 shares of ACC Ltd. If the cost of the shares is considered and allowed as a deduction, there would be loss in the impugned transaction. In conclusion, the Ld. AR submitted that the addition cannot be sustained in any manner. 42.5 Regarding the sales of 63,500 shares of ACC Ltd. to V.B. Desai, the assessee has submitted that the same pertains to additional securities belonging to the assessee and his family members which were handed over to Allahabad Bank in connection with the sale of shares mentioned in the earlier paragraph. The appellant submitted that out of the above shares of 63,500 shares, 60,000 shares represents those shares which were initially handed over by the appellant and were lying with Allahabad Bank under RF deal. It was also submitted that the remaining 3500 shares of ACC Ltd. constituted pledge of the securities by VBD to AllBank and was not sale of securities. It was also submitted that these securities belong to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on the 3rd interim report of Janakiraman Committee. However, the appellant received loan of Rs. 60 Cr. from Hiten P. Dalal against shares of various companies. Hence, the Ld. AR requested not to make any addition in this regard. 42.11 With respect to sale of 4,33,000 shares of RIL, the Ld. AR submitted that the AO has not provided the evidence gathered by him from 3rd parties on the basis of which he concluded that appellant sold these shares to Hiten Dalal. Hence, the addition cannot be made. 42.12 Regarding sale of 4,74,700 shares of Apollo Tyres Ltd., the Ld. AR submitted that no shares were sold by the appellant to Canara Bank or Pallav Sheth. He submitted that M/s J.H. Mehta had sold 25,000 shares of APL belonging to her client, Orion Travels Ltd. to Canara Bank. The Ld. AR also submitted that the assessee had also not carried out sale transactions of 4,43,950 and 750 shares with Pallav Sheth and Rajesh Shah respectively. The AO has not provided the evidence collected from 3rd parties on the basis of which the conclusion has been arrived at by him. Hence, no addition can be made. 42.13 Regarding sale of 1,66,200 shares of Tata Tea Ltd., the Ld. AR submitted that the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....constitute purchase and sale of shares giving rise to profit in the hands of the appellant. As held by the Tribunal in earlier year, RF transactions are in the nature of short-term loan from one bank to another in the guise of security transactions. The borrowing bank sales securities and receives consideration and the securities are bought back at a fixed price at the end of loan period at slightly high price. This represents interest on loan. This has been accepted by the Janakiraman Committee appointed by RBI in its interim report of May, 1992. The co-ordinate Bench of ITAT has also accepted RF transactions to be in the nature of short-term loan in ITA No.8025/Mum/1994 dated 25.09.2008 (PBP 956 to 963). Hence, no additions on account of shares market trading profit could be made in respect of the above RF transactions. 42.19 We also find that the 500 shares of ACC Ltd., 10,00,00 shares of RIL, 25000 shares of APL and 1,70,000 shares of L&T were sold by M/s J.H. Mehta and not by the appellant. The revenue has not bought anything to disprove the claim of the appellant that these shares belong to the assessee, Hence, the addition cannot be made in the hands of the appellant. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... He also made addition on account of oversold position in shares for sale in excess of holding determined. In the ground no. 9, the Ld. AR has already explained that these transactions considered as sale by the AO in the hands of the appellant was not correct. The said explanation covered sale of shares of the aforesaid companies also. In view of the said explanation, he submitted that the addition made by the AO on account of oversold position in shares of the above 4 companies ought to have been deleted. 43.3 Great Eastern Shipping (GE Shipping): The Annexure S-1 captured sale transactions in respect of 6,50,000 shares of GE Shipping based on information received from 3rd parties. According to the AO, since the appellant neither had any opening stock of the shares of the said company nor had any purchases during the year, the entire sale of 6,50,000 shares of GE Shipping at the value of Rs. 11,77,50,000/- constituted oversold position in shares. 43.2.1 The details of the transactions in GE Shipping gathered by the AO from the enquiries with the third parties is as follows: Sr. No. Name of the party No. of shares Rate Sale value Addition on account of Overs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt Holdings Pvt. Ltd. confirming the said transactions undertaken by them with the appellant. f. Audited financial Statements of M/s. Eminent Holdings Pvt. Ltd. for the year ending 31.03.1993 alongwith the break up of the profit on sale of shares. g. Ledger A/c. of M/s. Zest Holdings Pvt. Ltd. in the books of the appellant for AY 93-94 h. Contract note dated 03.04.1992 and 06.04.1992 issued by the appellant to M/s. Zest Holdings Pvt. Ltd. i. Letter dated 17.07.2009 issued by M/s. Zest Holdings Pvt. Ltd. confirming the said transactions undertaken by them with the appellant. j. Computation of income of M/s. Zest Holdings Pvt. Ltd. for AY 93-94 alongwith Audited financial Statements of M/s. Zest Holdings Pvt. Ltd. for the year ending 31.03.1993 and the break up of the profit on sale of shares. k. Ledger A/c. of Jyoti H. Mehta in the books of the appellant for AY 93-94 l. Letter dated 17.07.2009 issued by Jyoti H. Mehta confirming the said transactions undertaken by them with the appellant. m. Ledger A/c. of Harsha D. Shah. in the books of the appellant for AY 93-94 n. HSM-Investment A/c. in the books of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the year, the entire sale of 12,695 shares of Tata Power Ltd. constituted oversold position in shares. 43.4.1 The details of the transactions in Tata Power Ltd. gathered by the AO from the enquiries with the third parties is as follows: Sr. No. Name of the party No. of shares Rate Sale value Addition on account of Oversold Position 1. V. B. Desai 12,695 1,850 2,34,85,750 2,34,85,750 Total... 12,695 2,34,85,750 2,34,85,750 43.4.2 The Ld. AR submitted that the said transaction in 12,695 shares of Tata Power Ltd. did not constitute sale of shares by the appellant. According to the AO, the transaction constituted sale of 12,695 shares by the appellant to VBD on 13.05.1992. In the ground No. 9, it has been explained that the said transaction constituted pledge of shares by VBD with AllBank and was part of the R/F deal in 60,000 shares of ACC Ltd. Hence, the same did not constitute oversold position in shares. Moreover, the details of the shareholders of the pledged shares were provided in Exhibit X to the petition filed by AllBank which showed that except 5,689 shares, other shares belonged to other family mem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eir behalf. 43.5.5 In light of the above submissions, the Ld. AR submitted that the said transaction in the shares of 75,000 shares of Ruchi Soya Ltd. for the sale consideration of Rs. 1,74,75,000/- cannot be held as sale of shares of the appellant. 44. On the other hand, the Ld. Special Counsel support the order of lower authorities. 45. We have heard both sides and perused the materials on record. We find that the facts and the basis of the addition on account of oversold position in shares in the impugned ground are similar to the previous ground pertaining to the addition towards share market trading profit. In case the sale of shares was more than the opening stock and the purchases during the year, the said excess sale was considered as oversold position. We find that the oversold position in respect of shares of RIL, Tata Tea Ltd., Castrol India Ltd. and Tata Steel Ltd. is on the same basis, which led to addition on account of share market trading profit. The Ld. Counsel for revenue has not been able to rebut the submissions of the appellant. He has not bought any new and tangible materials on record to take a different view. Hence, following the reasons given in gr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Rs. 224/-. In the said ground, the appellant has challenged the addition on account of 2 entries in the bank account of Rs. 6,16,39,480/- and Rs. 224/-, which were added by the AO as unexplained receipt in assessee's bank account. The Ld. AR submitted that since a massive search action was carried out by the department and various other government agencies, the appellant had lost complete records as the same were seized by the various agencies. The appellant, therefore, could not trace records relating to the said bank receipts added by the AO. The assessee had also addressed letter to the bank seeking explanation for the nature of deposits and the parties who have paid the said amount. However, no response was received by the appellant. In view of the difficulties faced by the appellant over the years on account of search action and the subsequent notification under the Special Courts Act, the Ld. AR requested that the appellant may be granted one opportunity to obtain the details from the bank and explain the transaction. This is more so because no part of the transaction can remain unexplained as the same were completely scrutinized by the various government agencies and the S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4,45,10,514/- treating the loans and advances as alleged unexplained investments u/s. 69 of the Act. 49.1 The CIT(A), in the impugned order passed in the third round of litigation, has again confirmed the said addition. While deciding the said issue, he held that no books of account have been furnished by the appellant before him and, therefore, the question of the said investment in the form of loans and advances having not been recorded in the books of account does not arise. He, therefore, rejected the contentions of the appellant that addition could not have been made u/s. 69 of the Act. The CIT(A) further held that the addition on account of opening balance of the loans and advances was also correct in view of the fact that these balances have been reported as on 08.06.1992. The CIT(A) also rejected the prayer of the appellant for telescoping of the said addition against the addition on account of source of income made by the AO. 49.2 The Ld. AR submitted that by making the aforesaid addition, the CIT(A) had brought to tax an entire new source of income during the appellate proceedings which is beyond the powers granted to him u/s. 251 of the Act. It was submitted that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave been recorded in the books c. The ledger account of these parties from the books of account reflecting the balance d. Extract of the report of M/s. Vyas & Vyas, special auditor 49.5 He submitted that, in fact, some of the loans added were also pertaining to earlier year and therefore the same cannot be treated as unexplained investments in the year under appeal as the same falls outside the ambit of s. 69 of the Act. In this regard, reliance was placed on the following decisions: a. Ushakant N. Patel v. CIT [282 ITR 553 (Guj.)] b. CIT v. Mrugesh Jaykrishna [245 ITR 638 (Guj.)] c. DCIT v. Singla Enclave Developers Pvt. Ltd. [40 Taxmann.com 127 (Chd.)] 49.6 The Ld. AR, therefore, prayed that the aforesaid addition made u/s. 69 of the Act is legally not tenable and therefore may kindly be deleted. 49.7 Without prejudice to the above, the Ld. AR also submitted that out of the total loans and advances amounting to Rs. 4,45,10,514/-, loans and advances to the tune of Rs. 3,95,41,589/- represented the loans given in the earlier years and remaining outstanding as on 31.03.1993. It was submitted that the aforesaid addition constitute....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is not tenable. Being a subordinate authority, the AO was bound by the direction of the Tribunal. The remedy lies elsewhere; the assessee could have challenged order of the Tribunal before Hon'ble High Court. Hence, the action was the AO was in accordance with law and cannot be set aside. 51.1 Be that as it may, the power of enhancement by the CIT(A) in respect of a new sources of income has attracted judicial attention in a number of cases. Section 251(1)(a) of the Act grants the CIT(A) statutory power of enhancement in an appeal against an order of assessment. As held by the Hon'ble Supreme Court in case of CIT v. Kanpur Coal Syndicate, 53 ITR 225 (SC), the scope of CIT(A) power is co-terminus with that of AO. He can do what the AO cannot do and also direct him to do what he has failed to do. These are special and exceptional attributes of the jurisdiction of the first appellate authority, which is not bestowed even upon in the higher appellate authorities. In absence of any statutory provision, the CIT(A) is vested with all the plenary powers which the subordinate authority may have in the matter. Amounts relating to new sources of income of items not considered by the AO fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....passed on 24.03.2010 by enhancing the income of the appellant on account of interest earned by the appellant from the family members amounting to Rs. 7,40,00,000/-. 52.1 The CIT(A), in the impugned order passed in the 3rd round of litigation, has again confirmed the said addition. The CIT(A) in the order observed that although identical addition made by way of enhancement by his predecessor during AY 1992-93 was deleted by the Tribunal, appellant was following mercantile system of accounting during the year under appeal. Further, it was alleged that no proper maintenance of accounts was found in the case of appellant. Based on the said findings, the addition made by the AO was confirmed by the CIT(A). 53. At the very outset, the Ld. AR pointed out that while dismissing the said ground, CIT(A) has inadvertently referred the addition to be of Rs. 11,85,00,000/- instead of Rs. 7,40,00,000/-, which needs to be corrected. He submitted that the addition made by the CIT(A) in the 2nd round of litigation by way of enhancement is beyond his powers and jurisdiction and, therefore, the same is unjustified on the said ground alone. This issue is identical to the issue raised in Ground no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ceipts. The assessee has consistently followed cash system of accounting in respect of interest income. This consistent position cannot be overlooked on the ground that other relatives of assessee are recognizing interest income on mercantile basis. Tribunal, thus in AY 89-90 deleted the addition before us even though the Ld. DR vehemently relied on the order of the authorities below but could not bring to our knowledge any decision contrary to the decision of the Tribunal for the AY 89-90. In assessee's own case holding that interest income has to be recognized in the case of the assessee on actual receipt basis. The Id DR even did not deny that the assessee was following the cash system of accounting in respect of interest income. We, therefore following the decision of this Tribunal in the case of the assessee for AY 89-90 in ITA no. 637/Mum/2007 set aside the order of the AO on this issue and delete the addition of Rs. 11,85,00,000/-. Thus, the ground no 23 of assessee's appeal is allowed." 55.1 The Ld. Special Counsel has not distinguished the above case either on fact or on law. We also find that the co-ordinate Bench in assessee's own case for AY 1989-90 in ITA No....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The Ld. Special Counsel has not been able to distinguish the above decision either on facts or in law. Hence, following the above decisions of the coordinated bench of the Tribunal, the ground is allowed. 60. Ground No. 16 pertains to not granting set off of addition on account of source of income against application of income following telescoping theory of determination of income. The Ld. AR submitted that the appellant had raised ground for granting set off of addition on account of source of income against the expenses/application of income following telescoping theory. It was submitted that income earned can be said to have been utilized for making alleged unexplained investment or unexplained expenditure. It was, therefore, contended that once some source of income is assessed in the hands of the appellant, the investment allegedly added by the AO ought to be presumed, in absence of evidence to the contrary, out of source of income assessed to tax in the order. In other words, the appellant should be granted the benefit of "telescoping" in respect of alleged unexplained income. The appellant relied upon the following decisions: a. Late Harshad S. Mehta [Legal Hei....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... after considering tax deductible at source on income assessed. The Ld. AR submitted that the CIT(A) vide his order had directed the AO to verify and grant credit of the due taxes to the appellant as per the law. Thus, this ground becomes academic in nature and does not require adjudication. 67. Ground No. 21 pertains to not holding that interest u/s. 220 of the Act would not be leviable. The Ld. AR submitted that the interest u/s. 220 of the Act in case of de novo assessment need not be charged from date of original assessment order but rather from fresh assessment order. This has not been allowed by the CIT(A). The appellant submitted that since the Tribunal had set aside the case of the appellant to the file of AO for de novo adjudication of the issues challenged in appeal before them, the interest u/s. 220 of the Act could only have been levied pursuant to the consequential assessment order passed by the AO. However, the AO has levied interest from the date of the original assessment order passed in the present case and included in the aggregate demand raised, which is contrary to the said legal position. This view has also been held by the Tribunal in the case of the appell....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on, the ground is allowed. 70. In the result, the appeal of the assessee is partly allowed. ITA No.975/Mum/2024 (AY 1993-94) 71. Ground No. 1 of the revenue's appeal pertains to addition of Rs. 13.91,00,000/- on the basis of review of unaudited accounts prepared by M/s. Vvas and Vyas, C.As. During the course of 2nd round of litigation, the CIT (A), vide his order dated 24.03.2010, had enhanced the income of the appellant by Rs. 13,91,00,000/-. The CIT (A) referred to the statement of affairs prepared by M/s. Vyas and Vyas, CAs, Special Auditors. He observed that the statement of affairs on the liability side reflects on amount of Rs. 83,51,53,713/-as other income not shown in books and that the said income has not been assessed to tax. Therefore, he proposed enhancement of income for A.Y. 1992-93 and A.Y. 1993-94 by Rs. 83.51 crores. Out of the said amount Rs. 69.63 crores were added in the hands of the appellant for A.Y. 1992-93 and the balance amount of Rs. 13.91 crores was added by way of enhancement in his order for A.Y. 1993- 94. The above amount was also added by the AO in the impugned assessment order under appeal during the set aside proceedings. However, since the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m/2007] dated 13.12.2007 for A.Y. 1994-95. b) Jyoti H. Mehta v. ACIT [ITA No. 3211/mum/2012] dated 21.03.2014 for A.Y. 1992-93. c) Late Shri. Harshad S. Mehta v. DCIT [ITA No. 637/mum/2007] dated 02.01.2008 for A.Y. 1989-90. 72.3 In view of the said findings, the appellant submits that the addition made by the CIT(A) by way of enhancement in the 2nd round of litigation and reiterated by the AO ought to be deleted. 73. On the other hand, the Ld. Special Counsel relied on the order of AO. 74. We have heard both sides and perused the materials on record. We have also gone through the decision of the ITAT in appellant's own case for AY 1992-93 in ITA No.5702/Mum/2017 (supra), wherein the issue was decided as under: "24.6. We have heard rival contentions and carefully considered the same along with the orders of the authorities below. We noted that the said addition has been made mainly on estimate basis on account of liabilities which were shown as other income in the review of the unaudited accounts of the assessee prepared by M/s Vyas & Vyas as on 8.6.1992 when the search has taken place. It was noted that the liabilities were to the extent of Rs 8....