INCOME TAX OFFICER 10(1)(1), AAYAKAR BHAVAN V. KUNAL COMTRADE PRIVATE LIMITED, MUMBAI

ITA 3730/MUM/2024

AI Insights

The case involves Kunal Comtrade Private Limited, which faced reopened assessments for the Assessment Years 2013-14 and 2014-15 based on information from the CBDT regarding irregularities in the National Spot Exchange Ltd (NSEL). The AO made several additions to the assessee's income, including outstanding receivables, profits from trading, and brokerage income, which the assessee contested. The Ld CIT(A) deleted these additions, a decision upheld by the Tribunal. The Tribunal noted the lack of confrontation with the assessee regarding the material used for the additions and the failure of the AO to provide necessary documents during the proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471313 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BISWANATH DAS
• Assessee Lawyers: MANI JAIN
• Keywords: Reassessment proceedings; Transactions in derivatives
• Section: 142(1); 145

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “E” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No. A.Y. Appellant Respondent 3731/Mum/2024 2013-14 Income Tax Officer, Ward-10(1)(1), Aayakar Bhavan, Mumbai Kunal Comtrade Private Limited, C-303, Orchid Enclave, JB Nagar, Andheri East, Mumbai [PAN: AAECK7870K] 3730/Mum/2024 2014-15 For Assessee : Shri Mani Jain For Revenue : Shri Biswanath Das, CIT-DR Date of Hearing : 11-02-2025 Date of Pronouncement : 06-03-2025 O R D E R PER B.R. BASKARAN, A.M : Both the appeals filed by the Revenue relate to Assessment Years (AYs.) 2013-14 and 2014-15. They are directed against the orders passed by the Ld.CIT(A), NFAC, Delhi. The facts surrounding the reopened assessments of both the years are identical in nature. Hence, both the appeals were heard together and they are being disposed of by this common order, for the sake of convenience. 2. The AO had reopened the assessments of both the years on the basis of information received from CBDT, which in turn, had received letter from 2 ITA Nos. 3730 & 3731/Mum/2024 National Spot Exchange Ltd (NSEL) with regard to irregularities found in that spot exchange. 3. The assessee company is carrying on the business as “trader, consultant, adviser, broker for any commodity, financial products etc. It is a trading member of Indian Bullion Market Association Ltd (IBMA) in NSEL. It filed its return of income for AY 2013-14 and 2014-15 declaring total loss of Rs.28,82,775/- and NIL income (after set off of brought forward loss) respectively. Subsequently, the AO reopened the assessment of both the years on the basis of information received from CBDT with regard to irregularities committed by some persons in NSEL. It was noticed that the assessee herein was actively trading in paired contracts on its own accord through clearing cum trading member Indian Bullion Market Association Ltd (IBMA) without taking delivery of commodities. 4. For the year relevant to AY 2013-14, the AO received information that the assessee was having outstanding receivables of Rs.14.34 crores from IBMA. The information received from CBDT mentioned that the assessee has bought commodities for a value of Rs.54.34 crores and sold the commodities for Rs.55.34 crores. Thus, it made a profit of Rs.1.00 crores in trading. The information also contained details of trading carried on by the assessee as broker to certain customers. Though the assessee denied any of the above said information, the AO, by placing reliance on the information received from CBDT, assessed following income in AY 2013-14:- 1. Outstanding receivables from IBMA - 14.34 crores 2. Profit from trading in commodities - 1.00 crore 3. Brokerage in trading for others @ 2% - 6.48 crores 3 ITA Nos. 3730 & 3731/Mum/2024 5. For the year relevant to AY 2014-15, the AO received information that the Directors of the Company Mr. Navin Agarwal had introduced funds to the extent of Rs. 7.55 crores and Mr. Anurag Agarwal Rs. 4.88 crores. Hence the capital infusion was to the extent of Rs. 12.43 crores as on 31-03-2014. However, in the return of income, the assessee has only showed that the capital was only Rs. 6 lakhs only. Accordingly, the AO took the view that there was under reporting of capital infusion 6.43 crores. (The AO has arrived at this figure by deducting 6 crores from the capital infusion amount of Rs.12.43 crores).The AO assessed the same as income of the assessee. As in AY 2013-14, the AO assessed the outstanding receivable of Rs.23.91 crores and estimated brokerage income of Rs.6.48 crores in this year also. 6. It is pertinent to note that the assessee had asked for the copy of the information, which formed the basis for making above said additions. However, the AO never supplied the same to the assessee. During the course of hearing before the ITAT, the Tribunal had directed the Ld DR to obtain the information/materials, which were relied upon by the AO to make the above said additions. However, the AO, vide his letter dated 05-02-2025, replied as under:- “With respect to submission of documents called for vide letter dated 06-01-2025 at Sr No.2(a) & 2(b), it is submitted that all the necessary efforts have been taken to trace out the said documents, however, the same could not be traced out. Moreover, reconstructed files of the above mentioned assessee viz., M/s Kunal Comtrade, PAN: AAECK7870K for both the A.Y 2013-14 & 2014-15 have already been forwarded by this office along with letter dated 15.01.2025.” We notice that the AO has not furnished the information, which formed the basis for making above said additions. It is well settled proposition that the AO could not make any addition on the basis of any material without confronting the same with the assessee.It is pertinent to note that the revenue could not furnish those documents/material before the 4 ITA Nos. 3730 & 3731/Mum/2024 Tribunal also. Hence, on this count alone, the additions made in both the years are liable to be deleted. 7. Be that as it may, we shall examine the additions on their merits. We notice that the assessee has furnished all the information available with it to prove that the information received by the AO was contrary to facts available on record. We notice that the assessee has made detailed submissions before the Ld CIT(A) on each of the additions made by the AO in both the years under consideration. The Ld CIT(A) has summarized them and after considering them, he has rendered his decision in respect of each of the additions. We notice that the discussion so made by the Ld CIT(A) and decision rendered by him in respect of each of the issue is comprehensive in nature and hence we extract the same below:- ASSESSMENT YEAR 2013-14:- 8. The first issue relates to the addition of outstanding receivable of Rs.14.34 crores. The submissions made by the assessee against this addition have been summarized by the Ld CIT(A) as under:- 11.2 The gist of submission made by the appellant is reproduced hereunder: - (i) During the entire assessment proceedings the AO has not provided copy of the Annexure VII forwarded by the NSEL to the CBDT. (ii) The appellant is a registered stock broker on the NSEL. The commodity transactions were under taken through IBMA. The transactions were made on the portal provided by the NSEL. In respect of transactions under taken on behalf of the clients, the appellant issued contract notes. It is not aware of any wrong doings if any by NSEL proved subsequently. (iii) The AO relied on the letter of the third party without verifying actual position. It was further contended that 300 brokers were engaged in the wrong doings to the exchange of Rs.5600 Crore, by brokers who were defaulter and diverted the trading money. The NSEL has released a list of such defaulters and the role of such defaulter in the NSEL scam. The link for the portal is as under: 5 ITA Nos. 3730 & 3731/Mum/2024 (a)http://www.nselrecoverygroup.net/defaulters/role-of- defaulters.html (b)http://www.nselrecoverygroup.net/defaulters/amount- receivable-fronv defaulting~members.html (iv) Pursuant to the NSEL scam unearthed in July 2013, the NSEL itself initiated recovery measures to recover outstanding amounts from defaulter. This Act of NSEL itself shows that neither NSEL nor brokers & trading members (except defaulters) were knowingly part of such irregularities. Therefore, contention of Id. AO that appellant was part of such wrong doings and was a beneficiary of such default is incorrect. Not a single evidence has been brought on record by the AO to prove that the appellant was part of the overall scam. It is rather submitted that appellant itself has suffered loss as a result of scam. (v) The statutory compliance of IBMA is not the concern of the appellant. The appellant being a third party was not required to look into such compliances in case of IBMA. (vi) The AO has not provided copy of forensic audit report to the appellant. (vii) The outstanding receivable of Rs.14.34 Crore contended by the AO is incorrect in fact appellant has an outstanding receivable of Rs.18,98,616/- which is reflected in the audited financial part of paper book at page no.17 to 22. (viii) The IBMA in its email reply to the appellant dated 10.03.2016 has attached ledger account for F.Y.2013-14 which was forming part in its books of account. The said ledger shows opening balance of Rs.18,52,190/- (i.e. closing balance of F.Y.2012-13). The difference of Rs.46,426/- was on account of certain margin money which was to be settled by both parties mutually (Copy of the mail reply & the ledger attached with the said reply is enclosed at page no. 23-32 of the paper book). (ix) During the course of assessment proceeding appellant has duly submitted various details such as contract notes issued by appellant to its clients in respect of transactions undertaken by it on NSEL. The appellant has already offered brokerage income arising out of such transaction. Copy of the brokerage income ledger account is placed at page no. 33-34 of paper book. Further, the client of the appellant has also offered income being profit arising out of such purchase & sale of commodity. Copy of the financials of Sital Mercantile & Credit Private Limited ((hereinafter referred to as \"SMCPL\") and Urmila Real Estates Private Limited (hereinafter referred to as \"UREPL\") are enclosed at page no. 35-59 of the paper book. Both these entities have duly disclosed commodity trading in their financials. 6 ITA Nos. 3730 & 3731/Mum/2024 (x) Trade receivable by itself does not represent income which is liable to tax. The books of accounts were not rejected by Id. AO u/s. 145 of the Act. In such circumstances, trade receivable cannot be doubted. If the trade receivable is non-genuine, the same needs to be written off as an expenditure. How such receivable can be treated as income. It is beyond the scope of accounting principle. 8.1. The decision rendered by the Ld CIT(A) on this addition reads as under:- 11.3Perusal of the Profit & Loss account of the appellant for A.Y.2013- 14 reveals as under: - Perusal of the above financial of the appellant reveals that the appellant is involving sales of commodities to the tune of Rs.19.19 Crores. Against this it has shown purchase to the tune of Rs.21.90 Crores. The closing in stock has been shown at Rs.2.98 Crores. Under these circumstances, the profit on commodities would be approximately Rs.27 lacs which has been duly reflected in the books of accounts. The AO has not brought on records anything to disprove these financials. The books of accounts of the appellant have not been rejected. Further, mere receivable cannot be considered as income unless and until it is brought 7 ITA Nos. 3730 & 3731/Mum/2024 on record the source and nature of such receivable. Receivables if any out of purchases and sales/ trading activity would result into trade debtors. Thus, trade debtors if any cannot be held to be income. In fact, the receivable/ debtors comes to the existence only after offering income/ sales. The AO has not brought on record any evidences to establish the nature of transactions carried out by the appellant which would generate income to the appellant to the tune of Rs.14.34 Crores. The AO has merely relied on the information received from NSEL in the form of letter sent to Member, CBDT. The AO has not carried out any further verification with NSEL (National Spot Exchange Limited) or IBMA (Indian Bullion Market Association) regarding the nature and volume of transactions as well as the balances of the trade receivable. Since, no contradictory evidences have been brought on record to rebut the submission of the appellant the addition made merely on the basis of the letter dated 13.06.2016 of the NSEL has no basis. Further, the appellant objections that the appellant was not granted copy of “annexure-VII” to the letter dated 13.06.2016 during the assessment proceedings nor during reopening proceedings are grave and incorrigible lacuna. The appellant has further argued that the addition has been made without providing the material on which he has taken adverse view against the appellant. 11.4 Considering the discussion made by the AO in the assessment order and submissions filed by the appellant, it is seen that no documentary evidences have been brought on record by the AO rebut the documentary evidences filed by the appellant in the form of ledger account of IBMA (Indian Bullion Market Association Ltd) for the period 01.04.2012 to 31.03.2013 wherein the closing balance is reflected at Rs.18,98,616/-. During the appellate proceedings the copy of ledger account submitted by the IBMA through email was also filed for F.Y.2013-14. The opening balance reflecting therein was Rs.18,52,190/-. There was a minor of Rs.46,426/- for which the appellant stated that the variation was on account of certain margin money which was to be settled by both parties mutually. In view of the above findings not discrepancy has been establish by the AO. The addition of Rs.14,34,00,000/- is therefore deleted. Ground No.8 & 9 of the appellant are allowed.” 8.2. We heard the parties on this issue. As observed by the Ld CIT(A), any amount receivable by the assessee cannot straight away constitute income in the hands of the assessee. As noticed earlier, the assessee has carried on trade on its own account and also on behalf of its customers. First of all, the trade receivable declared in the books of accounts of the 8 ITA Nos. 3730 & 3731/Mum/2024 assessee did not tally with the alleged information shared with the AO. Secondly, the information so received was not cross checked by the AO. Thirdly, that information was not confronted with the assessee. Fourthly, the AO could not prove that the books of accounts of the assessee are not reliable. Further, the AO had placed reliance on the impropriety/irregularity in the audit of accounts of IBMA/NSEL. In our view, the assessee cannot be found fault with in regard to the above said impropriety/irregularity happening in the hands of third parties. We notice that the ld CIT(A) has considered all these important points in order to arrive at the conclusion that the addition of Rs.14.34 crores relating to outstanding receivables is not assessable as income of the assessee. Accordingly, we uphold order passed by Ld CIT(A) on this issue. 9. The next issue relates to the addition of under reported profit of Rs.1.00 crore. The submissions made by the assessee against this addition have been summarized by the Ld CIT(A) as under:- 12. Ground No.10 & 11:- Addition of Rs.1 Cr. being profit on sale of commodities on NSEL. 12.2 The gist of submission made by the appellant is reproduced hereunder: - (i) The AO has failed to consider the reply filed by the appellant and made the addition completely based on the reasons without verifying the factual position. (ii) The amount of purchases & sales of commodities stated by the AO is incorrect. Transactions carried out as a broker has also been considered as appellant own transactions. (iii) Appellant has actually made purchases of commodities of Rs.20.83 Cr. (Excl. charges). (iv) Reconciliation has been furnished and total amount of purchases Rs.54,34,13,350/- as per NSEL (as alleged by the AO) has been reconciled as under: 9 ITA Nos. 3730 & 3731/Mum/2024 (v) Out of the total amount of sales as alleged by AO, a sum of Rs. 6,70,10,940/- pertains to F.Y. 2013-14 and thus no question arises of making addition for the year under consideration. Further, sum of Rs. 23,70,72,569/- and Rs. 6,62,97,811 /- pertains to trade done on behalf of SMCPL & GLA respectively and thus the same cannot be assessed in the hands of appellant. The corresponding brokerage income in respect of the sales undertaken on behalf of the SMCPL & GLA has been offered to tax by the appellant. Copy of Brokerage income ledger account is placed at page no. 33-34 of the paper book. The remaining sum of Rs. 18,31,54,475/- are the actual sales made by the appellant during the year under consideration. (vi) Thus, considering the actual amount of sales and purchases made by the appellant, actual profit in the hands of appellant comes to 10 ITA Nos. 3730 & 3731/Mum/2024 Rs.27,30,682/-. The breakup of the above figure is tabulated as below :- 9.1. The decision rendered by the Ld CIT(A) on this issue reads as under:- 12.3 The submission made by the appellant has been carefully considered. It is the stand of the appellant that it has carried out the purchases & sales transactions on account of self and on account of other parties. The appellant has filed reconciliation with supporting documentary evidences. It has been claimed that the own transactions of purchases & sales has resulted into profit of Rs.27,30,682/- which has been disclosed in the books of accounts. The other transactions pertain to its clients and therefore cannot be considered in the hands of the appellant. The AO has not brought any documentary evidences on record to rebut the submission made by the appellant. In absence of any documentary evidences the addition of Rs.1,00,00,000/- cannot be sustained and hence, the same is deleted. Ground No.10 & 11 of the appellant are allowed. 9.2. This addition has also been made by the AO on the basis of uncontroverted information received by him. The AO has taken the difference between the aggregate amount of sales and the purchases as income of the assessee. However, no material was brought on record to show that the details of purchases and sales found in the information was correct and that shown in the books of accounts of the assessee were not 11 ITA Nos. 3730 & 3731/Mum/2024 correct. As noticed earlier, the AO has not rejected book results. Hence, we are of the view that the Ld CIT(A) was justified in upholding the profit declared by the assessee in the books of accounts and accordingly, deleting the addition of Rs.1.00 crore made by the AO. 10. The last issue relates to addition of estimated brokerage income @ 2% amounting to Rs.6.48 crores. The submissions made by the assessee against this addition have been summarized by the Ld CIT(A) as under:- 13. Ground No.12 to 15:- Addition of Rs. 6,48,00,007/- by way of commission 13.2 The gist of submission made by the appellant is reproduced hereunder: - (i) The AO has not dealt with the submissions filed by the appellant during the assessment proceedings. No discussion has been made regarding factual position and submissions made by the appellant. The AO simply on the basis of reasons recorded in appellant’s case has made such a huge addition which is baseless. (ii) Neither rate of brokerage and nor turnover as specified in the reasons are correct. The rate of 2% as alleged by AO is completely on presumption without considering practical scenario. It is pertinent to mention that nowhere in the country such a high rate of brokerage is being charged on the commodity transaction. The appellant has charged brokerage @ 0.02% on purchases and sales amount. Sample copy of contract note is enclosed at page no. 80-89 of paper book. On perusal of the same it can be seen that brokerage is collected @ 0.02%. Accordingly, the rate of 2% as mentioned in the impugned assessment order is incorrect and vague. (iii) It has never acted as a broker to Capital First Commodity Limited. In fact, CFCL is a registered broker to the appellant for trade on NSEL platform prior to October, 2012. Thus, no addition of brokerage income as computed on the turnover of CFCL can be made, as the appellant has not acted as a broker to CFCL. Copy of ledger account in the books of CFCL is enclosed at page no. 80-89 of the paper book. (iv) The alleged turnover of Rs. 234.78 crores pertaining to Urmila Real Estate Pvt. Ltd. (UREPL) is incorrect. The said fact can be verified from Financial Statements of UREPL enclosed at page no. 35-42 of the paper book. The said party has shown the sale of commodity of Rs. 24.97 crores. Copy of IBMA ledger is placed at page no 69-73 of the paper book. The brokerage income earned by appellant from sales 12 ITA Nos. 3730 & 3731/Mum/2024 made on behalf of UREPL has already been offered to tax in the year under consideration. (v) The alleged turnover of Rs. 65.61 crores pertaining to Sital Mercantile & Credit Pvt. Ltd. (SMCPL) is incorrect. The said fact can be verified from the Financial Statements of SMCPL enclosed at page no. 43-59 of the paper book. Copy of IBMA ledger is placed at page no 69- 73 of the paper book. The brokerage income earned by the appellant from sales made on behalf of SMCPL has already been offered to tax in the year under consideration. (vi) The AO has mechanically adopted incorrect figures without application of mind and verifying the submission of the appellant. The appellant outrightly disputed the facts & the figures which were alleged by the AO. However, the AO did not bother to deal with the same and provide the information which has been relied upon. (viii) The appellant charges 0.02% of brokerage on the trade transactions from the parties to which it is acting as an agent. Thus, applying this rate on the corrected amount of transactions of sale of commodities in respect of UREPL and SMCPL entered into during the year under consideration, the brokerage amount comes to Rs. 2,98,593/- (ix) The AO in the reasons recorded stated that the appellant has not shown any brokerage income in its ITR. The appellant has duly included the brokerage income in its books of accounts and has offered the same for tax. Copy of Financial Statements is enclosed at page no. 17-22 of the paper book. 10.1. The decision rendered by the Ld CIT(A) on this issue reads as under:- 13.3 The AO has worked out the brokerage income to the tune of Rs.6.48 Cr. @2% on the turnover of Rs.324.11 Cr. The AO has not brought on record any documentary evidences to establish the turnover as claimed by him. Further, the AO has not brought any documentary evidences to establish the brokerage rate of 2%. The AO has not brought any material on record to reject the claim of the appellant that the brokerage charged to its clients is not 0.02%. A copy of contract bill submitted by the appellant showing brokerage charged @0.02% is reproduced hereunder: - 13 ITA Nos. 3730 & 3731/Mum/2024 The AO has not brought on records any documentary evidences to prove that the appellant has earned brokerage income more than what it has offered in the return of income at Rs.2,98,593/-. In absence of any documentary evidences to establish receipt of brokerage income to the tune of Rs.6.48 crore, it is not possible to sustain the addition and hence the same is deleted. Ground No.12 to 15 of the appellant are allowed. 10.2. We heard the parties on this issue and perused the record. First of all, the brokerage rate of 2% adopted by the AO is based on presumptions only and against the facts available on record. As noticed earlier, the AO has not rejected books of accounts of the assessee. The addition has been made by the AO on the basis of information, which have not been proved to be correct. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting this addition. 14 ITA Nos. 3730 & 3731/Mum/2024 ASSESSMENT YEAR 2014-15:- 11. The first issue urged in this year relates to the addition of Rs.6.43 crores relating to capital infused by the shareholders. With regard to this addition, the assessee explained as under before Ld CIT(A):- “43. At the outset, it is submitted that the appellant during the course of reassessment proceedings itself submitted documents/clarifications with respect to the said issue. However, the Id.AO arbitrarily rejected the same and made an addition of Rs.6.43 Cr on account of underreporting of capital infusion. 44. It is humbly submitted that during the year under consideration, the appellant received funds from its directors, Mr. Navin Agarwal and Mr. Anurag Agarwal amounting to Rs.7.55 Cr and Rs.4.88 Cr respectively in the form of unsecured loans and not share capital. The same can be verified from the balance sheet of the appellant placed at page no 13-18 of the paper book. On perusal of the same, it can be seen that the appellant had duly recorded the receipt of such funds received from Mr. Navin Agarwal and Mr. Anurag Agarwal which was already made in earlier years. 45. The Id. AO in the impugned order has further contended that the said funds introduced by the appellant are not forming part of share capital. In this regard, it is submitted that stated that directors of the appellant company are also the shareholders of the company. Accordingly, the share capital to the tune of Rs.6,00,000/- invested by Mr. Navin Agarwal and Mr. Anurag Agarwal is in the capacity of shareholders. 46. However, the said funds to the extent of Rs.12.43 Cr were introduced by them in the form of unsecured loans in the capacity of Directors. It is pointed out that the Id.AO had himself stated that the funds are introduced by the \"directors' and not shareholders, then how can the same form part of share capital. The Id. AO has merely made the addition without application of mind. 47. Thus, it is apparent that the Id. AO misinterpreted that the said funds received by the appellant from its directors were in the form of share capital and therefore contended that the same is not recorded in the books of accounts of the appellant. 48. However, he had overlooked the fact apparent from the balance sheet itself that the said funds are received in the form of unsecured recoded under the head \"short term borrowings\". Thus, it is submitted that capital infusion as alleged by the Id.AO has duly been recorded in 15 ITA Nos. 3730 & 3731/Mum/2024 the books of accounts of the appellant. Accordingly, the loans received are duly explained. 49. It is further submitted the issue related to unsecured loan was duly examined by ld.AO in the original assessment proceedings. The Id. AO in the notice issued u/s 142(1) of the Act dated 18.07.2016 had specifically sought details regarding the unsecured loan. In response to the same, the details were also filed by the appellant. With such thorough examination of this issue, now reassessing the same issue with incorrect facts is nothing but non application of mind of the part of Id. AO. It is submitted that details related to unsecured loan such as Loan Confirmation, ITR Ack & Bank statement were duly filed before the Id. AO during the original assessment proceedings. Copy of the said notice and the reply filed by the appellant before AO during original assessment proceedings are placed at page no 25- 81 of the paper book. Accordingly, the loans received are already explained. 50. Moreover, it is also submitted that the sole basis of reopening the case of the appellant was with regard to NESL scam. The addition of unsecured loan has no nexus with the reason for reopening the case of the appellant. As already stated in the above paras, the said issue has already been examined during the original assessment. The re- examination of the same on the part of the Id. AO is entirely on the basis of conjectures and surmises. Moreover, even after submission of details, no independent enquiry was conducted by the ld. AO.” 11.1. The Ld CIT(A) was convinced with the above said explanations given by the assessee and accordingly deleted the addition with the following observations:- “11.3 During the assessment proceedings the AO had arrived at a conclusion as under:- “there was capital infusion to the extent of Rs. 12.43 crores as on 31.03.2014 but the returns filled by the assessee showed that the capital was only Rs. 6 lakhs. Therefore, Under reporting of capital infusion of Rs.6.43 crores.” Perusal of the above findings reveal that the AO has made an error in arriving at the figure of under reporting of capital infusion at Rs.6.43 Crores. The AO has observed that there is capital infusion of Rs.12.43 Crores whereas the capital shown in the return was Rs.6 lacs. Therefore, the discrepancy works out to Rs.12.37 Cr. [Rs. 12.43 Cr. (–) Rs.6 lacs]. However, inadvertently he has arrived at a figure of Rs.6.43 Cr. reducing the figure of Rs.12.43 Cr by Rs.6.00 Cr. instead of Rs.6 lacs. 16 ITA Nos. 3730 & 3731/Mum/2024 11.4 The appellant in his written submission has pointed out that the AO has overlooked certain facts and therefore he was unable to reconcile the figure of Rs.12.43 Cr. being funds infused in the company. The amount was received as loan from the directors whereas the AO tried to reconcile the amount with respect to the share capital. The appellant has pointed out that the AO has specifically called for the details of Short Term Borrowing as unsecured loan amounting to Rs.12,43,71,830/-. The relevant part of the questionnaire is reproduced hereunder: - 11.5 Perusal of the above facts reveal that the amount of Rs.12.43 Cr. has been examined by the AO in the form of Short Term Borrowing and no adverse view has been taken in the assessment order. The addition in respect of this amount by assuming it to be share capital is misplaced. In view of the above facts of the case and submission filed by the appellant alongwith supporting documentary evidences, the argument of the appellant is found acceptable. The addition of Rs.6.43 Cr. made by the AO is deleted. Ground No.8 & 9 of the appellant are allowed.” 17 ITA Nos. 3730 & 3731/Mum/2024 11.2. We heard the parties on this issue and perused the record. We notice that the AO has misinterpreted the loan given by the directors as capital infusion. Further, the AO himself has examined the loans received from the directors and was convinced with their genuineness. It is now a established fact that the assessee did not get any fresh capital during the year under consideration. Hence, the question of making any addition on that count will not arise. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting this addition. 12. The next addition contested by the Revenue is related to the outstanding receivable of Rs.23.91 crores. 12.1. This issue is identical with the similar addition made by the AO in AY 2013-14, which has been deleted by Ld CIT(A) in that year and his decision has already been confirmed by us. In this year, the Ld CIT(A) has deleted the addition with the following observations:- “12.3 The assessment order of the AO and submissions of the appellant on this issue have been considered. The AO has made addition of Rs.23.91 Cr on account of trade payable to NSEL. However, the submissions filed by the appellant during the assessment proceedings as well as the appellate proceedings reveal that no such amount is payable to M/s. NSEL. In fact, there was a receivable outstanding of Rs.36.32 Cr from NSEL which is duly reflected in the balance sheet of the appellant under the head trade receivables. In fact, the trade payable of the appellant is from its clients as under: - 18 ITA Nos. 3730 & 3731/Mum/2024 The addition made by the AO is on basis of incorrect facts. The addition being factually incorrect the same cannot be sustained. The addition of Rs.23.91 Cr. made by the AO is deleted. Ground No.10 & 11 of the appellant are allowed.” 12.2. Since the facts relating to this addition is identical to the similar issue decided by us in AY 2013-14, following the same, we uphold the order passed by Ld CIT(A) on this issue. 13. The next issue urged by the revenue relates to the addition of estimated brokerage income. This issue is also identical with the similar addition made by the AO in AY 2013-14. The AO has made this addition on estimated basis without rejecting the books of accounts of the assessee and also without bringing any material on record to validate the information received from CBDT. Accordingly, following the decision rendered by us in AY 2013-14, we uphold the decision rendered by the Ld CIT(A) in deleting this addition. 14. In the result, both the appeals of the Revenue are dismissed. Order pronounced in the open court on 06-03-2025 Sd/- Sd/- [ANIKESH BANERJEE] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 06-03-2025 TNMM 19 ITA Nos. 3730 & 3731/Mum/2024 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "