INCOME TAX OFFICER - 4(3)(3), MUMBAI V. M.N.SHARES AND STOCK BROKERS PRIVATE LIMITED , MUMBAI

ITA 5399/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1008 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 21-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHADR
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Unexplained expenditure
• Section: 143(3); 133A; 148; 132

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , ! ' , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NO.5399/MUM/2017 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER-4(3)(3), R. NO.637, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S M.N. SHARES & STOCK BROKERS PVT. LTD. 43, RAJNIGANDHA GULMOHAR CROSS ROAD NO.11, MUMBAI-400049 / REVENUE / ASSESSEE P.A. N O. AACCM9443Q C.O. NO.271/MUM/2017 (ARISING OUT OF ITA NO.5399/MUM/2017) ASSESSMENT YEAR: 2009-10 M/S M.N. SHARES & STOCK BROKERS PVT. LTD. 43, RAJNIGANDHA GULMOHAR CROSS ROAD NO.11, MUMBAI-400049 / VS. INCOME TAX OFFICER-4(3)(3), R. NO.637, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / ASSESSEE / REVENUE P.A. NO. AACCM9443Q ITA NO.5399/MUM/2017 & C.O. 271/MUM/2017 M/S M.N. SHARES & STOCK BROKERS PVT. LTD. 2 $ % & / REVENUE BY MS. N. HEMALATHA-DR $ % & / ASSESSEE BY DR. K. SHIVARAM / DATE OF HEARING 03/01/2018 & / DATE OF ORDER: 03/01/2018 & / O R D E R THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 07/06/2017 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI AND ASSESSEE HAS PREFERRED CROSS OBJECTION. IN THE APPEAL OF THE REVENUE, DELETING THE DISALLOWANCE MA DE TOWARDS SET OFF OF FICTITIOUS LOSSES OF RS.45,84,59 5/- AND ADDITION MADE OF RS.1,37,538/- TOWARDS UNEXPLAINED EXPENDITURE HAS BEEN CHALLENGED. 2. DURING HEARING, THE LD. DR, MS. N. HEMALATHA, SR. DR, ADVANCED ARGUMENTS WHICH IS IDENTICAL TO TH E GROUND RAISED. ON THE HAND, DR. K. SHIVARAM, LD. SR . ADVOCATE, DEFENDED THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) BY EXPLAINING T HAT THE ASSESSEE IS AN INVESTOR AND NOT A BROKER AND IF THE BROKER HAS DONE SOMETHING WRONG, THE ASSESSEE CANNO T BE HELD RESPONSIBLE FOR THE SAME. ITA NO.5399/MUM/2017 & C.O. 271/MUM/2017 M/S M.N. SHARES & STOCK BROKERS PVT. LTD. 3 2.1. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARES AND STOCK BROKING AND TRADING DECLARED TOTAL INCOME OF RS.1,87,294/- IN ITS RETURN FILED ON 30/09/2009, WH ICH WAS COMPLETED U/S 143(1) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER THE ACT) ON 03/11/2010. THE ASSESSEE RECEIVED NOTICE U/S 148 DATED 29/03/2016 ON 30/03/2 016 TO WHICH THE ASSESSEE EXPLAINED THAT THE RETURN FIL ED ON 30/09/2009 MAY BE TREATED AS RETURN IN PURSUANCE TO NOTICE U/S 148 OF THE ACT. HOWEVER, THE LD. ASSESSI NG OFFICER FRAMED ASSESSMENT U/S 143(3) R.W.S. 147, VI DE ORDER DATED 23/11/2016 MAKING THE ADDITION OF RS.45,84,59 5/-. THE LD. ASSESSING OFFICER ALSO ESTIMATED 3% ADDITIO N AS COMMISSION ON SUCH TRANSACTION AS UNEXPLAINED EXPENDITURE. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS BEFORE THIS TRIBUNAL, THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE HAS NOT CREATED ANY F ICTITIOUS PROFIT/LOSS BY MISUSING THE CCM FACILITY AND FURTHE R WHEN THE CLIENT CODE WAS MODIFIED ON THE SAME DAY, THERE COULD NOT BE ANY MALA-FIDE INTENTION, THUS, THE INCOME SH OULD NOT ITA NO.5399/MUM/2017 & C.O. 271/MUM/2017 M/S M.N. SHARES & STOCK BROKERS PVT. LTD. 4 BE TREATED AS SUPPRESSED. THERE IS UNCONTROVERTED F INDING IN THE IMPUGNED ORDER THAT NO SPOT VERIFICATION U/S 131(1A) OF THE ACT WAS CARRIED OUT AGAINST THE ASSESSEE AND THE ADDITION WAS MADE MERELY ON THE BASIS GENERAL INFORMATION. A SEARCH ACTION U/S 132 OF THE ACT WA S CARRIED OUT IN COMMODITY MARKET GROUP OF CASES ON 19/06/2007, WHEREIN, AS PER THE REVENUE, SOME DATA PERTAINING TO TRADE MODIFICATION AND CLIENT CODE CH ANGES OF THE BROKERS WAS COLLECTED. SUBSEQUENTLY, SURVEY PROCEEDINGS U/S 133A OF THE ACT WAS CONDUCTED ON 25/03/2008 AT THE BUSINESS PREMISES OF THE ASSESSEE . THE ASSESSEE OFFERED ADDITIONAL INCOME OF RS.33,22,000/ -. THE WHOLE CASE OF THE REVENUE IS THAT THE ASSESSEE MADE HUGE CLIENT CODE MODIFICATION RESULTING INTO LOSS OF RS.2,88,55,000/-. THE CASE OF THE ASSESSEE IS THAT ALL THE TRANSACTIONS WERE MADE ON RECOGNIZED STOCK EXCHANGE , I.E. MCX, THROUGH AUTHORIZED BROKER M/S RIDDI SIDDHI BUL LIONS LTD. AND THE ASSESSEE ALSO FURNISHED THE CODE OF CO NTRACT NOTE. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) DULLY FOLLOWED THE DECISION OF THE TRIBUNAL IN THE CASE O F INCOME TAX OFFICER VS PAT COMMODITY SERVICES PVT. LTD. (IT A ITA NO.5399/MUM/2017 & C.O. 271/MUM/2017 M/S M.N. SHARES & STOCK BROKERS PVT. LTD. 5 NO.3489 & 3499/MUM/2012) ORDER DATED 07/08/2015 AND SAMBHAVA INVESTMENT LTD. (ITA NO.3109/MUM/2011) ORDER DATED 19/12/2013 AND DELETED THE ADDITION. IT IS ALSO NOTED THAT THE REVENUE AUTHORITIES IGNORED THE REPL Y TO QUESTION NO.9, WHEREIN, THE PARTNER OF THE ASSESSEE DENIED OF HAVING MADE ANY REQUEST FOR ANY CHANGE IN CLIENT CODE. THE ASSESSEE ALSO PAID A MARGIN MONEY OF RS.2.90 CR ORES TO RSBL WHICH IS EVIDENT FROM THE STATEMENT OF ACCOUNT OF RSBL WHICH HAS BEEN ADJUSTED AGAINST THE LOSSES OF THE ASSESSEE. UNDISPUTEDLY, THE TRANSACTIONS HAVE DONE THROUGH RECOGNIZED EXCHANGE AND NO EVIDENCE HAS BEE N BROUGHT ON RECORD TO DEFY THE TRANSACTION BY ANY DE NIAL FROM EXCHANGE AUTHORITIES. THUS, WE FIND NO INFIRMI TY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). IDENTICAL IS THE SITUATION FOR DELETING T HE ADDITION OF RS.1,37,538/- TOWARDS UNEXPLAINED EXPENDITURE. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED . 3. SO FAR AS, THE CO. NO.271/MUM/2017 IS CONCERNED, THE SAME WAS NOT PRESSED BY THE LD. COUN SEL FOR THE ASSESSEE, THEREFORE, DISMISSED AS NOT PRESSED. ITA NO.5399/MUM/2017 & C.O. 271/MUM/2017 M/S M.N. SHARES & STOCK BROKERS PVT. LTD. 6 FINALLY, THE APPEAL OF THE REVENUE AS WELL AS THE C ROSS OBJECTION OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 03/01/2018. SD/- (JOGINDER SINGH) ! ' / JUDICIAL MEMBER MUMBAI; DATED : 03/01/2018 F{X~{T? P.S / ! & $ )!*+ ,&+-* / COPY OF THE ORDER FORWARDED TO : 1. '#$%& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * / THE CIT, MUMBAI. 4. ) ) * / CIT- , MUMBAI 5. +,- ' , ) '#$ ' / , / DR, ITAT, MUMBAI 6. -0 1$ / GUARD FILE. & / BY ORDER, (+# ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI