Hiren Sureshbhai Parmar, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-5(2), RAJKOT-GUJARAT

ITA 566/RJT/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6733 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 15-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARVIND SONTAKKE
• Keywords: Unexplained investment; Transactions in derivatives; Corroborative evidences; Capital receipt
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] HIREN SURESHBHAI PARMAR, HIREN , 3, KRISHNANAGAR, MAVDI PLOT, RAJKOT, PAN: AJHPP9162A (APPELLANT /RESPONDENT ) VS THE ITO, WARD - 5(2 ), RAJKOT ( RESPONDENT /APPELLANT ) REVENUE BY : S H RI ARVIND SONTAKKE , D . R. ASSESSEE BY: S H RI KALPESH DOSHI , A.R. DATE OF HEARING : 15 - 1 1 - 2 017 DATE OF PRONOUN CEMENT : 11 - 01 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS CROSS APPEAL FILED BY ASSESSEE AND REVENUE FOR A.Y. 2008 - 09 , AR ISE FROM ORDER OF THE CIT(A) - IV, RAJKOT DATED 12 - 01 - 2011 IN APPEAL NO. CIT(A) - IV / 0165/10 - 11 , IN PROCEEDINGS UNDER SECTION 143(3) O F THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO S . 566 & 588 / RJT /20 12 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LEARNED CIT(A) HAS WRONGLY CONFIRMED THE ADDITION OF RS. 16,73,862/ - AS UNEXPLAINED INVESTMENTS U/S 69 OF THE INCOME TAX ACT, 1961. 2 . THAT, THE FINDING OF THE LEARNED CIT (A) ARE NOT JUSTIFIED IN LAW AS WELL AS FACTS OF THE CASE AND REQUIRED TO BE DELETED. 3. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1 THE LD. CIT(A), RAJKOT HAS ERRED IN LAW AND ON FACTS OF THE CASE I N ALLOWING THE CLAIM OF LOSS IN SHARE TO THE LIMIT OF RS. 5,83,367/ - OUT OF LOSS OF RS. 1073725/ - . THE RELIEF OF RS. 4,90,357/ - (RS. 1073725/ - - RS. 5,83,367/ - ) WAS WRONGLY ALLOWED. 2. FURTHER, THE LD. CIT(A) HAS OUT OF ADDITION OF RS. 18,78,500/ - MADE ON ACCOUNT OF CASH DEPOSITED IN ICICI BANK ACCOUNT, HAS CONFIRMED ADDITION OF RS. 13,12,156/ - HAS BEEN CONFIRMED (RS. 9,75,000/ - CASH DEPOSITED IN SAVING A/C OF STANDARD CHARTERED BANK + RS. 3,37,156/ - ON ACCOUNT OF RS. 50505/ - INDIRECT INCOME, RS. 2,61,651/ - DEPOSITED RECEIVED THROUGH CHEQUE/S AND RS. 25000/ - FROM SHRI RAMJIBHAI PARMAR) AND ALLOWED RELIEF OF RS. 5,66,344/ - (RS. 18,78,500/ - - RS. 13,12,156/ - ). THE LD. CIT(A) OUGHT TO HAVE CALLED FOR THE REVISED REMAND REPORT TO DECIDE THE QUANTUM OF LOSS ALLOW ABLE TO THE ASSESSEE AND ALLOWING OTHER RELIEF TO THE ASSESSEE. 4 . IN THIS CASE, RETURN OF INCOME SHOWING TOTAL INCOME OF RS. 1 , 22 , 080/ - WAS FILED ON 06 - 08 - 2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER STATED THAT AS PER AIR INFORMATION, THE ASSESSEE WAS HOLDING SA VING A/C WITH ICICI BANK. HE STATED THAT THE TOTAL CASH DEPOSIT ED IN THIS SAVING BANK A/C WAS RS. 18 , 78 , 500/ - AND THE AMOUNT CREDITED BY CHEQUES OR TRANSFER WAS I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 3 RS. 17 , 46 , 315/ - . THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE TO EX PLAIN WHY THE TOTAL AMOUNT OF RS. 36 , 24 , 845/ - SHOULD NOT BE TREATED AS UNACCOUNTED INVESTMENT U/S. 69 OF THE ACT. THE ASSESSEE EXPLAINED THAT THE ACTUAL CASH DEPOSIT ED IN ICICI BANK WAS RS. 3 , 56 , 360/ - ONLY AND NOT RS. 18 , 78 , 500/ - AS STAT ED BY THE ASSESSING OFFICER. HE HAS ALSO EXPLAINED THAT THE TOTAL CHEQUE DEPOSITED IN SAVING BANK A/C WAS RS. 17 , 46 , 315/ - OUT OF WHICH THE AMOUNT DEPOSITED OUT OF WITHDRAWAL WAS RS. 12 , 28 , 872/ - AND THE BALANCE AMOUNT OF RS. 5 , 17 , 443/ - WAS DEPOSITED AFTER BORROWING FROM FRIENDS AND RELATIVES. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT SUBMITTED ANY SUPPORTING EVIDENCES IN SUPPORT OF MONEY DEPO SITED IN THE BANK , T HEREFORE, HE ADDED RS. 36 , 24 , 845/ - AS UNACCOUNTED MONEY IN THE TOTAL INCOME OF THE ASSESSEE. 5 . AGGRIEVED AGAINST THE IMPUGNED ORDER OF ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED THAT TOTAL AMOUNT DEPOSITED IN THE ICICI BANK IN CASH WAS RS. 5 , 05 ,360/ - AND NOT RS. 1 8 , 7 8, 500/ - AS STATED BY THE ASSESSING OFFICER. HE FURTHER STATED THAT ASSESSING OFFICER HAS MADE ADDITION ON ACCOUNT OF CASH DEPOSITED IN BANK OF RS. 18 , 78 , 500/ - AND OTHER THAN CASH L DEPOSIT IN BANK OF R S . 17 , 46 , 315/ - WHERE AS THE TOTAL OTHER AMOUNT DEPOSITED IN THE BANK ITSELF INCLUDES THE CASH DEPOSITED IN THE BANK. THE ASSESSEE HAS SUBMITTED THE SUMMARY OF CREDIT AND CASH ENTRY IN THE BANK BEFORE THE LD. CIT(A THEREAFTER,T HE DETAILS OF BANK TRANSACTION PROVIDED BY THE ASSESSEE BEFORE CIT(A) REFERR ED TO THE ASSESSING OFFICER FOR REMAND REPORT BY THE LD. CIT(A). ). IT WAS I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 4 CLARIFIED BY THE ASSESSEE THAT CASH DEPOSIT OF RS.18,78,500/ WAS MADE IN ANOTHER BANK ACCOUNT OF THE ASSESSEE WITH STANDARAD CHARTED BANK. HE STATED THAT HE WAS JUST INSTRUMENTAL WHOSE NAME VARIOUS TRANSACTIONS WERE MADE AND BANK S WERE OPERATED. HE STATED THAT THE CASH DEPOSITED IN THE BANK WAS USED FOR MAKING PAYMENTS FOR THE SHARE DEALING IN VARIOUS ACCOUNTS. H E STATED THAT HE HAS ACTED ON BEHALF OF OTHERS IN PURCHASES AND SALE S OF SHARES AND SECURITIES . THE ASSESSEE HAS GIVEN EXPLANATION FOR CASH DEPOSITED IN ST ANDARD CHARTERED BANK OF RS. 18,78, 500/ - BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER STATED IN THE REPORT TO THE LD. CIT(A) THAT THE CASH DEPOSITED DURING THE F.Y. 2007 - 08 OF RS. 18 , 78 , 500/ - WAS ACTUALLY DEPOSITED WITH THE STANDARD CHARTERED BANK BECAUSE IN THE AIR DATA NAME OF THE BANK WAS NOT MENTIONED BUT T AN NO. WAS MENTIONED AND NOW THE INFORMATION GATHERED THAT THE T AN IN THE AIR DATA PERTAINED TO THE STANDA RD CHARTERED BANK WHICH WAS OPERATED BY THE ASSESSEE. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS REPORTED THE SUBMISSION MADE BY THE ASSESSEE REGARDING CASH DEPOSITED IN THE STANDARD CHARTERED BANK , ICICI BANK AND WITH RESPECT TO LOSS INCURRE D ON THE SHARE TRANSACTIONS INCURRED IN VARIOUS DEMAT ACCOUNTS , VERIFICATION OF CREDITORS ETC. 5.1 BEFORE THE LD. CIT(A), THE ASSESSEE CLARIFIED THAT THE CASH DEPOSIT OF RS. 18,78,500/ - WAS MADE IN ANOTHER BANK OF THE ASSESSEE WITH STANDARD CHARTERED BANK . ASSESSEE FURTHER SUBMITTED THAT CASH OF RS. 3 , 56 , 360/ - WAS DEPOSITED IN ICICI BANK. THE ASSESSEE HAS ALSO SUBMITTED COPY OF CONTRA ACCOUNTS AND I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 5 CONFIRMATION LETTERS FROM LENDERS THE LD. CIT(A) HAS CONFIRMED THE A DDITION TO THE EXTENT OF RS. 3,61666 / - CHEQUES DEPOSITED IN ICICI BANK. HE ALSO CONFIRMED THE ADDITION OF RS.9,75,000 IN RESPECT OF CASH DEPOSITED IN STANDARD CHARTED BANK AND INCOME OF RS 3,37,156/ - ON ACCOUNT OF CHEQ UES DEPOSITED IN THE BANK A/C STANDARD CHARTERED BANK. THE DETAIL FINDING OF LD. CIT(A) ARE REPRODUCED AS UNDER: - 6.1.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMISSIONS OF APPELLANT AND ASSESSING OFFICER. I FIND THAT ASSESSING OFFICER HAD RECEIVED THE AIR INFORMATION THAT APPELLANT HAS DEPOSITED CASH OF RS. 18,78,500/ - IN BAN K ACCOUNT FROM THE BANK WITH TAN 'MUMS25234G'. THIS BANK ACCOUNT IN THE NAME OF APPELLANT WAS IN STANDARD CHARTERED BANK, RAJKOT AND ITS NUMBER WAS NO 806 - 1 - 004074 - 8. HOWEVER, ASSESSING OFFICER DID NOT DECIPHER THE TAN CORRECTLY AND CORRELATED THE INFOR MAT ION OF CASH OF RS. 18,78,500/ - DEPOSITED IN THE BANK A/C WITH STANDARD CHARTERED BANK AS CASH DEPOSITED IN REGULAR BANK ACCOUNT OF APPELLANT IN ICICI BANK WITH ACCOUNT NO. 015301512034. ASSESSING OFFICER CONSIDERED THE ENTIRE CHEQUE DEPOSI TS AND TRANSFERS O F RS. 1746315/ - IN THE REGULAR BANK ACCOUNT OF APPELLANT IN ICICI BANK AS UNEXPLAINED DEPOSITS IN THE ASSESSMENT ORDER. THE CASH DEPOSITS IN THIS BANK ACCOUNT WERE ONLY RS. 3,56,360/ - AND NOT RS. 18,78,500/ - BE CAUSE THE CASH OF RS. 18,78,500/ - WAS DEPOSITED IN ANOTHER UNDISCLOSED BANK ACCOUNT IN THE NAME OF APPELLANT IN STANDARD CHARTERED BANK. ASSESSING OFFICER MADE ADDITION OF RS. 18,78,500/ - REFERRING TO THE BANK ACCOUNT IN ICICI BANK THOUGH THE REFERENCE SHOULD HAVE BEEN MADE TO THE BANK ACCOUNT WITH STA NDARD CHARTERED BANK. THE ASSESSING OFFICER CLARIFIED THESE DEFECTS DURING THE REMAND PROCEEDINGS. AS FAR AS REGULAR BANK ACCOUNT OF APPELLANT IN ICICI BANK IS CONCERNED, THE APPELLANT RECEIVED ABOUT RS 5.9 LAKHS IN CHEQUE FROM PERSONS LIKE SUNILBHAI BHATT , LALIT LAKHAVANI, PARWESH SHEIKH FOR INVESTMENT IN SHARES AND FROM NITIN LAKKAD IN RESPECT OF REPAYMENT OF LOAN EARLIER TAKEN BY HIM FROM APPELLANT. APPELLANT HAD INVESTED REGULARLY OUT OF SUCH RECEIPTS IN THIS BANK ACCOUNT IN ICICI BANK IN IPO AND HAD RE GULARLY RECEIVED REFUND OF SUCH INVESTMENT IN IPOS TO THE EXTENT OF ABOUT RS. 5.4 LAKH. THE REFUND OF RS 5.4 FROM APPLICATION MADE IN IPO IS NOT ANY NEW FUND BUT A REFUND OF THE SAME FUND EMPLOYED I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 6 EARLIER FROM THE ICICI BANK ACCOUNT IN APPLICATION OF IPOS. THE ORIGINAL CREDITORS OF FUNDS WERE REPAID SUBSEQUENTLY FROM THIS BANK ACCOUNT IN ICICI DURING THE YEAR. THE ORIGINAL CREDITORS OF FUNDS, SHRI SUNILBHAI BHATT, LALIT LAKHAVANI AND NITIN LAKKAD HAVE CONFIRMED THE TRANSACTION WITH APPELLAN T AND THE RECEIPT OF RS. 50,000/ - FROM PARWESH SHEIKH ON 23 - 7 - 2007 IS ALSO EVIDENT FROM THE BANK ACCOUNT OF PARWESH SHEIKH SUBMITTED BY THE APPELLANT. THESE CONFIRMATIONS AND ACCOUNTS WERE VERIFIED BY THE ASSESSING OFFICER DURING REMAND PROCEEDINGS AND WERE FOUND IN ORDER. THE CHEQUE OF RS 1.57 LAKH PERTAINED TO THE EMPLOYER OF APPELLANT, ALPHA DATA PROCESSING LTD WHICH WAS WRONGLY CREDITED IN APPELLANTS ACCOU NT AND WAS IMMEDIATELY RETURNED . THE DEPOSIT OF RS 0.56 LAKH WAS A DEPOSIT OUT OF CASH IN HAND ON 25 - 7 - 2007. APPELLA NT SUBMITTED CASH BOOK TO EXPLAIN THE AVAILABILITY OF CASH FOR CASH DEPOSITS IN BANK ACCOUNT OF ICICI BANK MAINLY FROM EARLIER WITHDRAWALS WHICH HAVE ALSO BEEN VERIFIED BY THE ASSESSING OFFICER AND THEREFORE THE CASH DEPOSITS IN ICICI BANK ACCOUNT APPEAR T O BE EXPLAINED. THE SALARY OF RS. 0.68 LAKH RECEIVED IN ICICI BANK ACCOUNT IS ALREADY DISCLOSED BY APPELLANT IN THE RETURN OF INCOME. 6.1.2 IN RESPECT OF 'COMMISSION INCOME', APPELLANT HAS SHOWN A RECEIPT OF RS 1,90,367/ - IN ICICI BANK ACCOUNT IN HIS EXPL ANATION SUBMITTED DURING THE APPELLATE PROCEEDINGS. IT APPEARS THAT APPELLANT HAS A RBITRARILY DEDUCTED RS 1,13,666/ - AS COMMISSION PAID IN CASH TO REDUCE SUCH COMMISSION INCOME TO RS. 76,701/ - TO RECONCILE THE SAME WITH THE FIGURE OF COMMISSION RECEIPT OF RS 76,701/ - SHOWN IN P&L ACCOUNT FILED WITH RETURN OF INCOME. IN P&L ACCOUNT FILED WITH RETURN OF INCOME APPELLANT HAD SHOWN THE GROSS RECEIPT OF COMMISSION AS RS. 76,701 AND HAD CLAIMED DEDUCTION ON ACCOUNT OF TELEPHONE, PETROL, TRAVELLING AND PROFESSIONA L FEE AND HAD SHOWN A NET PROFIT OF RS 58,954/ - FROM COMMISSION. THE CLA IM OF DEDUCTION OF RS. 1,13,666/ - AS SUB COMMISSION PAID IN CASH APPEARS TO BE ONLY A RECONCILIATION ENTRY. APPELLANT WAS ASKED VIDE NOTICE U/S 251 FROM THE UNDERSIGNED TO EITHER SUBMI T EVIDENCES OF PAYMENT OF SUB BROKERAGE OR SUB COMMISSION OF RS. 1,13,666/ - . THE APPELLANT DID NOT SUBMIT ANY EVIDENCE FOR SUCH CLAIM. THEREFORE THE COMMISSION INCOME CONSIDERED AT RS. 76,701/ - IN THE RETURN OF IN COME IS ENHANCED BY RS 1,13,666/ - BECAUSE T HE BANK RECEIPTS SHOW A COMMISSIO N INCOME OF RS. 1,90,367/ - IN ICICI BANK ACC OUNT. IN RESPECT OF RS 1,49,000/ - RECEIVED FROM PARWESH SHEIKH ON 7 - 11 - 2007 IN ICICI BANK ACCOUNT THE PLEA OF APPELLANT THAT, IT IS CASH DEPOSIT WAS WRONGLY SHOWN BY THE ICICI BANK AS RECEIVED FROM PARWESH I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 7 SHEIKH, IS UNACCEPTABLE WITHOUT ANY AUTHENTICATION FROM 'THE BANK AUTHORITIES. MOREOVER, APPELLANT HAS NOT SUBMITTED ANY CONFIRMATION FROM PARWESH SHEIKH IN RESPECT OF RECEIPTS AS UNDER FROM HIM IN HIS ICICI BANK A/C. 07 - 11 - 2007 1,49,000 07 - 11 - 2007 49,000 23 - 07 - 2007 50,000 IT IS PERTINENT TO MENTION THAT WHEN APPELLANT DISCOVERED DURING THE REMAND PROCEEDINGS THAT HE HAS NOT ACCOUNTED FOR THE TRANSACTIONS IN HIS BANK ACCOUNT IN STANDARD CHARTERED BANK, HE RECONSTRUCTED H IS ACCOUNT BOOKS INCORPORATING THE TRANSACTIONS IN HIS BANK ACCOUNT IN STANDARD CHARTERED BANK. WHILE RECONSTRUCTING THE BANK BOOK OF ICICI BANK, APPELLANT HAS CHANGED HIS STAND AND HAS SHOWN THE SOURCE OF CHEQUE OF RS 1,49,000/ - RECEIVED ON 7 - 11 - 2007 IN IC ICI BANK AS RECEIVED FROM PARWESH SHEIKH AND NOT CASH - IN - HAND. NO CONFIRMATION WAS FILED FROM PARWESH SHEIKH IN THIS REGARD OR ANY PROOF WAS PROVIDED THAT THIS AMOUNT WAS RECEIVED FROM PARWESH SHEIKH AS ADVANCE OR LOAN EVEN AFTER THE CHANGE OF STAND. THERE FORE I FIND THAT THE APPELLANT HAS FAILED TO SUBMIT THE N ATURE OF RECEIPT OF RS 1,49,000/ - ON 7 - 11 - 2007 AND O THER RECEIPTS AS MENTIONED ABOVE - FROM PARWESH SHEIKH IN ICICI BANK ACCOUNT. IN ABSENCE OF CONFIRMATION FROM PARWESH SHEIKH THE NATURE OF SUCH DEPO SIT IN HIS BANK ACCOUNT IN ICICI BANK RECEIVED FROM PARWESH SHEIKH REMAIN UNEXPLAINED. IN ABSENCE OF ANY CONFIRMATION THE RECEIPT CANNOT BE PRESUMED TO BE CAPITAL IN NATURE SUCH AS A LOAN OR ADVANCE. MOREOVER, SUCH RECEIPT WAS NOT RETURNED TO PARWESH SHEIK H AS IN CASE OF OTHER PERSONS WHO HAD ADVANCED MONEY TO APPELLANT FOR INVESTMENT AND WHO WERE REPAID LATER. I THEREFORE CON FIRM THE AMOUNT OF RS. 2,48,000/ - RECEIVED FROM PARWESH SHEIKH IN ICICI BANK A/C. IN NUTSHELL, I CONFIRM THE ADDITION OF RS 1,13,666/ - FOR SHOWING LESS COMMISSION INCOME IN RETURN OF INCOME IN RESPECT OF CHEQUES OF COMMISSION RECEIVED IN ICICI BANK ACCOUNT AND IN RESPECT OF THE DEPOSIT OF RS 2,48,0 00/ - RECEIVED IN ICICI BANK ACCOUNT FROM PARWESH SHEIKH AS UNEXPLAINED DEPOSIT. I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 8 6.2.1 APP ELLANT HAS PRESENTED THE RECONSTRUCTED BOOKS OF ACCOUNTS DURING THE REMAND PROCEEDING BEFORE THE ASSESSING OFFICER. APPELLANT RECTIFIED ANOTHER ERROR DURING THE APPELLATE PROCEEDING THAT THE AMOUNT OF RS. 3,81,785 SHOWN AS CASH WITHDRAWAL EARLIER ON 11/01/ 2008 FROM HIS STANDARD CHARTERED BANK ACCOUNT IS ACTUALLY A CHEQUE PAYMENT TO ANIRUDDHASINH PARMAR. HOWEVER, THE RECONSTRUCTED CASH BOOK OF APPELLANT DOES NOT SHOW ANY NEGATIVE BALANCE OF CASH EVEN WITHOUT THE ABOVE CASH WITHDRAWAL. AS PER THE RECONSTRUCTE D CASH BOOK, WITH ABOVE CORRECTION, APPELLANT HAS SHOWN THE SOURCE OF CASH RECEIVED BY HIM AS UNDER: OPENING CASH BALANCE 168077 WITHDRAWAL FROM ICICI BANK 832075 WITHDRAWAL FROM STANDARD CHARTERED BANK 821078 CASH RECEIVED FROM ANIRUDHASINH PARM AR 345000 CASH RECEIVED FROM MAHESHWARI JADEJA 340000 CASH RECEIVED FROM MAYUR PATADIA 300000 TOTAL 2806230 THE DEPOSIT OF CASH OF RS. 3,56,360/ - IN ICICI BANK ACCOUNT AND RS. 18,78,500/ - IN STANDARD CHARTERED BANK ACCOUNT HAS BEEN EXPLAINED B Y THE APPELLANT FROM THE ABOVE SOURCES OF CASH. THE SOURCE OF CASH DEPOSIT FROM THE WITHDRAWAL FROM THE BANK ACCOUNTS OF ICICI AND STANDARD CHARTERED BANK ACCOUNTS IS EVIDENT FROM THE COPY OF RESPECTIVE BANK STATEMENTS AND THEREFORE THE SAME CANNOT BE CONS IDERED AS UNEXPLAINED DEPOSITS. HOWEVER, IN RESPECT OF THE CASH OF RS. 9.85 LAKH RECEIVED FROM ANIRUDHASINH PARMAR, MAHESHWARI JADEJA AND MAYUR PATADIA, IT IS SUBMITTED DURING REMAND PROCEEDING THAT THE APPELLANT WAS NOT IN A POSITION TO SUBMIT ANY CONFIRM ATION FOR THE CASH OF RS. 9.85 LAKH RECEIVED FROM I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 9 ANIRUDHASINH PARMAR, MAHESHWARI JADEJA AND MAYUR PATADIA DUE TO THREAT FROM THESE PERSONS. I DO NOT FIND THIS PLEA ACCEPTABLE BECAUSE THESE PERSONS HAVE REGULARLY PAID AND RECEIVED CHEQUES TO/ FROM APPELLAN T WHICH IS EVIDENT FROM BANK ACCOUNTS OF APPELLANT. APPELLANT HAS A DEMAT A/C ALSO WHERE APPELLANT HAS RECEIVED SHARES FROM ANIRUDHASINH PARMAR AND FROM PURCHASES MADE IN CASH SEGMENT THROUGH MARWARI SHARES & FINANCE LTD, ANGLE BROKING LTD OR IPO. HOWEVER, IT WAS FOUND THAT SOME ALLOTMENT IN IPO SUCH AS 134 SHARES FROM IPO OF POWER GRID ON 27/09/2007AND DEPOSITED IN DEMAT A/C WAS NOT SOLD THROUGH ANY OF THE BROKERS BUT WAS SOLD IN OFF MARKET TO HIREN UMRETIA ON 17/03/2008 AT UNDISCLOSED PRICE. SIMILARLY, TH OUGH THE INITIAL PURCHASES OF A FEW SHARES IN DEMAT A/C THROUGH MARWARI SHARES & FINANCE LTD MAY BE SUPPORTED BY BILL BUT THE MAJORITY OF SHARES PURCHASED FROM ANIRUDHASINH PARMAR ARE TRANSFERRED BY APPELLANT AT ARBITRARY PRICE TO HIS DEMAT A/C. THERE IS A RECEIPT OF REFUND OF RS. 18,565/ - ON 4 - 2 - 2008 STANDARD CHARTERED BANK FROM APPLICATION IN THE IPO OF RELIANCE POWER. THE APPELLANT COULD NOT EXPLAIN THE INITIAL INVESTMENT FOR THIS IPO FROM ANY OF THE BANK ACCOUNTS, WHICH SHOWS THE UNDISCLOSED FUNDS AVAIL ABLE TO APPELLANT IN BUSINESS OF SHARES. APPELLANT COULD NOT EXPLAIN THE SOURCE OF PURCHASES FOR THE SALE OF SHARES OF RNRL ON 15 - 10 - 2007 AND 22 - 10 - 2007 AND SHARES OF UCO BANK ON 22 - 10 - 2007 THROUGH ANGLE BROKING LTD FROM HIS DEMAT A/C OR OTHERWISE IN HIS R EPLY TO NOTICE U/S 251. SIMILARLY ALL TRANSFER OUT AND TRANSFER IN OF SHARES UNDER DIFFERENT SCRIPT IN DEMAT A/C OF APPELLANT COULD NOT BE COMPLETELY TALLIED WITH THE BILLS OF MARWARI SHARES & FINANCE LTD AND ANGLE BROKING LTD. ALL THE SHARES RECEIVED FROM APPELLANT FOR MARGIN AS CONFIRMED BY MARWARI SHARES AND FINANCE LTD DO NOT APPEAR TO BE TRANSFERRED FROM DEMAT A/C OF APPELLANT. THEREFORE, THE POSSIBILITY OF SALES AND PURCHASES OF SHARES IN OFF MARKET AND TRANSACTED IN CASH AND THEREBY GENERATING CASH F OR APPELLANT CANNOT BE RULED OUT. THEREFORE, THE UNCONFIRMED CASH OF RS. 9.85 LAKH RECEIVED IN THE CASH BOOK BY APPELLANT AND SUBSEQUENTLY DEPOSITED IN STANDARD CHARTERED BANK A/C IS CONSIDERED AS INCOME OF APPELLANT FROM HIS UNDISCLOSED SHARE MARKET OPERA TIONS. I THEREFORE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION ON ACCOUNT OF CASH DEPOSITED IN STANDARD C HARTERED BANK TO RS. 9,85,000/ - 6.2.2 ASSESSING OFFICER FOUND OUT THAT A LOSS OF ABOUT RS. 10.73 LAKH LAKH WAS INCURRED IN FUTURE AND OPTION TRANSACTIONS, IN IPO AND IN CASH SEGMENT OF SHARE MARKET IN SHARE AND SECURITY DEALINGS THROUGH BROKERS, LIKE MARWADI SHARES & FINANCE LTD, ANGLE BROKING I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 10 LTD, AJAY NATWARLAL SECURITIES LTD, RELIGARE SECURITIES LTD IN THE MANNER AS UNDER: BROKER THROUGH W HOM TRANSACTIONS WERE CARRIED OUT MARKET SEGMENT PROFIT / LOSS RELIGARE SECURITIES LTD INVESTMENT IN IPO - 17558 MARWARI SHARES & FINANCE LTD F&O - 677114 MARWARI SHARES & FINANCE LTD CASH MARKET - 235285 AJAY NATWARLAL SECURITIES LTD F&O 12 8544 ANGLE BROKING LTD F&O - 274691 ANGLE BROKING LTD CASH MARKET 2379 - 1073725 AFTER THE RECEIPT OF REPORT OF THE ASSESSING OFFICER, THE A/R OF APPELLANT WAS ASKED TO SUBSTANTIATE THE ABOVE LOSSES WITH SUPPORTING BILLS AND COPY OF LEDGER A CCOUNT OF APPELLANT IN THE BOOKS OF ABOVE BROKERS. THE APPELLANT SUBSEQUENTLY REVISED THE CLAIM OF SOME OF THE ABOVE PROFITS AND LOSSES AS UNDER: BROKER THROUGH WHOM TRANSACTIONS WERE CARRIED OUT MARKET SEGMENT REVISED PROFIT/LOSS RELIGARE SECURITIES LTD INVESTMENT IN IPO 4962 MARWARI SHARES & FINANCE LTD F&O - 677114 I.T.A NO. 566 & 588 /RJT /20 12 A.Y. 2008 - 09 PAGE NO HIREN SURESHBHAI PARMAR VS. ITO 11 MARWARI SHARES & FINANCE LTD CASH MARKET - 235285 AJAY NATWARLAL SECURITIES LTD F&O - 81253 ANGLE BROKING LTD F&O 5145 ANGLE BROKING LTD CASH MARKET 3903 - 979642 THE INCORRECTNESS OF T HE CLAIM OF LOSS OF RS. - 235285/ - IN CASH SHARES TRANSACTIONS THROUGH MARWARI SHARES & FINANCE LTD WAS INTIMATED TO THE APPELLANT THROUGH NOTICE U/S 'YOU HAVE CALCULATED A LOSS OF RS 2,35,285/ - IN TRANSACTIONS OF SHARES IN CASH MA RKET THROUGH MARWARI SHARES & FINANCE LIMITED PLEASE NOTE THAT THE BILLS OF MARWARI SHARES & FINANCE LIMITED FOR CASH SEGMENT OF TRANSACTIONS IN SHARE, SUBMITTED DURING THE APPELLATE PROCEEDING, ONLY REFER TO PURCHASE OF CERTAIN SHARES OF DENA BANK, BELLAR Y STEEL, RELIANCE PETRO, TN PETRO, VIKAS WSP LTD WORTH RS. 2,83,425/ - WHICH ALSO APPEAR CREDITED IN YOUR DEMAT A/C. HOWEVER, THERE IS NO SUCH CONFIRMATION OR BILLS OF MARWARI SHARES & FINANCE LIMITED WHICH SHOW THAT THESE SHARES WERE SOLD THROUGH THEM BEFO RE 31 - 3 - 2008. IN FACT THE DEMAT A/C OF YOURS DOES NOT SHOW ANY SALE OF SHARES OF BELLARY STEEL, TAMILNADU PETRO, VIKAS WSP AFTER THEY WERE ACQUIRED FROM MARWARI SHARES & FINANCE LIMITED BEFORE 31 - 3 - 2008. THEREFORE EXCEPT THE LOSS IN SALE OF SHARES OF CHAMB AL FERTILIZER OF RS 2,881/ - THE REMAINING CLAIM