ITO 3 (2), Indore V. M/s Madhya Bharat (International), Indore

ITSSA 205/Ind/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1134 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-06-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-04-2021
• Assessment Year: 2007-2008
• Appeal Filed On: 07-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S MANTRI
• Keywords: Set aside
• Section: 153A; 133(6); 143(2); 43; 13; 153; 132; 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE RAJPAL YADAV, VICE PRESIDENT AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A NOS.203 TO 206/IND/2017 ASSESSMENT YEARS :2005-06 TO 2008-09 ITO-3(2) : REVENUE INDORE V/S M/S MADHYA BHARAT, (INTERNATIONAL) PVT. LTD. 631, USHA NAGAR EXTENSION INDORE : RESPONDENT PAN: AADCM8494Q C.O NOS.05 TO 08/IND/2019 (ARISING OUT OF IT(SS)A NOS.203 TO 206/IND/2017) ASSESSMENT YEARS :2005-06 TO 2008-09 M/S MADHYA BHARAT, (INTERNATIONAL) PVT. LTD. 631, USHA NAGAR EXTENSION : APPELLANT PAN: AADCM8494Q V/S ITO-3(2 : RESPONDENT INDORE REVENUE BY SHRI S.S. MANTRI, CIT-DR ASSESSEE BY SHRI PRAKASH JAIN & MRS. SHREYA JAIN, ARS MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 2 DATE OF HEARING 27.05.2021 DATE OF PRONOUNCEMENT 29.06.2021 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE REVENUE AND CROSS OBJECTION RAISED BY THE ASSESSEE( S) FOR ASSESSMENT YEARS 2005-06 TO 2008-09 ARE DIRECTED AG AINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-I (IN SHORT LD. CIT], INDORE DATED 15.05.2017. 2. AS THE ISSUES RAISED IN THESE APPEALS AND CROSS OBJECTIONS ARE COMMON AND RELATES TO SAME ASSESSEE, AT THE REQUEST OF BOTH THE PARTIES, ALL THESE APPEALS AND CROSS OBJECTION WERE HEARD TOGETHER AND ARE BEING DISPOSE D OF BY THIS COMMON ORDER FOR SAKE OF CONVENIENCE AND BREVI TY. 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGA GED IN THE BUSINESS OF COMMODITY TRADING AND PROVIDING SER VICES IN CAPACITY OF BEING A MEMBER OF NATIONAL COMMODITY & DERIVATIVE EXCHANGE LTD. (IN SHORT NCDEX) AND NATIO NAL BOARD OF TRADE INDORE (IN SHORT NBOT). SEARCH WAS MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 3 CONDUCTED U/S 132 OF THE ACT ON 02.05.2008 AT THE BUSINESS PREMISES OF THE COMPANY AND ALSO AT THE RESIDENCE OF ITS DIRECTORS. CONSEQUENT TO SEARCH NO TICE U/S 153A OF THE ACT WERE ISSUED FOR A.YS. 2004-05 TO 20 08-09. IN RESPONSE ASSESSEE COMPANY FILED THE RETURN. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTIONS WHICH VARIOUS CLIENTS FOR WHICH TRADING WAS DONE THROUGH NBOT. IT WAS SUBMITTED BY THE ASSESSEE THAT APART FROM EARNING BROKERAGE, ASSESSE E ALSO INVOLVED IN ITS INDIVIDUAL CAPACITY IN COMMODITY TR ADING ON NBOT. AS REGARD THE PROFIT AND LOSS EARNED BY THE C LIENT IT WAS SUBMITTED THAT ALL THE TRANSACTIONS ARE CARRIED OUT THROUGH BANKING CHANNELS AND THE GAIN/LOSS HAD BEEN SHOWN BY THE RESPECTIVE CLIENTS IN THEIR TAX RETURN . 4. LD. ASSESSING OFFICER WAS NOT SATISFIED WITH THE DOCUMENTS FILED AND ALSO AS THERE WAS NO POSITIVE RESPONSE TO THE NOTICE ISSUED U/S 133(6) OF THE ACT BY MOST OF THE CLIENTS. LD. ASSESSING OFFICER CONCLUDE D THE ASSESSMENT MAKING VARIOUS ADDITIONS. THESE ADDITION S ALSO INCLUDED THE ADDITIONS MADE ON ACCOUNT OF PROF ITS EARNED BY THE CLIENTS ON NBOT PRO-ACCOUNT FOR THE MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 4 FOLLOWING AMOUNTS: ASSESSMENT YEAR ADDITION ON ACCOUNT OF PROFIT OF CLIENT IN PRO- ACCOUNT 2005-06 RS.3,02,48,520 2006-07 RS.4,63,10,950 2007-08 RS.6,85,53,750 2008-09 RS.4,99,82,340/- 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) CHALLENGING THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER AND ALSO RAISED LEGAL GROUND THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COUR SE OF SEARCH, NO ADDITION WAS REQUIRED TO BE MADE BY THE LD. ASSESSING OFFICER. LD. CIT(A) HELD IN FAVOUR OF THE ASSESSEE REGARDING GROUNDS RAISED ON MERITS AND AGAINST THE ASSESSEE ON LEGAL ISSUE. 6. THEREAFTER, BOTH THE ASSESSEE AND REVENUE PREFER RED AN APPEAL BEFORE THE TRIBUNAL VIDE IT(SS)A NO.87/IND/2 012 & OTHERS, ORDER DATED 29.02.2016. THIS TRIBUNAL ON OBSERVING THAT FIRST APPELLATE AUTHORITY ADMITTED F RESH EVIDENCE WITHOUT GIVING ANY OPPORTUNITY TO THE ASSE SSING MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 5 OFFICER TO REBUT THE SAME, WHICH WAS A CLEAR CONTRA VENTION RULE 46 OF THE IT. RULES, RESTORED ALL THE APPEALS BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE TO THE FILE OF LD. CIT(A) WITH A DIRECTION TO DECIDE ALL T HE GROUNDS DE NOVO . 7. IN THE SET ASIDE PROCEEDINGS LD. CIT(A) GAVE NEC ESSARY OPPORTUNITY TO THE LD. ASSESSING OFFICER AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE DE LETED THE ADDITION MADE BY THE LD. ASSESSING OFFICER BUT DECIDED THE LEGAL GROUNDS AGAINST THE ASSESSEE FOR A.YS. 20 05-06 TO 2008-09. 8. NOW IN THE SECOND ROUND REVENUE IS AGAIN IN APPE AL BEFORE THIS TRIBUNAL AND ASSESSEE HAS RAISED CROSS OBJECTIONS RAISING FOLLOWING GROUNDS: THE REVENUE HAS RAISED COMMON GROUNDS OF APPEAL IN IT(SS)A NO.203 TO 206/IND/2017: 1. ON THE FACTS AND IN LAW IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE ON A/C OF CLAIM OF PROFIT PERTAINING TO CLIENTS FOR THE A.Y. 2005-0 6 TO 2009-10. 2. ON THE FACTS AND IN LAW IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN IGNORING THE REPORTS SUBMITTED BY THE ASSESSING OFFICER FOR THE A.Y. 2005-06 TO 2009-10 I N WHICH IT WAS CLEARLY MENTIONED THAT THE ASSESSING OFFICER WA S ISSUED NOTICED U/S 133(6) IN 15 CASES, NOTICES ISSUE U/S 1 33(6) COULD MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 6 NOT BE SERVED AND IN THE 14 CASES REPLIES WERE RECE IVED, OUT OF WHICH 6 PARTIES WERE STATED THAT INFORMATION CANNOT BE FURNISHED SINCE THE INFORMATION ARE BEYOND THE TIME LIMIT. ON THE BASIS OF THIS, IT CANNOT BE SAID THAT THE ONUS OF T HE ASSESSEE HAVE BEEN DISCHARGED. 3. THE APPELLANT CRAVES LEAVE TO ADD TO OR DEDUCT FROM OR OTHERWISE AMEND THE ABOVE GROUNDS OF APPEAL. THE ASSESSEE HAS RAISED COMMON GROUNDS OF APPEAL IN CO NO.05 TO 08/IND/2019: 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE AO'S ACTION IN ISSUI NG THE NOTICE U/S 153A AND COMPLETING THE ASSESSMENT EVEN WHEN NO INCRIMINATING DOCUMENTS RELEVANT TO ASSESSMENT YEAR IN QUESTION WERE FOUND AND SEIZED FROM THE POSSESSION OF THE ASSESSEE. 9. WE WILL FIRST TAKE UP LEGAL GROUND RAISED BY THE ASSESSEE IN CO. NOS.05 TO 08/IND/2019 10. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSION MADE IN THE SYNOPSIS FILED BEFORE THIS TRIBUNAL ON 13.08.2919 & 27.05.2021. IT WAS SUBMITTED THAT SINC E NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH ADDITIONS SHOULD NOT HAVE BEEN MADE IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABIL CHAWLA (2016) 380 ITR 573 WHICH WAS SUBSEQUENTLY FOLLOWED BY THIS TRIBUNAL IN THE CASE OF DCIT VS. SHRI MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 7 SATISH NEEMA(2020)37 ITJ 308 (TRIB. INDORE ) AND IN THE CASE OF TAJ GRIH NIRMAN SOCIETY VS. ACIT (2021) 40 ITJ 260 (TRIB. INDORE). RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE HIGH COURT OF DELHI IN THE CASE OF PR. CIT VS. MEETA GUTGUTIA 3935 ITR 526 DECIDING AGAINST THE REVENUE AND THE SLP AGAINST THIS JUDGMENT WAS DISMISSED BY THE HONBLE SUPREME COURT (2018) 96 TAXMANN.COM 468 (SC ). 11. PER CONTRA THE LD. DR VEHEMENTLY ARGUED SUPPORT ING THE ORDERS OF BOTH LOWER AUTHORITIES. 12. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE SUB MISSIONS FILED BY THE ASSESSEE. COMMON LEGAL GROUND HAS BEEN RAISE D IN ALL THE CROSS OBJECTIONS FILED FOR A.YS. 2005-06 TO 2008-09 CONTENDING THAT LD. CIT(A) ERRED IN UPHOLDING THE ADDITION MAD E BY THE LD. ASSESSING OFFICER BY ISSUING NOTICE U/S 153A OF THE ACT AND COMPLETING THE ASSESSMENTS EVEN WHEN NO INCRIMINATI NG MATERIAL RELEVANT TO ASSESSMENT IN QUESTION WAS FOUND AND SE IZED FROM THE POSITION OF THE ASSESSEE. 13. WE NOTE THAT SEARCH U/S 132 OF THE ACT WAS COND UCTED ON 02.05.2008. THIS FACT HAS NOT BEEN DISPUTED AT THE END OF LD. DR AS WELL AS IN THE FINDING GIVEN BY THE LD. ASSESSIN G OFFICER THAT NO MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 8 INCRIMINATING MATERIAL WAS REFERRED TO WHILE MAKING THE IMPUGNED ADDITIONS FOR A.Y. 2005-06 TO 2008-09. THO UGH THE DATE OF FILING ORIGINAL RETURNS OF INCOME ARE NOT A PPEARING IN THE BODY OF ASSESSMENT ORDERS NOR COPIES FILED IN PAPER BOOK BUT AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE HAS A N OFFICER OF THE COURT, ORIGINAL RETURN FOR A.Y. 2005-06 & 2006- 07 WERE FILED BEFORE THE DUE DATE AND THE CASE OF ASSESSEE WAS NO T SELECTED FOR SCRUTINY PROCEEDINGS BY WAY OF ISSUANCE OF NOTICE U /S 143(2) OF THE ACT. SINCE NO INCRIMINATING MATERIAL WAS FOUND SPECIFICALLY WITH REGARD TO ASSESSMENT YEARS 2005-06 & 2006-07 B OTH THESE YEARS COMES UNDER THE CATEGORY OF NON-ABATED ASSESS MENT. SO FOR AS ASSESSMENT YEARS 2007-08 & 2008-09 ARE CONCERNED SINCE THE SEARCH WAS CONDUCTED ON 02.05.2008, NORMAL ASSESSME NT PROCEEDING FOR A.YS. 2007-08 & 2008-09 BEING ABATED ASSESSMENT MERGED WITH THE SEARCHED ASSESSMENT AND THE REQUIREMENT OF ANY INCRIMINATING MATERIAL FOR ISSUA NCE OF NOTICE U/S 153A OF THE ACT WAS DISPENSED OFF. 14. WE OBSERVE THAT HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABIL CHAWLA(SUPRA) AFTER CONSIDERING THE VARIOUS JUDGMENTS HAS DEALT WITH THIS ISSUE AND LEGAL POSIT ION THAT EMERGES IS REPRODUCED BELOW: MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 9 ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS W ILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATIO N AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL.' IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESS MENT PROCEEDINGS. MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 10 INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE R ECORD OF THE AO. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED I NCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 15. THE ABOVE STATED RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT AGAIN COMES FROM CONSIDERATION IN THE CA SE OF PR. CIT VS. MEETA GUTGUTIA (SUPRA) AND THIS TRIBUNAL HAS APPLIED THIS RATIO IN VARIOUS CASES. IN THE CASE OF DCIT, INDORE VS. SHRI SATISH NEEMA (SUPRA) THIS TRIBUNAL HELD AS UNDER: 19. WE THEREFORE RESPECTFULLY FOLLOWING THE DECISIO N REFERRED ABOVE AND ALSO CONSIDERING THE LATEST JUDGEMENT OF HON'BL E HIGH COURT OF DELHI IN THE CASE OF PR. CIT & ORS. VS. MEETA GUTGUTIA (S UPRA) COME TO THE CONCLUSION THAT SINCE THE ASSESSMENT ORDERS IN QUES TION WERE CONCLUDED AND NON-ABATED ASSESSMENTS NO ADDITION CAN BE MADE IN THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT UNLESS T HERE IS ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. WE FIND NO INCONSISTENCY IN THE FINDING OF LD. CIT(A) QUASHING THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT SINCE THE ADDITIONS WERE NOT MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURIN G THE COURSE OF MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 11 SEARCH. THUS REVENUE'S APPEAL FOR ASSESSMENT YEARS 2005-06, 2006-07 AND 2009-10 STANDS DISMISSED. 16. IN THE LIGHT OF THE ABOVE DECISIONS, WE ARE OF THE CONSIDERED VIEW THAT LD. ASSESSING OFFICER ERRED IN ISSUING NOTICE U/S 153A OF THE ACT FOR A.YS.2005-06 & 2006- 07 SINCE THERE WAS NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH PERTAINING TO THESE TWO ASSESSMENT YEARS AND AS BOTH THESE YEARS WERE NON- ABATED ASSESSMENTS, NO ADDITION COULD BE MADE. THUS , LEGAL GROUND RAISED IN THE CROSS OBJECTIONS FOR A.Y S. 2005- 06 & 2006-07 ARE ALLOWED AND THE ASSESSMENTS PROCEEDINGS FOR BOTH THESE YEARS ARE QUASHED. 17. AS REGARDS ASSESSMENT YEARS 2007-08 & 2008-09 T HE ASSESSEE FAILS TO GET ANY RELIEF IN THE CROSS OBJEC TIONS FILED BEFORE US, SINCE THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) & OTHER DECISIONS RELIED BY THE ASSESSEE ARE NOT APPLICABLE FOR THESE TWO ASSESSMENT YEARS. THUS, GROUNDS RAISED IN CROSS OBJECTIONS FOR A.YS. 2005-06 & 2006-07 ARE AL LOWED AND FOR A.YS. 2007-08 & 2008-09 ARE DISMISSED. MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 12 18. NOW WE TAKE UP THE REVENUES APPEAL FOR A.Y. 20 05-06 TO 2008-09 IN IT(SS)A NOS. 203 TO 206/IND/2017. 19. AS REGARDS FOR A.YS.2005-06 & 206-07 ARE CONCER NED SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT PROCEEDINGS ALLOWING THE LEGAL GROUNDS RAISED BY TH E ASSESSEE IN ITS CROSS OBJECTIONS NO.05 & 06/IND/201 9 DEALING ON MERITS OF THE CASE WILL BE MERELY ACADEM IC IN NATURE. THUS, REVENUES APPEAL FOR A.YS. 2005-06 & 2006- 07 ARE DISMISSED INFRACTOUS BEING ACADEMIC IN NATUR E. 20. AS REGARDS THE REVENUES APPEAL FOR A.YS. 2007 -08 & 2008-09 REVENUE HAS CHALLENGED THE FINDING OF LD. C IT(A) DELETING THE ADDITION OF RS. 6,85,53,750/- AND RS.4,99,82,340/- MADE BY LD. ASSESSING OFFICER FOR A.YS. 2007-08 & 2008-09 RESPECTIVELY. 21. LD. DR VEHEMENTLY ARGUED SUPPORTING THE ORDER O F LD. ASSESSING OFFICER AS WELL AS THE WRITTEN SUBMISSION S FILED ON 19.08.2019 WHEREIN IT HAS BEEN SUBMITTED THAT TH E IMPUGNED AMOUNT HAVE NOT BEEN SHOWN IN THE INCOME T AX RETURNS NOR ANY EVIDENCE HAS BEEN FILED TO PROVE TH AT THE IMPUGNED AMOUNT IS NOT LIABLE TO BE ADDED IN THE HA NDS OF MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 13 ASSESSEE. 22. PER CONTRA LD. COUNSEL FOR THE ASSESSEE APART F ROM RELYING ON THE FINDING OF LD. CIT(A) MADE TWO FOLD CONTENTIONS: A. ALL THE TRANSACTIONS IN PRO-ACCOUNT OF NBOT HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS AND DETAILS OF EACH CLIENT HAVE BEEN PROVIDED TO THE LD. ASSESSING OFFI CER AND SOME OF THEM HAVE ALSO REPLIED CONFIRMING THE LEDGE R ACCOUNT AND THE TRANSACTIONS MENTIONED THEREIN. B. SECONDLY, IT HAS BEEN CONTENDED THAT LD. ASSESSI NG OFFICER HAS ONLY CONSIDERED FIGURE OF PAY-IN FROM N BOT BUT HAS NOT CONSIDERED THE PAY-OUT FIGURES. LD. ASS ESSING OFFICER HAS ONLY CONSIDERED THE AMOUNT RECEIVED FRO M NBOT AS INCOME BUT FAILED TO GIVE THE BENEFIT OF SE T OFF OF THE AMOUNTS PAID AGAINST AMOUNT RECEIVED WHICH WILL END UP IN LOSS AND NO ADDITION COULD HAVE BEEN MADE IN THE HANDS OF ASSESSEE. 23. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. FOR A.YS. 2007-08 & 2008-09 LD. A O MADE THE ADDITION FOR THE PAY-IN FROM NBOT AT RS. 6,85,53,750/- AND MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 14 RS.4,99,82,340/-. WE NOTE THAT THE FIGURES FOR PAY- IN AND PAY-OUT FROM NBOT, PROFIT AND LOSS TO THE CLIENTS A ND PROFIT AND LOSS OF THE ASSESSEE FOR A.YS. 2007-08 A ND 2008-09 ARE AS UNDER: A.Y. PAY-IN & PAY OUT FROM NBOT PROFIT AND LOSS TO THE CLIENT PROFIT & LOSS OF THE ASSESSEE PAY-IN PAY-OUT PROFIT LOSS 2007-08 68,553,750 87,622,500 43,835,761 84,645,640 23,203,700 2008-09 49,982,340 37,933,650 37,305,350 43,063,520 18,625,920 24. THE ABOVE FIGURES ARE NOT DISPUTED AT THE END O F BOTH THE PARTIES. SO FAR AS THE FIRST CONTENTION OF LD. COUNSEL FOR THE ASSESSEE IS CONCERNED THAT THE ALLEGED AMOU NT HAS BEEN DISCLOSED BY THE CLIENTS IN THEIR RETURNS AS F EW CLIENTS HAVE CONFIRMED THE TRANSACTION ENTERED INTO WITH TH E ASSESSEE AND ADDRESS OF ALL THE CLIENTS ARE MADE AV AILABLE FOR THE LD. ASSESSING OFFICER, WE OBSERVE THAT IN T HE IMPUGNED ORDER AT PAGE 3 THERE IS A LIST OF 15 CLIE NTS WHICH DEALT WITH THE ASSESSEE DURING A.YS. 2006-07 TO 200 8-09 WHO HAVE NOT REPLIED TO THE NOTICE ISSUED U/S 133(6 ) OF THE ACT WHICH THUS COULD NOT HELP, THE LD. AO TO FIND T HE EXACT POSITION ABOUT THE DISCLOSURE OF PROFIT AND L OSS MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 15 INCURRED BY THE CLIENTS. SIMILARLY, IN ANOTHER LIST OF 14 CLIENTS APPEARING AT PAGE 4 OF THE IMPUGNED ORDER A LL THE NOTICES SERVED WERE RETURNED BACK WHICH EVEN INCLUD ED IN FEW CLIENTS FROM INDORE. THEN AGAIN THERE IS A LIST OF 14 CLIENTS APPEARING AT PAGES 5 & 6 OF THE IMPUGNED OR DER OUT OF WHICH SIX HAVE SUBMITTED THAT SINCE THE MATT ER IS A VERY OLD SO THEY DID NOT HAVE THE NECESSARY DOCUMEN TS AND INFORMATION AND FOR THE REMAINING 8 CLIENTS THE Y HAVE CONFIRMED THE ACCOUNT STATEMENT. IN ALL OUT OF 43 C LIENTS ONLY 8 HAVE CONFIRMED THE TRANSACTIONS AND THESE 8 HAVE ALSO NOT SUBMITTED ANY DOCUMENTARY EVIDENCES TO SHO W THAT THE ALLEGED INCOME/LOSS HAS BEEN SHOWN IN THEI R INCOME TAX RETURNS. 25. UNDER THESE FACTS AND CIRCUMSTANCES SO FAR AS F IRST CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS CONCERNED THAT PROFIT AND LOSS HAS BEEN SHOWN BY TH E RESPECTIVE CLIENTS IN THEIR INCOME TAX RETURNS AND THE TRANSACTIONS ARE CONFIRMED BY THEM, WE DO NOT FIND ANY MERIT AND THE SAME IS NOT ACCEPTED AT OUR END BECAU SE WHEN ANY NEW CLIENT IS ADDED BY A MEMBER OF MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 16 NCDX/NBOT, COMPLETE KYC IS DONE AND ALL THE DOCUMENTARY EVIDENCE IN SUPPORT OF IDENTITY, PAN NO ., ADDRESS ARE TAKEN. DETAILS OF BANK ACCOUNT ARE ALSO AVAILABLE. YEARLY CONFIRMATION ALSO TAKEN FROM THE CLIENTS SINCE THE ACCOUNTS OF THE MEMBERS OF SUCH EXCHANGE ARE SUBJECT TO AUDIT BY THE EXCHANGE ALSO. 26. HOWEVER, AS REGARDS THE SECOND CONTENTION OF TH E LD. COUNSEL FOR THE ASSESSEE THAT LD. AO SHOULD HAVE TA KEN THE FIGURES OF PAY-IN AND PAY-OUT FROM NBOT, IN ENT IRETY, CERTAINLY HAS A MERIT IN IT. 27. WHEN THE LD. ASSESSING OFFICER WAS NOT ABLE TO LAY HAND ON THE DOCUMENTARY EVIDENCE TO SATISFY HIMSELF ABOUT THE FACT THAT PROFIT AND LOSS EARNED BY VARIO US CLIENTS ARE GENUINE AND HAVE BEEN SHOWN IN THEIR RE GULAR RETURN OF INCOME, HE RESORTED TO COMPLETE THE ASSES SMENT ON THE BASIS OF THE FIGURES OF PAY-IN FROM NBOT. LD ASSESSING OFFICER HOWEVER DID NOT CONSIDERED THE FI GURE OF PAY-OUT. THIS ACTION OF THE LD. ASSESSING OFFICER W AS NOT JUSTIFIED AS HE CANNOT PICK AND CHOOSE THE FIGURES AT HIS/HER PLEASURE. ONCE IT WAS DECIDED TO MAKE THE MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 17 ADDITION ON THE BASIS OF GROSS TRANSACTIONS WITH NB OT THEN LD. ASSESSING OFFICER WAS BOUND TO CONSIDER BO TH THE FIGURES OF PAY-IN AND PAY-OUT. 28. IN THE CASE OF A.Y. 2007-08 PAY-IN AT RS. 68,55 3,750/- WHICH THE LD. ASSESSING OFFICER TOOK AS INCOME AND MADE THE ADDITION BUT HE FAILED TO CONSIDER THE FIGURE O F PAY-OUT WHICH IS AT RS.87,622,500/-. HAS HE CONSIDERED THIS FIGURE OF PAY-OUT THEN THE NET RESULT WOULD BE NEGATIVE I. E. A LOSS. SIMILARLY FOR A.Y. 2008-09 ALSO LD. ASSESSING OFFIC ER HAD CONSIDERED THE PAY-IN OF RS.49,982,340/- BUT DID NO T CONSIDER THE FIGURE OF PAY-OUT AT RS.37,933,650/-. IT WAS REQUIRED ON THE PART OF LD. ASSESSING OFFICER TO CO MPUTE THE CUMULATIVE CREDIT/DEBIT OF THE AMOUNT PAY-IN AN D PAY- OUT FROM NBOT AND MAY HAVE MADE THE ADDITION IF ANY ON THAT BASIS. 29. WE, HOWEVER, NOTE THAT THE CUMULATIVE AMOUNTS F OR THE YEARS UNDER APPEAL ARE NEGATIVE AND THUS, NO AD DITION WAS CALLED FOR A.YS. 2007-08 & 2008-09 BASED ON THE TRANSACTIONS WITH NBOT AS OBSERVED IN THE ASSESSMEN T ORDER. SIMILAR FINDING HAS BEEN GIVEN BY THE LD. CI T(A) IN MADHYA BHARAT INTERNATIONAL LTD. IT(SS)A NOS.203 TO 206/IND/2 017 & C.O.NOS.5 TO 8/IND/2019 18 THIS REGARD WHICH THUS NEEDS NO INTERFERENCE AND TH E SAME STANDS CONFIRMED. ACCORDINGLY GROUNDS OF APPEA L RAISED BY THE REVENUE FOR A.YS. 2007-08 & 2008-09 A RE DISMISSED. 30. IN THE RESULT, REVENUES APPEALS FOR A.YS. 2005 -06 & 2006-07 ARE DISMISSED AS INFRACTUOUS BEING ACADEMIC IN NATURE & APPEALS FOR A.Y. 2007-08 & 2008-09 ARE DISMISSED. CROSS OBJECTION BY THE ASSESSEE FOR A.YS . 2005- 06 & 2006-07 ARE ALLOWED AND FOR A.YS. 2007-08 & 20 08- 09 ARE DISMISSED. THE ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 29.06.2021. SD/- SD/- (RAJPAL YADAV) (MANISH BORAD) VICE PRESIDENT ACCOUNTANT ME MBER / DATED : 29.06.2021 PATEL/PS COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE