Appeal Details
Counselvise Citation
[2021] 104 COUNSELVISE.COM (IT) 7732 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
24-11-2021
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2009-2010
Appeal Filed On
09-06-2020
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) [Through Virtual Court] IT(SS)A. Nos: 55 to 60/Ahd/2020 & ITA No. 593/Ahd/2020 (Assessment Years: 2009-10 to 2014-15 & (2015-16) Asstt. Commissioner of Income-tax Central Circle- 2(3), Ahmedabad V/s M/s Affluence Commodities Pvt. Ltd. 4 th Floor, A-6, Safal Profitaire, Corporate Road, Prahlad Nagar, Ahmedabad PAN No. AAGCA 1140A (Appellant) (Respondent) IT(SS)A. Nos: 53 & 54/Ahd/2020 (Assessment Years: 2010-11) Asstt. Commissioner of Income-tax Central Circle- 2(3), Ahmedabad V/s Smt. Sejalben M Kothari A-501, Sugan Residency, Nr. Vasant Kunj Bus Stand, Paldi, Ahmedabad- 380007 PAN No. AKCPK1939N & Smt. Amee dhiren Shah D- 13/151, Nandanvan Flats, Nr. Bhavsar Hostel, Nava Wadaj, Ahmedabad PAN No. BMIPS9852B (Appellant) (Respondent) IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 2 Appellant by : Shri O.P. Sharma, CIT/DR Respondent by : Shri Dhinal Shah (आदेश)/ORDER Date of hearing : 22 -09-2021 Date of Pronouncement : 25-11-2021 PER BENCH 1. These nine appeals have been filed by the Revenue against the common order of Ld. CIT(A)-13/Intl.Taxn./Ahd/193 to 198/2016-17 order dated 14/02/2020. These appeals are time barred by 39 days. In reply to condonation of delay, Ld. CIT/DR argued that Supreme Court judgment dated 08/03/2021 in suo motu writ petitions (Civil No. 3 of 2020) at applicable in these instances matters wherein it is held that “in computing the period of limitation for any suit, appeal, application or proceedings the period from 15/03/2020 till 14/03/2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15/03/2020, if any, shall become available with effect from 15/03/2021. Since these appeals were filed on 21/10/2020 hence, squarely covered by the aforesaid Supreme Court judgment. Thus, respectfully following the aforesaid judgment, we condone the delay and proceed with the appeals. 2. Since in all appeals almost grounds common and amount and assessment years are different therefore for the sake of brevity we would like to dispose of appeals by a common order. IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 3 3. First of all, we would like to take up IT(SS)A No. 55/Ahd/2020 wherein revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.3,16,95,163/- made on account of disallowance of fictitious commodity losses in respect of transactions made through NMCE platform. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance of seized material/statements of various persons receded during search proceedings for making additions. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by the AO as mentioned in the assessment order that the assessee was continuously IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 4 booking losses from a single platform i.e NMCE in the last quarter of each year and said fictitious losses are set off with the profits earned from trading from other platforms. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 11,89,915/- made on account of disallowance u/s. 14A of the Act. 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 10. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 4. Brief facts of the case are that the assessee is a Pvt. Ltd. Company, engaged in the business of shares & securities, commodities / F&O derivatives etc. During the year, the assessee has carried out transactions through various brokers from NSE/BSE/MCX/NMCL platform. The assessee carried out commodity trades mainly on MCX and NMCE platform. 5. There was a search on Affluence Group of Companies including the assessee, Affluence Commodities Pvt. Ltd. [ACPL] on 18-12-2014. Therefore, the notice under Section 153A was issued for A.Y. 2009-2010 to A.Y. 2015-2016. The assessee furnished the income tax returns in response to notice under Section 153A for all the years. The AO passed the assessment order under Section 153A read with Section 143(3) in case of assessee. The assessee has preferred appeals for all the years. The CIT(A) has passed the Consolidated Order dated 14-02-2020 for A.Y. 2009-2010 to A.Y. 2014-2015 deleting the additions made by the AO. The Revenue has preferred appeals before ITAT against the order of Ld. CIT(A). 6. The grounds no. 1 to 4 are technical ground and department has taken stand that Ld. CIT(A) has erred in holding that any addition during the assessment u/s. 153 has to be passed to the incriminating material found during the course of search u/s. 132(1) of the Act. IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 5 7. The Ld. CIT(A) deleted the entire addition from A.Y. 2009-2010 to A.Y. 2013-2014 on the ground that the said assessment years do not abate under Section 153A in the absence of any incriminating material found during search following the decision of Gujarat High Court in the case of Pr. CIT V/s. Saumya Construction Pvt. Ltd. 387 ITR 529 (Guj.) wherein it is held that once search was conducted and notice was issued u/s. 153A, the Ld. A.O. was duty bound to issue notice to the assessee to furnish return for each assessment year immediately preceding to the assessment year relevant to the previous year in search was conducted or requisition was made. It was further held that all the assessment years were concluded assessments and non-abated assessment and any addition had to be made in respect of those assessment years and there must be an incriminating material and in the absence of incriminating material no addition can be made. 8. Since in the search carried out by the department no incriminating material was found or seized from the assessee. Therefore respectfully following aforesaid judgment and going through the impugned order. We do not find any ambiguity in the order passed by the lower authority and hold that Ld. CIT(A) has passed detailed and reasoned order. Therefore, we dismiss these grounds of appeal of the Revenue. 9. Now we come to merit of the case regarding Fictitious Commodity Loss of Rs. 3,16,95,163/- . 10. The Ld. A.O. held that assessee made consistently loss in the last quarter in the commodities of financial year by squaring of the transaction on the same day IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 6 and in some cases few minute or seconds through only few paragraphs by purchasing at higher rate and selling at lower rate. Therefore, the commodity loss made by the assessee. 11. On the other ground assessee submitted that the learned AO. has stated that on examination of seized / impounded materials -however he has not stated which seized material and impounded material on which the reliance is placed. In fact, there is no incriminating material regarding commodity loss whatsoever found during the search. It should be noted that there may be search or survey on Ahmedabad Commodity Group and the data is collected from Ahmedabad Commodity Group i.e. National Multi Commodity Exchange [NMCE]. The FMC has submitted the report that NMCE was involved in providing accommodation entry either for profit or loss. This observation are now no more relevant in view of the Order of the NMCE based on the Forensic Audit Report. NMCE is recognized by FMC. In other words, it is a recognized Exchange. All commodity traders trade through NMCE regularly. The learned AO has presumed that the assessee has also taken the accommodation entry of loss and therefore has presumed that such loss is a fictitious loss. The conclusion drawn is without any basis or evidence and therefore it is based only on suspicion. 12. The AO has stated that the assessee has traded through MCX throughout the year and has started trading on NMCE from 10-12-2008 onwards i.e. the last quarter of the financial year. The assessee has traded through several brokers. Now it should be noted that ACPL is the member of MCX but ACPL is not a member of NMCE. Therefore, the assessee has to carry on the trade through other several brokers who are registered with NMCE as members. The IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 7 allegation is that the assessee has made profit through MCX and losses through NMCE. It should be noted that all transactions are carried out either through MCX and NMCE at the prevailing market rate. The trading is on electronic trading platform at the rates displayed on the screen. If one desires, either to buy or sell he has to punch the order so that the transaction are executed. When the transaction is executed, the assessee does not know who is a buyer or seller on the other side. He gets only the statement of account from the broker and the transaction is accordingly settled either by pay in or payout as per settlement system of exchange. 13. And Ld. A.R. further argued that assessee has submitted his comments parawise and same are reproduced in Para no. 4 on page no. 10 to 64 of the CIT(A). Further argued that assessee is a speculative trader and investor as stated in reply to question no. 3 of the statement u/s. 132(4) dated 20/12/2014. And it is pertinent to mention that Ld. CIT(A) also sought remand report from the Assessing Officer regarding Fictitious Loss on merit for assessment year 2009-10 to assessment year 2014-15. The Ld. CIT(A) deleted the alleged fictitious loss on merit and same are part of his order from para no. 5.13 to 5.27 on page no. 71 to 79 wherein Ld. CIT(A) has held that if explanation has offered by the assessee is not accepted then onus shifts to the revenue and that the revenue cannot rely upon statement of the third party. Therefore, the inferences of synchronized trading and contrived losses are not proved by the revenue. 14. In the assessment year, there is no specific mention of any material like documents or assets from any person of any concerned of the Affluence IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 8 Group during the search which was held to be incriminating and which led to disallowance/addition made by the A.O. in the impugned assessment order. 15. From the perusal of the assessment order, it is unambiguously clear that the additions especially in relation to disallowances of losses incurred by the assessee in commodities trading on NMCE platform, is based on the data available in the NMCE Exchange and probably in the computes of the brokers and the assessee. The commodities trading, having taken place online electronically through the Exchange, have to reside in the servers of the Exchange and in the computers of the brokers and these data cannot be held to be incriminating in the nature within the meaning expounded in the case laws by the Hon’ble Courts. This data related to commodity trading cannot became incriminating even if some of the brokers and parties have admitted to some modus operandi in the entire operation so as to accruing of losses by the beneficiary/assessee. Moreover it is also established that such statements have not be confronted to the assessee wherein it has not been given opportunity to cross examine such parties/brokers whose statements have been adverse to the beneficiary/assessee. 16. It is well settled legal principle that addition based on third party statement/evidence cannot with stand if proper opportunity of cross- examination not provided to the assessee. And Ld. A.O. had to confront assessee with the material collected behind the back of the assessee if he chosen to use the material against the assessee and that he should provide assessee an opportunity of cross-examination not having done so made the evidence in question bad in law and same is violation of principle of natural justice if any addition made on the base of statement which has not been IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 9 subjected to cross-examine by the assessee same is amount to miscarriage of justice and such addition cannot be sustained. 17. In this case, Forensic Audit Report was also submitted and said auditor has given clean chit to the assessee and in our considered opinion entire allegation were based on the presumption about alleged fictitious loss without any nexus or transaction between the originating parties. And in our considered opinion, in such scenario, Ld. CIT(A) has rightly deleted the addition made by the Assessing Officer for fictitious commodities loss and order of the Ld. CIT(A) does not require any kind of interference at our end. Therefore, we dismiss this ground of appeal of the Revenue. 18. Now we come to grounds relating to Section 14A of Rs. 11,89,915/- read with 115JB. 19. It is seen that the said disallowance has been made by the A.O. in a mechanical manner without proper application of mind. It is well settled legal principal that section 14A would not attract in the case of traders in shares and securities where dividend earned is incidental to the trade. The assessee contended that A.O. did not record any satisfaction in invoking section 14A which is prerequisite of applying Rule 8D. 20. In our considered opinion, Ld. A.O. ought to have examined whether disallowance u/s. 14A could have been made without establishing direct nexus between interest bearing funds applying for share trading, investment activities. We accept the plea of the Ld. A.O. that it was actually stock in trade and same has been reflected in the balance sheet of the shares. In our considered IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 10 opinion, Ld. A.O. should have restricted the disallowance u/s. 14A to the extent of exempt income by way of dividend of Rs. 7,06,519/- but as the impugned assessment is related to unabated assessment year. Therefore such addition cannot sustain. 21. Ld. A.R. also cited an order of Special Bench in the matter of ACIT vs. Vireet Investment P. Ltd. 82 taxmann.com 415 (Delhi SB) and CIT vs. Gujarat State Fertilizers and Chemicals Ltd. 358 ITR 323 (Guj.) as the additions on account of section 14A has already been directed to be deleted by the Ld. CIT(A) and we have also confirmed the action of the Ld. CIT(A). Therefore, disallowance u/s. 14A could not be added/adjusted for computation of book profit u/s. 115JB, and we hold that Ld. CIT(A) has passed reasoned and detailed order and same does not require any kind of interference at our end. 22. It is pertinent to mention here that Ld. CIT(A) sought para-wise remand report from the Ld. A.O. at the submission filed by the assessee. 23. In the result, appeal filed by the Revenue is dismissed. 24. Now we come to IT(SS)A No. 54/Ahd/2020, the Revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 11 if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.4,11,11,109/- made on account of disallowance of fictitious commodity losses in respect of transactions made through NMCE platform. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance of seized material/statements of various persons receded during search proceedings for making additions. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by the AO as mentioned in the assessment order that the assessee was continuously booking losses from a single platform i.e NMCE in the last quarter of each year and said fictitious losses are set off with the profits earned from trading from other platforms. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 9. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 25. Since we have dismissed appeal of the Revenue in connected IT(SS)A No. 55/Ahd/2020 in rest of the remaining appeals almost grounds are common only amount and assessment years are different and for the sake of brevity, we do not want to repeat over here. IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 12 26. Now we come to IT(SS)A No. 56/Ahd/2020, the Revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.2,75,08,391/- made on account of disallowance of fictitious commodity losses in respect of transactions made through NMCE platform. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance of seized material/statements of various persons receded during search proceedings for making additions. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 13 the AO as mentioned in the assessment order that the assessee was continuously booking losses from a single platform i.e NMCE in the last quarter of each year and said fictitious losses are set off with the profits earned from trading from other platforms. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 11,46,519/- made on account of disallowance u/s. 14A of the Act. 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 10. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 27. Since we have dismissed appeal of the Revenue in connected IT(SS)A No. 55/Ahd/2020 in rest of the remaining appeals almost grounds are common only amount and assessment years are different and for the sake of brevity, we do not want to repeat over here. 28. At the outset, we note that similar grounds were raised by the Revenue in the same assessee’s case bearing IT(SS)A No. 55/Ahd/2020 corresponding to assessment year 2009-10 to 2014-15 which has been decided against the revenue. We hold that finding given in the said appeal with respect to IT(SS)A No. 55/Ahd/2020 will mutatis mutandis apply here in these cases also. 29. Now we come to IT(SS)A No. 57/Ahd/2020, the Revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 14 re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.30,53,12,559/- made on account of disallowance of fictitious commodity losses in respect of transactions made through NMCE platform. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance of seized material/statements of various persons receded during search proceedings for making additions. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by the AO as mentioned in the assessment order that the assessee was continuously booking losses from a single platform i.e NMCE in the last quarter of each year and said fictitious losses are set off with the profits earned from trading from other platforms. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,33,78,664/- made on account of disallowance of losses taken from M/s. Mari Gold Vinijya Pvt. Ltd. Kolkata 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,54,300/- made on account of disallowance u/s. 14A of the Act. 10. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 11. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 15 30. Since we have dismissed appeal of the Revenue in connected IT(SS)A No. 55/Ahd/2020 in rest of the remaining appeals almost grounds are common only amount and assessment years are different and for the sake of brevity, we do not want to repeat over here. 31. At the outset, we note that similar grounds were raised by the Revenue in the same assessee’s case bearing IT(SS)A No. 55/Ahd/2020 corresponding to assessment year 2009-10 to 2014-15 which has been decided against the revenue. We hold that finding given in the said appeal with respect to IT(SS)A No. 55/Ahd/2020 will mutatis mutandis apply here in these cases also. 32. Now we come to IT(SS)A No. 58/Ahd/2020, the Revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 16 years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.4,46,77,606/- made on account of disallowance of fictitious commodity losses in respect of transactions made through NMCE platform. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance of seized material/statements of various persons receded during search proceedings for making additions. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by the AO as mentioned in the assessment order that the assessee was continuously booking losses from a single platform i.e NMCE in the last quarter of each year and said fictitious losses are set off with the profits earned from trading from other platforms. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,08,65,224/- made on account of disallowance of losses taken from M/s. Mari Gold Vinijya Pvt. Ltd. Kolkata. 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 19,57,618/- made on account of disallowance u/s. 14A of the Act. 10. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 11. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 33. Since we have dismissed appeal of the Revenue in connected IT(SS)A No. 55/Ahd/2020 in rest of the remaining appeals almost grounds are common only amount and assessment years are different and for the sake of brevity, we do not want to repeat over here. 34. At the outset, we note that similar grounds were raised by the Revenue in the same assessee’s case bearing IT(SS)A No. 55/Ahd/2020 corresponding to assessment year 2009-10 to 2014-15 which has been decided against the IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 17 revenue. We hold that finding given in the said appeal with respect to IT(SS)A No. 55/Ahd/2020 will mutatis mutandis apply here in these cases also. 35. Now we come to IT(SS)A No. 59/Ahd/2020, the Revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,25,63,660/- made on account of disallowance of fictitious commodity losses in respect of transactions made through NMCE platform. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance of IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 18 seized material/statements of various persons receded during search proceedings for making additions. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by the AO as mentioned in the assessment order that the assessee was continuously booking losses from a single platform i.e NMCE in the last quarter of each year and said fictitious losses are set off with the profits earned from trading from other platforms. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 3,86,76,211/- made on account of unaccounted cash income from Off Market Trading (Dabba Trading). 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 51,14,013/- made on account of disallowance u/s. 14A of the Act. 10. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 11. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 36. Since we have dismissed appeal of the Revenue in connected IT(SS)A No. 55/Ahd/2020 in rest of the remaining appeals almost grounds are common only amount and assessment years are different and for the sake of brevity, we do not want to repeat over here. 37. At the outset, we note that similar grounds were raised by the Revenue in the same assessee’s case bearing IT(SS)A No. 55/Ahd/2020 corresponding to assessment year 2009-10 to 2014-15 which has been decided against the revenue. We hold that finding given in the said appeal with respect to IT(SS)A No. 55/Ahd/2020 will mutatis mutandis apply here in these cases also. 38. Now we come to IT(SS)A No. 60/Ahd/2020, the Revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 19 confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.15,82,58,061/- made on account of disallowance of fictitious commodity losses in respect of transactions made through NMCE platform. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance of seized material/statements of various persons receded during search proceedings for making additions. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by the AO as mentioned in the assessment order that the assessee was continuously booking losses from a single platform i.e NMCE in the last quarter of each year and said fictitious losses are set off with the profits earned from trading from other platforms. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,83,320/- made on account of unaccounted cash income from Off Market Trading (Dabba Trading). IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 20 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 18,22,436/- made on account of disallowance u/s. 14A of the Act. 10. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 11. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 39. Since we have dismissed appeal of the Revenue in connected IT(SS)A No. 55/Ahd/2020 in rest of the remaining appeals common grounds are common only amount and assessment years are different and for the sake of brevity, we do not want to repeat over here. 40. At the outset, we note that similar grounds were raised by the Revenue in the same assessee’s case bearing IT(SS)A No. 55/Ahd/2020 corresponding to assessment year 2009-10 to 2014-15 which has been decided against the revenue. We hold that finding given in the said appeal with respect to IT(SS)A No. 55/Ahd/2020 will mutatis mutandis apply here in these cases also. 41. Now we come to IT(SS)A No. 53/Ahd/2020, the Revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 21 the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.2,72,31,401/- made on account of disallowance of fictitious commodity losses in respect of transactions made through NMCE platform. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance of seized material/statements of various persons receded during search proceedings for making additions. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by the AO as mentioned in the assessment order that the assessee was continuously booking losses from a single platform i.e NMCE in the last quarter of each year and said fictitious losses are set off with the profits earned from trading from other platforms. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 11,74,947/- made on account of disallowance u/s. 14A of the Act. 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,40,000/- made on account of unexplained credits u/s. 68 of the Act. 10. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 11. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 42. Except following grounds of appeal all the grounds have been discussed and disposed of in our detailed order in connected IT(SS)A No. 55/Ahd/2020. IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 22 On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 1,40,000/- made on account of unexplained credit u/s. 68A. 43. During the course of assessment proceedings vide notice u/s 142(1) dated 03.11.2016 the assessee was asked to furnish complete names, addresses, PANs, confirmation of accounts, corresponding bank statements and return of income/sources of income of the depositors in respect of loans/deposits received during the year including of squired up accounts to prove the identity of the persons, genuineness of the transactions and creditworthiness of depositors. In response, vide submission dated 15.11.2016 the assessee has simply furnished copy of account of the depositors. No further details as called for were furnished by the assessee to prove the identity of the persons, genuineness of the transactions and creditworthiness of depositors. In view of the above vide notice u/s 142(1) of the act dated 18.11.2016 the assessee was asked to show cause as to why the loans /deposits should not be treated as unexplained u/s 68 of the Act. The contents of the notice dated 18.11.2016 is re-produced hereunder: “ In respect of loans/deposits received by you during the year (including of squired up accounts); you were asked to furnish complete names, addresses, PANs, confirmation of accounts, corresponding bank statements and returns of income of the depositors to prove the identity of the persons, genuineness of the transactions and creditworthiness of depositors. However, you have simply furnished copy of accounts of these depositors from your books. You have failed to furnish complete addresses, PANs, confirmation of accounts, corresponding bank statements and return of income/sources of income of the depositors to prove the identity of the persons, genuineness of the transactions and creditworthiness of depositors. Show cause as to why the loans /deposits should IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 23 not be treated as unexplained u/s 68 of the Act. Also show cause as to why corresponding interest expenses should not be disallowed." 44. In response to the above, vide submission dated 02.12.2016 the assessee has furnished copy of accounts, confirmations, bank statements/return of income in respect of some of the depositors. In respect of following loans/deposits the assessee has furnished only copy of accounts as per his books of account: Name Amount Date Mode of receipt Minesh M Juriwala 18500 04.04.2009 Cash Chandresh Shah 18000 11.05.2009 Cash Sandip Hemanbhai Shah 15000 08.07.2009 Cash Sanjay Sevantibhai Shah 18500 04.08.2009 Cash Amishbhai Kiritbhai Shah 19000 15.10.2009 Cash Bhavesh Khatri 17000 28.10.2009 Cash Rashmibhai Chinubhai Shah 19000 03.11.2009 Cash Paresh Jagpat 15000 04.11.2009 Cash Total 140000 These loans/deposits from these parties were shown to have been received in cash. The assessee has failed to furnish complete addresses, PANs, confirmation of accounts, corresponding bank statements and return of income/sources of income of the above depositors to prove the identity of the persons, genuineness of the transactions and creditworthiness of depositors. IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 24 The onus is on the assessee to prove the source of credit made in his books of account and furnish supporting evidences. However, in this case the assessee has failed to discharge his onus to prove the source of credit with relevant evidences. The above credits thus remains unexplained. 45. Thereafter assessee preferred first statutory appeal before the Ld. CIT(A) who granted relief to the assessee on the ground that all the details of unexplained credit have been submitted before the Ld. CIT(A) such as copy of ledger account of salary had been furnished before the ld. CIT(A) and Ld. CIT(A) also sought detailed remand report from the Ld. A.O. and therefore in our considered opinion, Ld. CIT(A) has rightly deleted the addition and same does not require any kind of interference at our end. 46. In the result, this ground of revenue is dismissed. 47. Now we come to ITA No. 593/Ahd/2020, the Revenue has taken following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs. 1,10,989/- on made by the AO on account of unexplained cash. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.51,12,885/- made on account of disallowance u/s. 14A rwr 8D of the Act. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred deleting the addition of Rs. 73,12,905/- made by the A.O. on account of disallowance of losses booked in penny stock of Rs. 73,12,905/-, namely Alang Industries Gases Ltd. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 5. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. IT(SS)A Nos. 55/Ahd/20120 & Ors. . A.Ys. 2009-10 to 2014-15 25 48. Ld. A.R. argued that the present appeal is squarely covered by the CBDT Circular No. 17 of 2019 dated 08/08/2019 and liable to be dismissed and on the other hand Ld. D.R. has fairly conceded that the present appeal is squarely covered by the CBDT Circular No. 17 of 2019 dated 08/08/2019. 49. In the result appeal filed by the Revenue is dismissed on account of Low Tax Effect. 50. In the combined result, all appeals of the Revenue are dismissed. Order pronounced in Open Court on 25 - 11- 2021 Sd/- Sd/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 25/11/2021 Rajesh True Copy Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER Deputy/Asstt.Registrar ITAT,Ahmedabad
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