MR. GAURAV SUNIL MANSINGHANI ,MUMBAI V. ITO WARD 22(1)(5), MUMBAI

ITA 751/MUM/2025

AI Insights

The case involves Mr. Gaurav Sunil Mansinghani, the appellant, who contested an addition of Rs.4,33,564 to his income for the Assessment Year 2016-17, which was treated as income by the Income Tax Officer based on a debit balance in the broker's ledger. The appellant argued that this balance represented an amount owed to him by the broker, not income. The Tribunal examined the financial statements and ledger accounts provided by both parties and concluded that the Assessing Officer had misinterpreted the ledger entries, leading to an incorrect assessment of income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126058 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL MATHEWS
• Assessee Lawyers: RUPAL SHAH

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘H(SMC)’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & MS PADMAVATHY S, ACCOUNTANT MEMBER ITA No.751/Mum/2025 (Assessment Year :2016-17) Mr. Gaurav Sunil Mansinghani 503, Nivaan, S.V. Road, Khar West Mumbai – 400 052 Vs. Income Tax Officer, Ward 22(1)(1) Mumbai PAN/GIR No.BQPPM1278L (Appellant) .. (Respondent) Assessee by Ms. Rupal Shah Revenue by Shri Sunil Mathews, Sr. DR Date of Hearing 15/04/2025 Date of Pronouncement 22/04/2025 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 13/12/2024 passed by Addl/ JCIT-4, Kolkata for the quantum of assessment passed u/s.143(3) for the A.Y.2016-17. 2. In the grounds of appeal assessee has challenged the addition of Rs.4,33,564/- by treating the debit balance in the ledger account of the broker as ‘income’ of the assessee. ITA No. 751/Mum/2025 Gaurav Sunil Mansinghani 2 3. The brief facts qua the issue involved are that assessee is into business of trading in F & O. He has filed his return of income on 06/12/2016 declaring total income of Rs.3,71,820/-. Before the ld. AO assessee has filed financial statement of stock broker, Anurag Stock Broking Pvt. Ltd., from such statement AO inferred that assessee has profit of Rs.4,33,564/-. He has considered the closing debit balance as profit of Rs. 4,33,564/-. Without giving any reasons that how it is an income, he has made the addition of Rs.4,33,564/-. Ld. CIT (A) has dismissed the appeal exparte. 4. Before us ld. Counsel has submitted that the ld. AO has misunderstood and misinterpreted the ledger account of the broker and in support he has filed the ledger account of the assessee in the books of the broker wherein the closing balance as on 31/03/2016 was a debit balance of Rs.4,33,563.98. This means this amount was to be received by the broker from the assessee. In the assessee’s books it was credit balance which means there was a liability to pay to the broker. Thus, the closing debit balance in the books of the broker of Rs.4,33,563.98 could not have been treated as ‘income’ of the assessee. 5. From the perusal of the said statement which was filed before the ld. AO it is seen that the ledger account of the assessee in the books of the broker there was a running account for debit and credit entries through which assessee had been doing ITA No. 751/Mum/2025 Gaurav Sunil Mansinghani 3 trading of F & O. At the year end of 31/03/2016 there was a debit balance of Rs.4,33,563.98 with the following narration:- ITA No. 751/Mum/2025 Gaurav Sunil Mansinghani 4 6. Thus, it was F & O bill credit margin that means broker has to receive the money from the assessee. Similarly, there is a credit balance of the same amount in the accounts of the assessee which means there was a liability to pay to the broker. Accordingly, no way a debit balance in the books of the broker can be treated as income of the assessee. Accordingly, addition of Rs.4,33,563.98 is deleted. 7. In the result, appeal of the assessee is allowed. Order pronounced on 22nd April, 2025. Sd/- (PADMAVATHY S) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 22/04/2025 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "