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TMI Blog2022 (10) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... the factual position by corroborative documentary evidences placed on record in the paper book as referred in the discussion above. From the above factual matrix of the issue raised by the ld. PCIT, we find that he has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 of the Act.We observe that in the course of proceedings u/s 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice by the Ld. PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon ble Courts. We find that the issue in the present case is purely on facts which are verifiable from the records of the assessee. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit Loss account of the assessee reveals the correct state of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigation Wing about systematic evasion of taxes by clients/members of the National Multicommodity Exchange (NMCE) during the different financial years by misuse of the NMCE platform on the basis of which, the reassessment proceedings were initiated after taking due approval from the competent authority. In this case, Ld. AO noted from the accounts of the assessee that it had derived profits of ₹83,76,790/- from commodities transaction through the client code - 1153 by trading through MEMBER/broker of NMCE namely Ratna Kamal Holdings Pvt. Ltd., Broker code number -CL0263. Ld. AO stated that during the course of assessment, assessee furnished the details of investments, bank account statements, contract notes etc. in support of the said transactions. Ld. AO issued notice under section 133(6) of the Act to Unishire Urban Infra Ltd (formerly known as Ratna Kamal Holdings Pvt Ltd) who in response filed copies of contract notes and detailed ledger copy for the year under consideration. He noted that the details of contract notes issued by the said broker show that net income of ₹83,76,790/-became receivable by the assessee after the deduction of brokerage of ₹34,620/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ratna Kamal Holdings Pvt Ltd, broker code no. - CL0263 and other paper/bogus entities controlled by entry operators to book pre-arranged profits. With these observations, Ld. AO treated the amount of ₹83,76,790/- as income under section 68 of the Act as unexplained cash credit. In respect of expense claimed in the accounts as commodity transaction charges which included brokerage for ₹34,620/-, it was also treated as unexplained expenditure under section 69C of the Act. The assessed total income was computed by the Ld. AO as under: - Total income as per Return of Income (-)₹19,32,076/- Add: unexplained expenditure under section 69C of the Act as per para no. 4 ₹34,620/- Total income (-)₹18,97,316/- Tax payable Nil 4. Subsequent to the above assessment, Ld. PCIT in para 2 observed from the perusal of the assessment records of the assessee that, in the assessment order, the AO stated that an amount of ₹83,76,790/- was treated as income under section 68 of the Act as unexplained cash credit, but while computing total taxable income, the same was not added, resulting in under-assessment of income. A show cause notice under section 263 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng total 88 pages. 8. Ld. Counsel for the assessee reiterated the submissions made before the authorities below. To corroborate the submissions made, he referred to the audited profit and loss account for the year under consideration placed at page 9 of the paper book. He pointed to the 'income from operations' reported at ₹3,27,01,007/-, details of which were given in schedule 11 placed at page 13. He referred to the amount of ₹2,59,79,863/- reported as 'profit in securities/derivatives dealing', forming part of income from operations. The breakup of profit in securities/derivatives dealing given in schedule 11 is placed at page 60, which is as under:- 1. Commodity trading ₹2,33,32,191/- 2. F&O profit in shares ₹26,57,016/- 3. Currency loss out of derivative trading (-)₹9,344/- Total ₹2,59,98,551/- 8.1 He submitted that commodity trading of ₹2,33,32,191/-forming part of the breakup of profit in securities/derivatives dealing included the amount of ₹83,76,790/- as depicted in the ledger detail placed at page 61 of the paper book. 8.2 Based on this verifiable data already placed on record by the assessee before the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on record in the paper book as referred in the discussion above. 11. From the above factual matrix of the issue raised by the ld. PCIT, we find that he has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 of the Act.We observe that in the course of proceedings u/s 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice by the Ld. PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts. 12. For this, let us take the guidance of judicial precedence laid down by the Hon'ble Apex Court in the case of Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordships have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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