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TMI Blog2023 (6) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... e incorrect and not sustainable. Thus, the addition was deleted and only addition pertaining to incorrect loss computation by the assessee was confirmed by ld CIT(A). There is no infirmity in the order passed by ld CIT(A). Grounds of appeal of the Revenue are dismissed. Unexplained increase in capital - CIT(A) deleted the addition as held that the capital accumulation was fully explained by assessee on the basis of capital in the Income Tax Return and accumulated incomes duly shown in the return of income - HELD THAT:- The assessee has furnished summary of capital balance starting from AY 2011-12 taking capital as on 31.03.2011 and duly explained capital accumulation till current assessment year. CIT(A) after considering submissions and explanations of the assessee, observed that the capital accumulation was fully explained by the assessee on the basis of capital in the Income Tax Return of assessment year 2011-12 and accumulated incomes duly shown in the return of income for assessment years 2012-13, 2013- 14, 2014-15 and current assessment year. In the remand report on this issue, the Assessing Officer has not given any adverse comments, therefore CIT(A) held that the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation is fully explained on the basis of capital in the ITR of A.Y 2011-12 and accumulated income in the ROI for A.Y 2012-13 to A.Y 2014-15 ignoring that assessee has shown NIL capital balance in ITR filed for A.Y 2014-15? 3) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 80,70,224/- made on account of investments in F O and equities from unexplained sources holding that the same was found explained from the withdrawal from Firms and bank transfers along with profits from F O STCG, LTCG and other profits, ignoring that during the assessment proceedings assessee could not explain the source of Rs. 80,70,244/- over and above ethe withdrawals from firms and bank transfers? 4) It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent. 3. Now we shall take grounds of Revenue s appeal in seriatim. Ground No.1 raised by the Revenue relates to deletion of addition of Rs. 3,97,77,965/- made on account of profit from future and options ignoring that assessee has failed to tender evidence and explanation in this reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... you during F.Y 2014-15 in the trading of Future Options. It is seen that there is huge difference in the profit shown by you in ROI. The details of total investments, sales and profit thereon earned by you in different derivatives from above four parties are as under: Sr. No. Name of the parties Total investment (amount in Rs) Total sales receipt (amount in Rs) Net profit (Amount in Rs. ) 1 Jainam Share Consultant Pvt. Ltd. 35,31,533/- 35,48,991/- (-) 38,86,586/- 2 Nirmal Bang Securities Pvt. Ltd. 5,91,101/- 7,59,859/- (-)1,68,758/- 3 J.M. Financial Services Pvt. Ltd. 2,62,74,330/- 2,07,77,317/- 54,97,013/- 4 Motial Oswal Securities Ltd. 5,7216,719/- 1,11,85,781/- 4,60,30,938/- 5.2 From the above details, it is very clear that you have earned total profit/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the Assessing Officer rejected the contention of assessee and observed that the assessee has stated that the figure mentioned in his ledger with regard to individual share brokers and that ascertained in the SCN are different and imaginary. The said contention of the assessee is totally baseless and uncalled for. Therefore, assessing officer had called for information u/s 133(6) of the Act from the relevant share brokers and had obtained the gain loss statement in the case of the assessee. The gain / loss statement so ascertained was differentiated separately in an excel sheet and on the basis of the said statement the profit derived by the assessee had been ascertained. The said excel sheet reflecting the difference pertaining to Motilal Oswal is given hereunder: Sr.No. (+) (-) Sr.No. (+) (-) Sr.No. (+) (-) 1 (+) (-) 31 6641.5 3040 61 45127.5 34170 2 4625 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3200 15 1726720 36100 45 140 26885 75 18125 38667 16 79505 379000 46 59000 43055 76 513.75 50600 17 1200 2405 47 184087 41388 77 9095 594145 18 19240 44142 48 214491.3 260 78 339392.5 1377 19 1130320 9120 49 3221963 217.5 79 20730 27860 20 380 2600 50 15735 1390 80 21830 4652 21 19605 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 122 1936690 30000 152 188550 - 182 54160 93 118950 5810 123 21200 88700 153 130250 - 183 58320 94 9880 13030 124 158551 128420 154 535 - 184 14720 95 28780 9790 125 10677 18827 155 14222 - 185 44960 96 11480 62310 126 2090 29863 156 13960 - 186 1920 97 17400 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10212 137 4620 - 167 31640 - 197 14660 108 228880 3735 138 38855 - 168 84240 - 198 110100 109 19120 32820 139 16685 - 169 3060 - 199 3560 110 30320 90155 140 19600 - 170 17040 - 200 3135 111 20200 53345 141 47130 - 171 266146 - 201 35 112 14630 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet reflecting the difference pertaining to Nirmal Bang is given hereunder: Sr.No. (+) (-) 1 3680 4972 2 7280 73487 3 116080 33120 4 54640 21560 5 23790 26229 6 38626 11080 7 594 55621 8 28150 58897 9 36080 181173 10 27720 17896 11 1105 1680 12 1153 8252 13 10822 77814 14 28947 79810 15 8641 121792 16 51866 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 963878 39 200942 215388 69 257528 104657 10 203306 26115 40 325127 6327 70 396533 8991 11 1886308 301077 41 6271 288921 71 301488 26592 12 661055 79107 42 14440 16905 72 95850 357421 13 56378 31364 43 14861 219976 73 58623 1444858 14 110275 45253 44 112543 111524 74 8506 704775 15 11294 35525 45 7936 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 302752 257877 58 31164 1655 88 35197 19627 29 23375 2133935 59 59790 197798 89 767105 1709064 30 202070 590549 60 87861 2563 90 658624 87808 Sr.No (+) (-) Sr.No. (+) (-) 91 1894283 103709 121 41023 - 92 139269 42797 122 58229 - 93 24172 2613 123 41888 - 94 23705 934268 124 3211 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115 13518 98785 116 73227 103347 117 2094 - 118 10624 - 119 119021 - 120 28143 - 11. Thus, as per the above, the net gains derived by the assessee was Rs. 2,62,74,217/- and net loss at Rs. 2,06,63,317/- resulting into net gain of Rs. 56,10,900/- 12. The excel sheet reflecting the difference pertaining to Jainam Share Consultants Pvt. Ltd. is given hereunder: Sr.No. (+) (-) Sr.No. (+) (-) Sr.No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 7993649 14 41420 15490 44 76895 193388 74 15 33160 4030 45 24165 94743 75 16 7240 42360 46 1635 12315 76 17 4885 344700 47 15730 24051 77 18 17805 188639 48 370 105891 78 19 3100 111310 49 100960 40786 79 20 31940 38236 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nirmal Bang 5,91,101 7,59,858 (1,68,757/-) JM Financials 2,62,74,217 2,06,63,317 56,10,900 Jainam Securities 41,07,063 79,93,649 (38,86,586) Net income 4,75,35,910 15. From the above analysis, the Assessing Officer noted that the total profit derived from trading in Futures and Options comes to Rs. 4,75,35,910/-. The assessee has shown total profit amounting to Rs. 77,57,945/- but the actual profit is Rs. 4,75,35,910/-. Hence, the difference comes to Rs. 3,97,77,965/- (4,75,35,910 77,57,945), which was added to the total income of the assessee by the assessing officer. 16. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Learned CIT(A) who has partly deleted the addition made by the Assessing Officer. The ld CIT(A) observed that the Assessing Officer's working of net gain from the brokers gain/loss statement is misleading figure and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommodity transactions profits were taken along with Future and Option gain/loss in the case of Jainam Share. Similarly, in the case of Motilal Oswal Securities Ltd, the assessing officer took the figure of net amount column whereas the figure in the Profit and Loss amount column was to be taken for working out the profit. Further, the column of net amount indicated value of roll over transactions which is not the actual profit but the Future and Option transactions which has not been settled and caried over to the next settlement cycle. This led to adding up of all such rollover Future and Option transaction, and therefore assessing officer computed incorrect net gain. This way, ld Counsel defended the order of ld CIT(A). 19. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. In order to prove the genuineness of the transaction, the ld Counsel, submitted following documents and evidences, viz: (i) Computation of income (Pb pages 1-5) (ii) Balance sheet and P L account(Pb pages 6-7); (ii) assessee s reply dated 12.10.2017 to Assessing Officer(Pb pages 8-9); (iv) assessee s reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltant and Nirmal Bang where from total profits of Rs. 77,57,945/- was shown in the computation of total income and return of income (ROI) of current assessment year (AY). Based on analysis of details filed during assessment proceedings, the assessing officer had worked out net gain/loss from four share brokers as under: Name of the broker Gains Loss Net gain or loss Motilal Oswasl 57216719 11236366 4,59,80,353 Nirmal Bang 5,91,101 7,59,858 (1,68,757/-) JM Financials 2,62,74,217 2,06,63,317 56,10,900 Jainam Securities 41,07,063 79,93,649 (38,86,586) Net income 4,75,35,910 Based on the above working of gain/loss from four brokers, the assessing officer concluded that net income from Future and Option should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g up the value of rolled over transactions for next settlement cycle as net gaingiving rise to abnormally high figure as compared to assessee s working. 22. The ld CIT(A) noted that assessee has given reconciliation tables of net gain worked by the Assessing Officer vis-a-vis net gain worked by the assessee and these tables bring out the facts/reasons where the assessing officer took figures of incorrect column to arrive at net gain different from assessee s working. The assessee has shown that the delivery based and commodity transactions profits were taken alongwith Future Option gain/loss in the case of Jainam Share. Similarly, in the case of Motilal Oswal Securtities Ltd, the assessing officer took the figure of net amount column whereas the figure in the Profit Loss amount column was to be taken for working out the profit. Further, the column of net amount indicated value of roll over transactions which is not the actual profit but the F O transactions which has not been settled and caried over to the next settlement cycle. This led to adding up of all such rollover F O transaction giving incorrect net gain working by the Assessing Officer. 23. Considering the above r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital balance as per Income Tax Return of assessment year 2011-12 was Rs. 3,73,88,803/- as on 31.03.2011 and it was mere mistake in filing up the balance sheet figures in the Income Tax Return for AY 2014-15 which led to Nil opening capital in ITR of AY 2015-16. The Assessing Officer did not accept the submission of the assessee and added the amount of Rs. 5,60,54,528/- to the total income of the assessee, as an unexplained capital introduced. 26. On appeal by assessee, the ld CIT(A) deleted the addition. The ld CIT(A) held that the capital accumulation of Rs. 5,60,88,803/- was fully explained by assessee on the basis of capital in the Income Tax Return of assessment year 2011- 12 and accumulated incomes duly shown in the return of income for assessment years 2012-13, 2013-14, 2014-15 and current assessment year. In the remand report on this issue, the Assessing Officer has not given any adverse comments. Hence, ld CIT(A) deleted the addition therefore, Revenue is in appeal before us. 27. Learned DR for the Revenue vehemently argued that ld CIT(A) was erred in holding that the capital accumulation is fully explained on the basis of capital in the Income Tax Return of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Return of A.Y. 2015-16. The Assessing Officer did not accept the submission of the assessee and added the same to the total income as unexplained capital introduced. During the appellate proceedings, the assessee explained that the capital balance of Rs. 5,60,88,803/- include opening capital of Rs. 4,11,58,447/- as well as profits of current assessment year from partnership firms, Future and Option profits, interest income, STCG/LTCG, dividend etc. The assessee has also furnished summary of capital balance starting from AY 2011-12 taking capital of Rs. 3,73,88,803/- as on 31.03.2011 and duly explained capital accumulation of Rs. 5,60,88,803/- till current assessment year. The ld CIT(A) after considering submissions and explanations of the assessee, observed that the capital accumulation of Rs. 5,60,88,803/- was fully explained by the assessee on the basis of capital in the Income Tax Return of assessment year 2011-12 and accumulated incomes duly shown in the return of income for assessment years 2012-13, 2013- 14, 2014-15 and current assessment year. In the remand report on this issue, the Assessing Officer has not given any adverse comments, therefore ld CIT(A) held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,62,858/- whereas the said investment, as on 31.03.2015 increased to Rs. 1,58,28,737/-. Thus, the Assessing Officer queried for source of funds for increased investment of Rs. 1,49,65,879/- (Rs. 1,58,28,737 - Rs. 8,62,858). The assessee had explained before the assessing officer that the investment in shares etc., was made from withdrawals from partnership firms M/s Magic Fashion and M/s N.M. Fashion through bank transaction. However, the assessing officer could only notice withdrawal from the said firms up to Rs. 62,95,655/- and concluded that Rs. 80,70,224/- was investment from unexplained sources. During the appellate proceedings, the assessee has filed a reconciliation chart explaining the source of funds for investment of Rs. 1,49,65,879/-. As per this chart, the assessee has corroborated that total bank payments to the share brokers amounted to Rs. 57,20,655/- out of which Rs. 10,86,275/- was found received back from share brokers. Further, the profits from F O transaction of current assessment year at Rs. 77,47,945/- STCG of Rs. 18,23,343/- and LTCG of Rs. 1,38,095/- added upto Rs. 97,19,383/- toward investment in share/debentures/mutual fund. Another profit earned of Rs. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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