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TMI Blog2024 (3) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... despite the operation of Assessee being identical in nature for all the years. We find that the entire issue is based on a factual appreciation of evidence before the AO and examined by the ITAT. We agree with the findings of the ITAT on this issue. No substantial question of law arises in the issue. Addition on account of a disparity/mismatch in the stock of shares - According to the AO, the statement of closing stock when compared with the list of closing stock of shares as furnished by Assessee did not tally - ITAT deleted addition - HELD THAT:- ITAT has delved in detail in the issue and held that there was nothing on record to contradict the explanation of Assessee. As per the market mechanism, Assessee is entitled to sell his rights in favour of another person instead of applying for the shares. This right to apply for shares cannot be understood to be an undisclosed asset . Assessee has furnished specific information with corroborating evidence and no substantial question of law arises from this issue. We, thus, agree with the view of the ITAT regarding deletion of the addition by the AO relating to undisclosed stock. Addition on account of credit balance in the account of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. Disallowance of loss on securities transactions - AO disallowed this claim only on the basis that Assessee has passed general entries to book losses. In the second round of proceedings, the AO changed his reasoning and held that Assessee failed to furnish explanation - ITAT noticed vouchers relating to transactions filed by Assessee and also that the transactions were by way of account payee cheque only thus deleted addition - HELD THAT:- ITAT held that a conclusion of booking bogus loss cannot be drawn without constructive examination of evidence. The further issue of levy of interest under Sections 139(8) and Section 217 of the Act is consequential and hence, does not require separate adjudication. Thus on all the issues, the ITAT has overturned the directions of AO on facts and appreciation of evidence and material on record. The ITAT has thus rejected the appeal preferred by the Revenue. Gravity of the matter, being related to the Harshad Mehta scam - The gravity of the scam as referred to by Revenue does not permit us to go beyond the materials available on record and substitute our view with that of the ITAT, which is firmly based on perusal of evidence and fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961 ( the Act ) making certain additions to the income of Assessee. Assessee assailed this order before the CIT(A), who partly allowed the appeal, against which appeal was filed before the ITAT by Assessee. The ITAT partly allowed the appeal against which the Department has preferred the present appeal. 5. Appellant proposed the following questions of law: 6.1 Whether, on the fact and in the circumstances of the case and in law, the Hon ble ITAT was right in deleting the addition made on account of negative brokerage by holding that Tax Authorities have not given proper justification in presuming that the loss shown by the assessee is bogus one and constitutes negative brokerage; without appreciating the fact that the assessee had mixed up all transactions of purchase and sale of shares in 'Patawat sheet' in order to create artificial loss criteria i.e. identity, creditworthiness and genuineness of the transaction? 6.2. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was right in deleting the addition made by the AO on account of mismatch stock of shares worth Rs. 20,59,607/- by holding that the lower authorities failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon is not applicable to the facts of the case? 6.8. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in deleting the addition of interest on securities by holding that the AO did not show any reason to the conclusion that the expenditure is bogus by relying its own decision in assessee's own case for A.Y. 1987-88; without appreciating the fact that the assessee had failed to discharge its onus of proving the genuineness of transaction with supporting evidences? 6.9. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in deleting the addition of Rs. 16,05,045/- being the loss on sale of securities by holding the tax authorities below disallowed the claim without proper examination of details furnished by assessee; without appreciating the fact that the assessee had failed to discharge its onus of proving the genuineness of transaction with supporting evidences? 6. The first issue relates to addition of an amount of Rs. 19.61 Lakhs pertaining to negative brokerage. According to the AO, Assessee had mixed up all the transactions of sale and purchase of shares in the Pat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l question of law arises in the issue. 7. The Revenue has then assailed the order of the ITAT directing deletion of the addition made by AO on account of a disparity/mismatch in the stock of shares worth Rs. 20,59,607/-. According to the AO, the statement of closing stock when compared with the list of closing stock of shares as furnished by Assessee did not tally. Assessee has pointed out several mistakes made by the AO. AO has treated the renunciation of right as sale of shares . The AO has accepted some mistakes, however, refused to accept others without any explanation. The ITAT has delved in detail in the issue and held that there was nothing on record to contradict the explanation of Assessee. As per the market mechanism, Assessee is entitled to sell his rights in favour of another person instead of applying for the shares. This right to apply for shares cannot be understood to be an undisclosed asset . Assessee has furnished specific information with corroborating evidence and no substantial question of law arises from this issue. We, thus, agree with the view of the ITAT regarding deletion of the addition by the AO relating to undisclosed stock. 8. The third issue relates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are not entitled to sit in an arm chair of a businessman to regulate business affairs. Hence, the third issue also based on facts and the view of the AO on the basis of general observations, surmises and conjectures de hors any substantial material as rejected by the ITAT is correct. 9. The next issue relates to the addition of unexplained cash credit. The additions relate to amounts received from various persons as under: 1. Shri. Dattatray N. Trodkar, Rs. 29,724/- 2. Kusumben Patel Rs. 15,000/- 3. M/s. Mamta Enterprises Rs. 3,00,000/- 4. Paresh Patel. Rs. 10,000/- 5. Sudha Patel Rs. 58,200/- 6. Vitthalbhai Patel Rs. 10,000/- 7. V. C. Patel Rs. 1,25,000/- 8. Vednarayan Sardeshpande Rs. 3,616/- The ITAT perused the opening balance of each of the lenders and concluded that the amounts were not received by way of fresh credit and thus there is no question of assessing the same under Section 68 of the Act. There is sufficient material provided by Assessee and hence, the ITAT has deleted this addition. 10. The next issue relates to disallowance of interest paid to bank and others amounting to Rs. 8,99,443/-. The ITAT has discussed at length the method of usage of bank overdraft faci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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