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TMI Blog2024 (11) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... ition on account of non-genuine purchases - HELD THAT:- We find that the coordinate bench of the Tribunal in a batch of cases pertaining to the assessee s sister concern in Abans Commodities (I) Pvt. Ltd. [ 2024 (11) TMI 359 - ITAT MUMBAI] while deciding a similar issue deleted the addition on account of nongenuine purchases. - Shri Prashant Maharishi, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Suyog Bhave For the Revenue : Shri PushkrajBhange Patil, Sr.DR ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeals have been filed by the assessee challenging the separate impugned orders of even date 21/05/2024 passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals)-52, Mumbai [ learned CIT(A) ], for the assessment years 2015-16 and 2018-19. 2. Since both the appeals pertain to the same assessee arising out of a similar factual matrix, therefore these appeals were heard together and are being decided by way of this consolidated order. ITA No. 3647/Mum./2024 Assessee s Appeal A.Y. 2015-16 3. In this appeal, the assessee has raised the following grounds: 1(a). On the facts and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) stated that it is seen that by trading in each of the 10 contracts enumerated in the table above, the assessee has overall profit of Rs. 2,30,63,250/- in the above contracts which becomes non-genuine gain for other counter parties in the form of accommodation entries without application of mind. e. Further the Learned CIT(A) has also ignored to address the judgement cited passed by the ITAT Delhi Bench 'D' in the case of 'Kundan Rice Mills Ltd v. ACIT which related to illiquid options. As per the judgement since both the orders of the SEBI relied upon by the Assessing Officer have been vacated by the SEBI vide order dated 05/04/2018, there was no material available with the authorities to conclude that assessee has entered into any dubious or other transactions deliberately to show business loss. 3. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in sustaining the addition of Rs 1,46,172/- under section 69C of the Act of deeming 0.25% of the buy and sell trades aggregating to Rs 5,84,69,150/- as cash commission instead of deleting the same. a. The Learned CIT(A) completely ignored the fact that there was an action u/s 133A in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anipulation and has purchased stock options for an aggregate premium value amounting to INR 1,77,02,950 and sold the same for an aggregate premium value of 4,07,66,200, resulting in a profit of INR 2,30,63,250. Thus, it was alleged that the assessee has benefited from engaging in reversal trades in illiquid stock options on the stock exchange resulting in non-genuine profit amounting to INR 2,30,63,250, which has been set off against other income. Accordingly, on the basis of aforesaid information notice under section 148 of the Act was issued on 31/03/2021 on the assessee. In response to the aforementioned notice, the assessee filed its return of income on 23/04/2021 declaring a total income of INR 11,08,840. During the reassessment proceedings, it was observed that the assessee has undertaken trades through its broker M/s Abans Securities Ltd. After observing the following, the Assessing Officer ( AO ) vide order dated 11/03/2022 passed under section 147 of the Act concluded that the trade of the assessee in reversal trades in illiquid stock options has resulted in nongenuine profit amounting to INR 2,30,63,250 by depleted trading stock options on the stock exchange and this cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us. 8. We have considered the submissions of both sides and perused the material available on record. We find that the coordinate bench of the Tribunal in a batch of cases pertaining to the assessee s sister concern in Abans Commodities (I) Pvt. Ltd. v/s ACIT, in ITA No. 3315/Mum./2024, etc., vide order dated 30/09/2024, while deciding a similar issue deleted the addition on account of non-genuine profit/loss in illiquid options and consequently also deleted the notional addition of commission under section 69C of the Act. The relevant findings of the coordinate bench are reproduced as follows: 13. We have heard both the parties at length and also perused various materials referred to before us and the relevant finding given in the impugned orders. From the perusal of the assessment order, it is seen that Id. AO has solely relied upon the report of Investigation Wing known as 'project falcon'. He has not carried out any independent enquiry or any investigation, whether the assessee had entered into any such transaction and has ignored all the evidence placed before the AO in support of all the trade transactions. One very important fact which has been brought on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunities in which assessee had shown profit. All those trades in which assessee disclosed profit has not been disturbed or adversely viewed except for few transactions of losses. For instance in A.Y.2014-15 there were 11 trades in United Exchange segment, some in futures and some in options, out of which only two trades of currency options have been alleged by the ld. AO. Similarly, in A.Y.2015- 16, the alleged trades in question which were executed in April 2014. The assessee had declared trading profit of Rs. 6,72,64,310/- in . .2014-15 and the alleged nongenuine loss which has been picked up by the Id. AO is only Rs. 7,20,400/-. Similarly, in A.Y.2015-16 assessee had declared trading profit of Rs. 2,50,52,106/- and alleged non-genuine trading loss is of Rs. 12,47,500/-. Over and above assessee had declared total income of Rs. 1,61,99,415/ in A.Y.2014-15 and Rs. 1,84,72,074/- in A.Y.2015-16. Thus, on these facts it cannot be inferred that assessee was engaged in booking of loss through dubious devise only for two transactions when all the transaction were done in same manner in currency options have been held to be genuine. Ld. AO should have at least analysed all the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng any kind of adhoc commission. Accordingly, addition of Rs. 4,718/- in A.Y.2014-15 and addition of Rs. 4,881/- in A.Y.2015-16 is deleted. . 27. In the appeal for A.Y.2014-15 the only issue is commission of non-genuine trades in liquid options of Rs. 10,950/-. Since the facts are similar in the case of Abans Commodities (I) Pvt. Ltd., therefore, in the above finding given therein, the addition of Rs. 10,950/- is deleted. 9. In the absence of any contradictory material on facts and law being brought on record since the issue arising in the present appeal is similar to the issue already considered by the coordinate bench of the Tribunal in a similar factual matrix in the case cited supra, therefore respectfully following the same, the addition on account of commission expenses under section 69C of the Act is deleted. 10. In this appeal, the assessee has also raised the grounds challenging the validity of reassessment proceedings under section 147 of the Act. Since we have deleted the addition made on merits, therefore, the legal issues raised before us have been rendered academic and are kept open. 11. In the result, the appeal by the assessee for the assessment year 2015-16 is allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T v/s JMJ Essentials Oil Company', Facts of which are entirely different from the appellants case. In case of PCIT v/s JMJ Essentials Oil Company the facts are related to cash sales and the appellant case is related to purchases which is done through electronic mode where that no evidence was found related to alleged non genuine Cash purchases during the action u/s 133A. f. The Learned CIT(A) has erroneously relied upon the case of 'CIT vs Sri Kamlekar Shankar Lal of which are entirely different from the appellants case. In case of CIT vs Sri KamlekarShankar Lal the estimated rate of profits is on Turnover whereas appellant case the estimated rate of addition made is on alleged non-genuine purchases that to on selected entities. 8. The Learned CIT(A) has erroneously relied upon the case of 'Chhagan Chandrakant Bhujbal vs ITO', facts of which are entirely different from the Appellants case. In case of 'Chhagan Chandrakant Bhujbal vs ITO' assessee opposed the reopening at the very end when show cause notice was issued, the decision of the High Court was mainly based upon this fact. In appellant's case this point was raised in the objection to reasons for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed its return of income on ITA Nos. 3647 3648/Mum/2024 (A.Ys. 2015-16 2018-19) 12 26/04/2022 declaring a total income of INR 20,90,580. On 03/12/2019, a survey under section 133A of the Act was also conducted on the Abans Group, wherein it was found that there are certain entities from whom purchases have been made by the assessee and these entities were found to be non-genuine parties. The details of the purchases made by the assessee from these entities for the year under consideration are as follows: Name of Entity Amounts Asterpetal Trade Service Pvt Ltd 18,84,70,940 Manmish Traders Pvt Ltd 18,85,08,950 Total 37,69,79,890 15. During the reassessment proceedings, it was found that M/s Asterpetal Trade and Services Private Limited does not have any sufficient source of funds to support such a huge turnover with a very low percentage of profit. Further, the shareholders of this company holding 50% of its shares are persons of little means and their financial position does not support the acquisition of this company. It was also noticed that all the activities like filing of ITR and even the handling of emails are being done from the premises of Abans Group of companies. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee as additional profit on account of such non-genuine purchases made during the year. Penalty proceeding u/s. 270A(1) is separately initiated for underreporting of total income. Further, since the assessee has not made the actual Purchases from the aforesaid entity, the said entry in the books maintained by the assessee will tantamount to being a false entry within the meaning of explanation (c) to sub section 1 of section 271AAD of the I.T. Act. Hence, penalty proceedings u/s. 271AAD is separately initiated. 16. The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue and upheld the addition made by the AO. Being aggrieved, the assessee is in appeal before us. 17. We have considered the submissions of both sides and perused the material available on record. We find that the coordinate bench of the Tribunal in a batch of cases pertaining to the assessee s sister concern in Abans Commodities (I) Pvt. Ltd. (supra), vide order dated 30/09/2024, while deciding a similar issue deleted the addition on account of nongenuine purchases. The relevant findings of the coordinate bench are reproduced as follows: 24. We have heard the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given detailed explanation before the Id. CIT(A) also which was not even being committed upon. In so far as ITR filed from the premises of Abans group from a particular IP address, assessee has categorically denied that it is incorrect and no such ITR has been filed from the IP mentioned in the order but from some other IP address which was provided before the ld. CIT (A). This has not been rebutted by the department when assessee brought on record that the IP address which has been mentioned by the ld. AO were different. In so far as the shareholders were not men of means, already it has been brought on record that they were filing their regular income tax returns and have shown investment of share capital from their own sources. In any case, this cannot be the ground for treating the transaction as non-genuine. 25.1 Now, coming to the summons issued to the Directors, it has been stated that the summons were issued during the peak Covid 19 lockdown period and directors had actually responded their inability to attend due to lockdown which has been ignored. If the Id. AO has simply relying upon the comments of the investigation wing and he did not ask the assessee during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delivery Orders (iv) Bank statements demonstrating payment towards the purchases (v) GST returns showing receipt of the goods and availment of input tax credit on such purchases 47. Again, ld. AO has made some allegations with regard to all the entities which has been dealt earlier. Accordingly, in view of our finding given in the other appeals, addition on account of alleged commission of 0.25% of such purchases are deleted. 18. In the absence of any contradictory material on facts and law being brought on record since the issue arising in the present appeal is similar to the issue already considered by the coordinate bench of the Tribunal in a similar factual matrix in the case cited supra, therefore respectfully following the same, the addition on account of non-genuine purchases is deleted. 19. In this appeal, the assessee has also raised the grounds challenging the validity of reassessment proceedings under section 147 of the Act. Since we have deleted the addition made on merits, therefore, the legal issues raised before us have been rendered academic and are kept open. 20. In the result, the appeal by the assessee for the assessment year 2018-19 is allowed. 21. To sum up, b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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