RATHINAM MURUGAVEL,NAMAKKAL vs. ITO, WARD 4,, NAMAKKAL

The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the AO in making addition of unaccounted expenses of Rs.14,89,565/- paid to NSE and BSE.

Brief facts are that the AO on perusing the statement of transactions made through ICICI Securities noted that the assessee has paid a sum of Rs.17,96,981/- to NSE and Rs.2,93,926/- to BSE on account of share transactions conducted through NSE and BSE. When the AO required the assessee to explain this expenditure assessee filed letter dated 28.11.2016 and stated that he has utilized a sum of Rs.6,25,636/-, loan availed from Shri R.Murugavel, TMB Mercantile Brnach. Hence, the AO giving credit for the same disallowed the balance amount of Rs.14,65,271/- as unexplained expenditure as under:- NSE – payments 1796981 BSE – payments 293926 Total payments 2090907 Less: Loan from TMB 625636 Unexplained expenditure 1465271 Aggrieved, assessee filed appeal before CIT(A).

Before CIT(A) assessee could file one statement of ICICI Securities wherein the details of intraday trading in shares including expenditure is enclosed but that statement was not complete and - 3 - CIT(A) could not verify the transactions and hence, he also confirmed the action of the AO. Aggrieved, now assessee is in appeal before the Tribunal.

I have heard rival contentions and gone through facts and circumstances of the case. I noted that the assessee is engaged in intraday trading i.e., a type of investing where you buy and sell shares on the same day. In this type of trading, brokers provide you with certain margins to purchase more shares than you buy using your capital and the margin borrowed to buy and sell more shares allow you as an intraday trader. Hence, in this assessee has incurred expenditure of brokerage charges, etc., with NSE and BSE. Even now before us assessee could not file the complete statement but he undertook to file the same. But in any case, the assessee files the complete statement of ICICI Securities where this expenditure is allowed on the basis of credit or actually assessee has not paid and it is only booked, the assessee has to prove the same. The assessee will file details of ICICI Securities who has allowed credit to the assessee. In case credit is allowed, the AO will consider and will delete the addition. But, if the statement reflects there is no credit i.e., statement of ICICI Securities, the AO will not allow the - 4 - claim of assessee. Subject to verification, the matter is restored back to the file of the AO.

In the result, the appeal filed by the assessee is allowed for statistical purposes.