PORUS SARANJIT SINGH,PUNE vs. INCOME TAX OFFICER (IT), WARD-4, PUNE, PUNE

PER R.S.SYAL, VP : These two appeals by the assessee are directed against the final assessment orders - both dated 30-01-2023 - passed by the Assessing Officer (AO) u/s.147 r.w.s.144C(13) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment years 2013-14 & 2014-15. Since some of the issues raised in these appeals are common, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.

2 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

A.Y. 2013-14 :

proceedings, was not pressed by the ld. AR. The same is,

therefore, dismissed.

made by the AO in Paddy Basmati account.

resident, who filed his return declaring total income at

Rs.10,60,310/-. It transpired that the assessee had not offered

profit earned on certain transactions made on National Spot

Exchange Ltd. (NSEL). On this basis, notice u/s.148 was issued.

Compliance was made by the assessee. During the course of

assessment proceedings, the AO called for the information from

NSEL and the assessee’s broker, namely, Anand Rathi

Commodities Ltd. u/s.133(6) of the Act, which divulged that the

assessee had not properly recorded transactions in respect of

purchase and sale of Paddy, routed by the broker through his

Sauda Register. There were two unrecorded Paddy Buy

transactions as per his Sauda Register, namely, of Rs.1,23,66,000/-

on 19-03-2013 with quantity of 7200 and of Rs.34,44,000/- on

11-03-2013 with quantity of 2400; and corresponding unrecorded

3 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

Paddy Sell transactions of the same quantity on same dates for

Rs.1,26,41,400/- and Rs.35,16,360/- respectively. On being called

upon to explain as to why profit from these sets of transactions,

totalling to Rs.3,47,760/-, was not recorded in the books, the

assessee submitted that the profit was actually recorded in the

subsequent year. However, the assessee failed to disclose the

depiction of such profit in the subsequent year. The same position

prevailed before the Dispute Resolution Panel (DRP) as well.

There also the assessee could not substantiate his claim that the

profit of Rs.3,47,760/- was shown in the subsequent year. This led

to the passing of the final assessment order making the addition to

this extent. Aggrieved thereby, the assessee has come up in appeal

before the Tribunal.

relevant material on record, it is seen that Sauda Summary Report

of Anand Rathi Commodities Ltd. showed two sets of transactions

of Paddy Buy and Paddy Sell on 19-03-2013 and 11-03-2013,

which were not recorded in the books of account for the year under

consideration. The assessee kept raising a claim before the AO as

well as the DRP that these transactions were recorded in the

subsequent year. However, the assessee failed to substantiate his

4 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

contention. Neither any material could be placed before the

AO/DRP to demonstrate the booking of profit from such

transactions in the immediately succeeding year, nor the position

has improved any further before the Tribunal. In view of the

admitted facts that the transactions did take place, and profit from

them was neither recorded in the year under consideration nor the

next year, we hold that the AO was justified in making the

addition. The ground is, therefore, dismissed.

by the AO. The facts apropos this ground are that a perusal of

statement of Anand Rathi Commodities Ltd., Multi Commodity

Exchange of India Limited (MCDX), disclosed that the assessee

had the transaction of Buy GOLDM worth Rs.94,96,186/- with

quantity of 3200 and Sell GOLDM of the same quantity for

Rs.96,91,360/-. The assessee, in his Profit and Loss account, had

shown the purchase transaction of GOLDM at Rs.47,88,186/- and

sale transaction of GOLDM at Rs.48,47,520/-, giving profit of

Rs.59,334/-. The AO observed that the assessee additionally

purchased Gold for Rs.47,08,000/-, which was sold for

Rs.48,47,520/-. Such transactions were found not to have been

recorded. He, therefore, computed profit from such unrecorded

5 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

transactions at Rs.1,35,840/- and proposed the addition in the draft

order. No succour was provided by the DRP. This resulted in the

addition in the final assessment order.

relevant material on record, it is seen that the assessee declared

profit of Rs.59,334/- from the Buy and Sell transactions of Gold.

The AO, apart from considering these transactions, also noted that

another set of transactions took place, profit from which was not

disclosed. We have gone through Contract note of Anand Rathi

Commodities Ltd. with trade date 01-02-2013 for purchase of 3200

quantity of GOLDM by 05-02-2013 and sale of such quantity by

05-03-2013. The purchase transaction got actually concluded on

04-02-2013. A copy of Contract-cum-bill dt. 04-02-2013 has been

placed at page 37 of the paper book with value of Rs.48,47,160/-.

Similarly, the sale transaction got actually concluded on

01-03-2013. A copy of Contract-cum-bill dated 01.03.2013 has

been placed at page 38 of the paper book with value of

Rs.47,04,514/-. We have also gone through the ledger of

transactions of Anand Rathi Commodities Ltd. with the assessee,

whose copy has been placed at page 25 onwards of the paper book,

showing Buy Sauda date as 01-02-2013 and the actual transactions

6 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

date of sale and purchase, namely, 01-03-2013 and 04-02-2013. In

fact, there was only one set of transactions of GOLDM purchase

and sale, but the AO inadvertently additionally took the dates of

Contract-cum-bills of purchase and sale as separate and distinct

transactions. The addition so made by the AO is, thus, directed to

be deleted.

expenses of Rs.5,45,693/- out of total expenses incurred at

Rs.6,82,453/-. The assessee debited Rs.6,82,453/- as expenses in

his Profit and loss account under different heads, such as,

Insurance, Car expenses, Bank charges, Accountant salary, Driver

salary, Car fuel, Travelling, Printing and Depreciation etc. The

AO held that since the business was transacted only through Anand

Rathi Commodities Ltd. and hence, the assessee was not required

to incur any further expenditure in relation thereto. He, therefore,

disallowed 80% of the expenses by allowing deduction only at

20%, against which the assessee has approached the Tribunal.

material on record, it is seen as an admitted position that the

assessee did carry on the business in the year under consideration.

Even though Anand Rathi Commodities Ltd was acting on behalf

7 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

of the assessee, still the assessee also was required to incur usual

necessary expenses to carry on his business. The expenses claimed

are in the nature of day-to-day expenses, such as, Accountant

salary, Driver Salary, Car expenses, Travelling and Depreciation

etc. Considering the facts in entirety, we are of the considered

opinion that it would be just and fair if the disallowance is

restricted to 20% towards personal element in expenses and

unverified expenses. The assessee gets the relief accordingly.

A.Y. 2014-15 :

proceedings was not pressed by the ld. AR. The same is, therefore,

dismissed.

Rs.1,72,844/- on the transaction in Paddy Basmati. From the

Sauda report received from Anand Rathi Commodities Ltd., the

AO observed that there was one transaction of Buy Paddy Basmati

of Rs.1,26,67,200/- and the corresponding Sell Paddy of

Rs.1,28,97,750/-, with differential amount of Rs.2,30,550/-. After

considering the amount of expenses, the AO worked out the

amount of profit of Rs.1,72,844/-. On being called upon to explain

as to why this transaction was not offered for taxation, the assessee

8 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

submitted that the transaction of sale was terminated and was not

honoured by NSEL. Information was called for from Anand Rathi

Commodities Ltd. u/s.133(6), in response to which the Sauda

Report was produced recording the Sauda date at 18-07-2013. The

AO computed profit at Rs.1,72,844/- and proposed the addition

thereof in the draft order. No relief was allowed by the DRP,

which led to the making of addition to this extent in the final

assessment order.

material on record. It is seen that the AO once again went through

Sauda dates to compute profit from the transaction which was not

offered for taxation. As against that, we have perused the

statement of the assessee’s account in the books of Anand Rathi

Commodities Ltd. This statement shows the Buy date of

18-07-2013 with Buy amount at Rs.1,26,67,200/-. Before the

transaction could be actually finalised and delivery obtained, scam

in NSEL came to light and all the relevant accounts were freezed.

Statement of account of Anand Rathi Commodities Ltd. with the

Report dt. of 17-03-2022, copy placed at page 25 onwards of the

paper book, records only the sauda date and not any corresponding

sale transaction. At the end of the statement, it has been mentioned

9 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

that: “In view of National Spot Exchange Ltd. (NSEL), Circular

No.NSEL/TRD/2013/065 dated July 31, 2013, NSEL has

suspended & postponed the settlement of all one day forward

contract & accordingly you have to receive around

Rs.12,560,551.81 as on 31-03-2021 from NSEL after adjusting all

transaction cost”. This shows that though the assessee made the

payment for the purchase of Paddy but could not take the delivery

as a sum of Rs.1.25 crore is still due from NSEL as per the above

statement. On one hand, the assessee did not receive the delivery

despite making payment for the purchase price, on the other, the

AO computed profit from the presumed sale. We fail to appreciate

that when the goods were not received in the first instance, where

is the question of presuming the corresponding sale and then

working out the profit therefrom. We, therefore, order to delete the

addition.

confirmation of disallowance of expenses at Rs.8,94,760/- out of

total expenses incurred at Rs.11,18,451/-. Following his view for

the preceding year, the AO made disallowance of expenses at 80%.

Facts being identical to the immediately preceding year 2013-14,

10 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

following the reasoning given above, we restrict the disallowance

to 20% of expenses instead of 80% made by the AO.

Sd/- Sd/- (S.S.VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 12th July, 2023 Satish आदेश की �ितिलिप अ�ेिषत/Copy of the Order is forwarded to: अपीलाथ� / The Appellant; 1. ��थ� / The Respondent; 2. 3. The DRP-3, Mumbai-1, DRP-3, Mumbai-2, DRP-3, Mumbai-3 िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “C” / DR 4. ‘C’, ITAT, Pune गाड� फाईल / Guard file 5. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

11 ITA No.305 & 304/PUN/2023 Porus saranjit Singh

Date 1. Draft dictated on 12-07-2023 Sr.PS 2. Draft placed before author 12-07-2023 Sr.PS 3. Draft proposed & placed before the JM second member 4. Draft discussed/approved by Second JM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *