DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(1), MUMBAI, MUMBAI vs. M/S. M B TRADE LINK PVT. LTD., MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL“J(SMC)” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER ITA No. 884/MUM/2026 (AY: 2014-15) (Physical hearing) DCIT, Circle – 7(1)(1), Mumbai M B Trade Link Pvt. Ltd. R. No. 126, Aayakar Bhawan, v 61, Prabha Mandir, Opp. Veer Savarkar Mumbai – 400020. s Road, Prabhadevi SO, Mumbai – 400025 [PAN: AADCM2011K] Appellant / Revenue Respondent / Assessee Assessee by None Revenue by Ms. Jayshree Thakur, Sr. DR Dale of institution of appeal 28.01.2026 Date of hearing 17.08.2026 Date of pronouncement 17.08.2026 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by Revenue is directed against the order of ld. CIT(A)dated 03.11.2025 for Assessment Year (AY) 2014-15. The Revenue has raised following grounds of appeal: “1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that as per Serious Fraud Investigation Officer (SFIO) report, most of the entities/Individuals booked bogus speculative & non speculative gain and losses by trading on the NSEL platform and assessee is also one of the beneficiaries of such scam. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in overlooking the fact that the statement of one of the brokers wherein it is clearly stated that "no physical delivery of goods took place at any time whatsoever in all trades executed on NSEL. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in considering the fact that the assessee had earned profit of Rs. 1,50,460/- on account of Client Code Modification transaction and that the assessee has shown Nil income after adjusting loss.” 2. None appeared on behalf of the assessee despite service of notice on more than three occasions. Therefore, we are left with no option except to hear the submissions of the learned Senior departmental representative (DR) for the Revenue and on the basis of material available on record. 3. The learned Senior Departmental Representative (ld. DR) for the Revenue submits that the case of the assessee was reopened on the basis of information received from the Serious Fraud Investigation Officer (SFIO). In the said information, it was reported that the assessee is one of the persons who was a beneficiary of transactions involving Client Code Modification CCM). The share broker of the assessee, namely, Anand Rathi and Associates, was indulging in providing client code modification. The learned CIT(A), while allowing relief to the assessee, ignored the vital facts and information. The learned Senior DR prayed that the order of the Assessing Officer be restored by reversing the findings of the learned CIT(A). 4. We have considered the rival submissions of the learned Senior DR and the material available on record. We find that the AO made an addition of Rs. 1,50,000/- on account of client code modification. We find that the learned CIT(A) allowed relief to the assessee by taking the view that before him the assessee submitted that the AO erred in computing the total income of Rs. 1,50,460/- as against the returned loss of Rs. 1,11,48,812/-. The assessee submitted that it was engaged in normal business activities and also undertook commodity trades through an authorised broker. The assessee filed a revised return earlier and subsequently filed a return in response to notice issued under section 148 wherein profit from trading in securities and forward commodity transactions amounting to Rs. 4,77,852/- was disclosed as business income. The component of Rs. 1,50,460/- represented the profit from commodity trades undertaken on 24 May 2013 and 27 June 2013 through broker, such fact is supported by the assesseswritten submission, wherein it has been stated that “the assessee has already offered the income of Rs. 4,77,852/- as Profit in Trading in securities and Forward Market. This statement is further substantiated by the Sauda report reproduced by the AO himself in the assessment order. The extract clearly shows that buy and sell transactions for the same quantity of commodity contracts were executed on the same dates and resulted in the profit figure of Rs. 1,50,460/-. This leaves no doubt that the profit is not an unexplained credit but a trading result arising out of completed business transactions. The AO disregarded the fact that the profit was already credited and offered in the computation of income and instead proceeded to add the same as unexplained income under section 68 of the Act. The A.O further held that it represented speculative profit not eligible for set-off against business loss. The addition so made by the A.O has therefore resulted in double taxation of the same profit. The provision of section 68 of the Act can be invoked only when there exists a credit in the books for which the assessee fails to provide a satisfactory explanation regarding its nature and source. In the present case, the appellant has fully explained the nature and source of the said profit. The AO himself has reproduced the contract note details including quantity, value, rates and settlement. Once the profit forms part of the trading results and appears in the return filed in response to notice under section 148, treating it again as unexplained income is legally untenable. The ld CIT(A) also relied on the decision of Tribunal in ITO vs. Prism Share Trading Pvt. Ltd., in ITA No. 5650/Mum/2017 dated 30.11.2018, wherein it was held that the AO was not justified in treating duly evidenced commodity profit as unexplained cash credit under section 68 of the Act. The Tribunal further examined whether loss can be set off against such income and held that section 115BBE restricting set-off was amended only with effect from assessment year 2017-18. In the year involved in that appeal (assessment year 2013- 14), there was no statutory embargo on allowing set-off of loss. The Tribunal held that “there was no embargo to claim set off of losses in the year under consideration.” Therefore, even if the addition is assumed to be under section 68, the set-off of loss cannot be denied prior to AY 2017- 18 because the amendment to section 115BBE is prospective only. In the present case, the assessment year involved is AY 2014-15, which falls prior to the amendment. Hence the assessee is legally entitled to set off its regular business loss against the commodity trading profit already offered. 5. We find that ld. CIT(A) while allowing relief to the assessee held that AO simply relied upon the information without actual verification of the facts. No comments were made on the various evidences furnished by the assessee. The learned CIT(A) clearly held that the addition cannot be made solely on the basis of information without making any comments on the various evidences furnished by the assessee. Thus, we find that the order of the learned CIT(A) is based on proper appreciation of facts. Accordingly, we do not find any merit in the grounds of appeal raised by the Revenue. In the result, the grounds of appeal raised by the Revenue are dismissed. 6. In the result, appeal filed by Revenue is dismissed. Order was pronounced in open court on 17/08/2026 Sd/- Sd/- JAGADISH PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, Dated:17/08/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai