ACIT-19(3), MUMBAI, MUMBAI vs. SHASHIKANT DEVJI THAKKER, MUMBAI

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ITA 9258/MUM/2025Status: DisposedITAT Mumbai30 June 2026AY 2014-159 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the Commissioner's order, finding no flaw in deleting the addition. The Tribunal agreed that the AO had misread the evidence and that the transactions were duly explained, especially given the consistency with prior year's assessment.

What were the facts?

The Assessing Officer (AO) made an addition of ₹2,16,80,935 treating client code modification (CCM) transactions via NSEL as unexplained money. The Commissioner (Appeals) deleted this addition, noting that similar transactions in a prior year were accepted and the AO provided no distinguishing material.

What were the issues?

Whether trading transactions routed through a broker, supported by documentary evidence, can be treated as unexplained money under Section 69A. Whether the principle of consistency applies when similar transactions were accepted in a prior assessment year.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 147,Section 144B,Section 250,Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE NARENDER KUMAR CHOUDHRY & HON’BLE JAGADISH

For Appellant: Shri Raveendran P.M., Ld. A.R
For Respondent: Shri Mehul Jain, Ld. D.R
Pronounced: 30.06.2026

आदेश / ORDER

PER: NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER: This appeal has been preferred by the Revenue against the order dated 14.10.2025, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2014-15.

2.

In the instant case, the Assessing Officer, vide assessment order dated 30.05.2023 passed under section 147 read with section 144B of the Act, made an addition of ₹2,16,80,935/- under section 69A read with section 115BBE of the Act, treating the alleged Client Code Modification (CCM) transactions carried out through NSEL via broker Anand Rathi, as unexplained money in the form of assets.

3.

The Ld. Commissioner, after considering the peculiar facts of the case, observed that in the Assessee's own case for Assessment Year 2013-14, identical trading transactions carried out through the very same broker, namely Anand Rathi, had already been examined and accepted. The Ld. Commissioner further observed that the AO had not brought any distinguishing material on record to demonstrate as to how the transactions involved in the year under consideration were different from those examined in Assessment Year 2013-14, except making general allegations. Accordingly, after analyzing the factual matrix and the merits of the case, the Ld. Commissioner deleted the impugned addition by recording the findings contained in paragraphs 6 to 6.1.6 (pages 17 to 19) of the impugned order, which read as under:

“6. Decision:- 6.1 Grounds No. 1 to 7:- On the facts and circumstances of the case and in law, the learned Assessing Officer erred in making an addition of Rs. 2,16,80,935/- and raising a demand of Rs. 1,56,22,535/- by overlooking the detailed submissions and evidences furnished during the reassessment proceedings. The learned Assessing Officer further erred in alleging that the appellant had carried out client-code modifications through M/s Anand Rathi Commodities Ltd. and in treating the entire sum of Rs. 2,16,80,935 as unexplained money under section 69A read with section 115BBE. He also erred in holding that the transactions with the said broker were not explained, that the source of funds remained unexplained, and that contract notes were not produced even though Sauda summary, ledger account, and bank statements were submitted. The learned Assessing Officer finally erred in overlooking the fact that similar transactions with the same broker were examined and accepted in A.Y. 2013-14. 6.1.1 All these seven grounds are interconnected, emanating from a single controversy concerning the addition of Rs. 2,16,80,935/- made under section 69A read with section 115BBE of the Act on the basis of alleged client-code modification and unproved trading transactions through M/s Anand Rathi Commodities Ltd. They are, therefore, taken up together for adjudication. 6.1.2 The reassessment order shows that the Assessing Officer relied on general information from the SFIO and NSEL investigations, which revealed instances of client-code modification by certain brokers. However, there is no reference anywhere in the assessment order to any specific trade, client code, or contract connected to the present appellant. No correspondence, trade log, or statement from the broker identifying the appellant's code was brought on record. The Assessing Officer simply extrapolated the general findings of the investigation and presumed that every client of the said broker, including this appellant, was involved in such transactions. In contrast, the appellant furnished a detailed reply to the show-cause notice dated 22 May 2023, enclosing the Sauda summary of the broker for the entire financial year, the ledger account maintained by the broker, the appellant's own bank statement reflecting transactions with the broker and even an affidavit of the broker filed before the Hon'ble Bombay High Court confirming the appellant's receivable from NSEL. These primary evidences clearly demonstrated that the trades were genuine and settled through normal banking channels. The Assessing Officer has not rebutted or disproved any of these documents. 6.1.3 ln law, an addition under section 69A can be made only where the assessee is found to be the owner of money or valuable article and the source thereof remains unexplained. The essence of the provision is the existence of unexplained ownership of money. Here, the amount of of Rs. 2,16,80,935/- represents not a possession of unaccounted money but the gross value of trades executed through a disclosed broker. The appellant had already offered to tax the profit of Rs. 6,16,999/- arising from such trades. The balance amount was merely the turnover of transactions routed through the broker and duly recorded in the ledger. Treating such trading turnover as unexplained money is conceptually erroneous and contrary to law. The Hon'ble Bomaby High Court in PCIT v. Pat Commodity Services Pvt. Ltd. in Tax Appeal No. 1257 of 2016, judgment dated 15th January 2019 has held that "It was also noticed that the Revenue has not contended that the client code modification facility is often misused by the assessee to pass on losses to the investors, who may have sizable profit arising out of commodity trading against which such losses can be set off.

The Revenue normally points out number of such instances of client code modifications as well as nature of errors in filling of the client code. At any rate, what can be taxed in the hands of the present assessee is the income escaping assessment. Even if the Revenue's theory of the assessee having enabled the clients to claim contrived losses, the Revenue had to bring on record some evidence of the income earned by the assessee in the process, be it in the nature of commission or otherwise. In the present case, the Assessing Officer has added the entire amount of doubtful transactions by way of assessee's additional income, which is wholly impermissible."

6.1.4 The factual matrix also reveals that all payments to and receipts from the broker were through regular banking channels. The ledger shows a running account with opening balance, purchases, sales, margins and periodic settlements. There is no evidence of any cash movement. The Sauda summary provides the details equivalent to contract notes, including trade date, commodity, quantity, rate, and resulting profit or loss. The explanation is coherent, consistent and fully supported by documentary record. In such a situation, once the appellant discharges his primary onus by producing these materials, the burden shifts to the Revenue to prove them false. The Assessing Officer has not done anything to prove the allegation against the appellant. 6.1.5 lt is equally relevant that for A.Y. 2013-14, in the appellant's own case, similar trading transactions with the same broker were examined and accepted. The A.O has not brought any material to differentiate as how the transaction are different in current years apart from the general allegation. Hence, there is nothing on record to suggest any change in facts or law, the principle of consistency laid down in PCIT v. Quest Investment Advisors Pvt. Ltd. (2018) 409 ITR 545 (Bom.) squarely applies. The Assessing Officer has not brought any fresh material to justify a different conclusion 6.1.6 On a cumulative appreciation of a of all facts and judicial precedents, the explanation offered by the appellant is satisfactory, the trading transactions stand proved and the ownership of any unexplained money is not established. Thus, the addition of Rs. 2,16,80,935/- under section 69A read with section 115BBE of the Act is, therefore, deleted. Consequently, as the principal issue has been decided in favour of the appellant, the remaining connected grounds (Nos. 2 to 7) which raise overlapping aspects of the same addition are rendered infructuous and require no separate adjudication.”

4.

We further observe that in the Assessee's own case for Assessment Year 2013-14, the then AO, vide assessment order dated 25.05.2023 passed under section 147 read with section 144B of the Act, had also made an identical addition of ₹15,85,000/- in respect of similar transactions carried out through Anand Rathi. Thus, the Assessee being aggrieved by the said addition preferred an appeal before the Ld. Commissioner, who, vide order dated 15.10.2025, deleted the said addition.

5.

Thereafter, the Revenue, being aggrieved by the aforesaid appellate order, preferred an appeal before the Tribunal. The Hon'ble Coordinate Bench of the Tribunal, vide order dated 01.04.2026 in ITA No. 9123/Mum/2025, affirmed the order of the Ld. Commissioner and upheld the deletion of the addition made for Assessment Year 2013-14. For the sake of brevity and ready reference, the relevant findings recorded in paragraphs 3 and 8 of the said order, are reproduced herein below:

“3. Being aggrieved assessee preferred an appeal before the Ld. CIT(A), who had accepted the explanations of the assessee and allowed the appeal, with following findings: "6. Decision:- 6.1 Grounds No. 1 to 3: On the facts and circumstances of the case and in law, the learned Assessing Officer erred in making an addition of Rs. 15,85,000/- and raising a demand of Rs. 1,24,246/- by overlooking the detailed submissions and evidences furnished during the re-assessment proceedings. The learned Assessing Officer further erred in alleging that the appellant had carried out client-code modifications through M/s Anand Rathi Commodities Ltd. and in treating the sum of Rs. 15,85,000/- as unexplained investment under section 69 of the Act. He also erred in holding that the transactions with the said broker were not explained and that the source of funds remained unexplained and that contract notes were not produced even though Sauda summary, ledger account and bank statements were submitted. All these three grounds are inter-connected, emanating from a single controversy concerning the addition of Rs. 15,85,000/- made under section 69 of the Act on the basis of alleged client-code modification and unproved trading transactions through M/s Anand Rathi Commodities Ltd. They are, therefore, taken up together for adjudication.

The re-assessment order shows that the Assessing Officer relied on general information from the SFIO and NSEL investigations, which revealed instances of client-code modification by certain brokers. However, there is no reference anywhere in the assessment order to any specific trade, client code or contract connected to the present appellant. No correspondence, trade log or statement from the broker identifying the appellant's code was brought on record. The Assessing Officer simply extrapolated the general findings of the investigation and presumed that every client of the said broker, including this appellant, was involved in such transactions. In contrast, the appellant furnished a detailed reply to the show-cause notice dated 16 May 2023, enclosing the Sauda summary of the broker for the entire financial year, the ledger account maintained by the broker (in two parts covering 1 April 2012 to 31 March 2013), the appellant's own bank statements reflecting transactions with the broker and even an affidavit filed before the Hon'ble Bombay High Court confirming the appellant's receivable from NSEL. These primary evidences clearly demonstrated that the trades were genuine and settled through normal banking channels. The Assessing Officer has not rebutted or disproved any of these documents. In law, an addition under section 69 can be made only where the assessee is found to be the owner of money or valuable article and the source thereof remains unexplained. The essence of the provision is the existence of unexplained ownership of money. Here, the amount of Rs. 15,85,000 represents not a possession of unaccounted money but two deposits routed through the appellant's disclosed bank accounts towards trading transactions with the broker. The appellant had already offered to tax the profit arising from such trades. Treating such banking transactions as unexplained investment is conceptually erroneous and contrary to law. The Hon'ble Bombay High Court in PCIT v. Pat Commodity Services Pvt. Ltd. (Tax Appeal No. 1257 of 2016, judgment dated 15 January 2019) has held that where the Assessing Officer adds the entire transactional value as income without establishing real undisclosed gain, such addition is wholly impermissible. The factual matrix also reveals that all payments to and receipts from the broker were through regular banking channels. The ledger shows a running account with opening balance, purchases, sales, margins and periodic settlements. There is no evidence of any cash movement. The Sauda summary provides the details equivalent to contract notes, including trade date, commodity, quantity, rate and resulting profit or loss. The explanation is coherent, consistent and fully supported by documentary record. In such a situation, once the appellant discharges his primary onus by producing these materials, the burden shifts to the Revenue to prove them false. The Assessing Officer has not done anything to prove the allegation against the appellant. It is equally relevant to note that in the appellant's own case for A.Y. 2014-15, the issue arising from similar trading transactions with the same broker was thoroughly examined and the addition made on identical grounds was deleted by this office after detailed consideration of facts and law. The facts of the present year are identical in all material respects. There is no change either in the nature of transactions or in the evidences placed on record. Following the settled principle of consistency enunciated by the Hon'ble Supreme Court in Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC), once a fundamental aspect permeating through different years has been accepted in one year, it should not be departed from unless there is a material change in facts or law. In view of this binding precedent and in the absence of any distinguishing feature, 1 consider it appropriate to maintain judicial consistency and to follow my own decision rendered for A.Y. 2014- 15. Accordingly, the same view is adopted in the present year also. On a cumulative appreciation of all facts and the above judicial precedents, the explanation offered by the appellant is satisfactory, the trading transactions stand proved and the ownership of any unexplained money is not established. Thus, the addition of Rs. 15,85,000/-under section 69 of the Act is deleted. Consequently, as the principal issue has been decided in favour of the appellant, the remaining connected grounds raising overlapping aspects of the same addition are rendered infructuous and require no separate adjudication."

4.

As the relief is granted to assessee by the Ld. CIT(A) in the impugned order, the revenue being aggrieved is in appeal before us. 5. At the outset Ld. Sr. DR. representing the revenue vehemently supported the order of AO and requested to set aside the order of CIT(A) on the issue of deleting the addition u/s 69 by reiterating the grievance of the revenue in terms of grounds of appeal assailed herein (supra). 6. Per contra, Ld. AR (Authorized Representative) on behalf of the assessee submitted that the addition made by the AO was only on account of alleged failure of assessee to furnish necessary supporting evidence to corroborate the disputed transactions. Whereas, it was only a misappreciation of the facts on record, that the AO had missed to witness the evidence furnished for impugned transactions which are treated as doubtful, on the other hand considered the genuineness of similar transactions carried out. It is submitted that Ld. CIT(A) had correctly appreciated the merits of facts and thus allowed the appeal of assessee. Prayed, the order of Ld. CIT(A) being justified on merits and in law deserves to be upheld. 7. We have considered the rival submissions and perused the material available on record. On perusal of the factual aspect of the instant case, we find that it is a simple case of factual misreading of the evidence on record, as the subjected transactions, which were corroborated by the assessee before the AO were missed his attention, having conviction that such information was not furnished by the assessee. Ld. CIT(A) examined the issue as clarified by the assessee and found that the information was very much there on records, which escaped the AO's consideration, though are identical to other transactions which were examined and accepted by the AO. In view of such facts, based on information and corroborative evidence which were furnished during the assessment proceedings as well as before the CIT(A), the disputed two transactions are also treated as duly explained by the Ld. CIT(A). 8. In backdrop of the aforesaid facts and circumstances, once the identical transactions are accepted by the AO, treating them as duly explained, the other transactions which were branded being unexplained, only for the reason that no corroborative supporting evidence were furnished by the assessee, cannot be disallowed, once it is established that such information was duly submitted by the assessee, which has been misconceived by the AO, merely due to oversight. We, thus, are of the considered opinion that there is no flaw in the impugned decision of Ld. CIT(A), which warrants any further consideration. The order of Ld. CIT(A), therefore, stands upheld”.

6.

We find that the facts and circumstances of the present appeal, the nature of the transactions, the issue involved and the addition made are identical to those considered by the Hon'ble Coordinate Bench in the Assessee's own case for Assessment Year 2013-14 in ITA No. 9123/Mum/2025 decided on 01.04.2026. The Revenue has also failed to point out any distinguishing feature warranting a different view. Therefore, respectfully following the aforesaid decision of the Hon'ble Coordinate Bench, we find no infirmity in the well-reasoned order passed by the Ld. Commissioner deleting the impugned addition. Accordingly, the order of the Ld. Commissioner is upheld and the grounds raised by the Revenue are dismissed.

7.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 30.06.2026.

Sd/- Sd/- JAGADISH NARENDER KUMAR CHOUDHRY ACCOUNTANT MEMBER JUDICIAL MEMBER (Tarun Kushwaha) Sr. Private Secretary

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench

//True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.

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