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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: Sri Sanjay Garg
order
: March 08th, 2022 ORDER
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-10, Kolkata [hereinafter referred to as ld. ‘CIT(A)] u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’) dated 31.05.2019 for AY 2015-16.
The assessee in this appeal has taken the following grounds of appeal: “1) For that on the facts and in the circumstances of the case, the ld. CIT(A) was not justified in confirming the action of the AO in treating the commodity profit of Rs.2,18,346/- as ingenuine. 2) For that on the facts and in the circumstances of the case, the ld. CIT(A) was not justified in confirming the action of the AO in making an addition of Rs.6,550/- on account of alleged unexpected expenditure u/s 69C of the Act. 3) The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing. ”
3. At the outset, the ld. Counsel for the assessee has invited my attention to the impugned Assessment Order and submitted that in this case the assessee in its return of income had shown commodity profit of Rs.2,18,346/-. However, the AO held that the said commodity profit shown by the assessee was ingenuine and bogus and treated the said amount of Rs.2,18,346/- as unaccounted income of the assessee u/s 68 of the Act.
Assessment Year: 2015-16 Aditya Pugalia HUF. He further estimated the expenditure at the rate of 3% of the said profit at Rs.6,550/- and treated the same as unexplained expenditure of the assessee and added the same to the income of the assessee. The ld. CIT(A) also confirmed the addition so made by the AO. 3.1. The ld. Counsel for the assessee has submitted that in this case the AO had relied upon certain report of Investigation Wing wherein it was noted that 85 entities were identified who had booked contrived losses in excess of Rs.10 crores which were used to set off any income/profit available in the books. The assessee was found to be one of the parties to whom bogus profit was given, so as to give the benefit of equal loss to some other parties. The AO, therefore, treated the income of commodity profit shown by the assessee as unexplained income of the assessee. The ld. Counsel for the assessee has submitted that the assessee has never indulged in such bogus profit, as alleged by the Department. He has, further, submitted that there was no evidence that the assessee had done any bogus transaction. He has, further, submitted that the income earned from commodity profit was offered to taxation as income from ‘other sources’. He has, further, submitted that even if the said income is treated as unexplained income u/s 68 of the Act, still there was no tax effect. He has, further, submitted that the AO has wrongly made the addition of Rs.6,550/- on account of unexplained expenditure in respect of arranging the ingenuine commodity trade.
Ld. D/R, on the other hand, has relied upon the finding of the lower authorities.
In this case, admittedly the assessee has offered an amount of Rs.2,18,346/- as income from ‘other sources’ shown to be earned from commodity profit. The assessment year involved is AY 2015-16 and there was no difference in the rate of tax in respect of income from ‘other sources’ or income assessed as unexplained income u/s 68 of the Act. Therefore, the motive of arranging such a transaction on the part of the assessee is missing in this case. 5.1. There is no mention as to whom/which party the assessee has given the benefit of bogus losses by booking the aforesaid profits. There is nothing on record that the assessee was involved in such a transaction. Even otherwise, there is nothing on record to show that the assessee has incurred expenditure at the rate of 3% at Rs.6,550/- to Assessment Year: 2015-16 Aditya Pugalia HUF. enter into alleged bogus transaction from which the assessee did not get any benefit of taxation etc.
In view of this, I do not find justification on the part of the lower authorities in changing the head of income of the assessee and making the impugned addition on account of alleged expenditure. Hence, the appeal of the assessee is allowed and the addition made by the lower authorities is ordered to be deleted.
In the result, the appeal of the assessee stands allowed. Order is pronounced in the open court on 08.03.2022. Sd/- [Sanjay Garg] Judicial Member Dated: 08.03.2022 Bidhan (P.S.) Copy of the order forwarded to:
1. 1. Aditya Pugalia HUF, C/o Subash Agarwal & Associates, Advocates Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata-700 069.
2. ITO, Ward-34(2), Kolkata. 3. CIT(A)- 10, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata.