ACIT, CC-13, NEW DELHI vs. DHIRAJ JAIN, NEW DELHI

During the course of search and seizure operation at the premises of Mahagun India Pvt Ltd, incriminating documents which were found and seized contained details of commodity trading done by Shri Dheeraj Jain to the tune of Rs. 12.45 crores. Documents so found were confronted to the brother of the assessee who admitted unaccounted income on account of commodity trading amounting to Rs. 12,45,40,000/- for F.Y. 2016-17 pertaining to A.Y 2017-18.

Relevant statement is extracted at page 5 of the assessment order wherein to Question No. 16, Shri Jain admitted the income as not recorded in the regular books of account and accepted the same as income from other sources and agreed to pay taxes on the same.

Return of income was accordingly filed including income of Rs. 12.45 crores shown as income from other sources being the amount disclosed during the course of search and seizure operation. Invoking provisions of section 69 of the Act, the Assessing Officer was of the firm belief that income has to be charged to tax u/s 69 r.w.s 115BBE of the Act as income was never disclosed by the assessee and would never have been disclosed had there been no search proceedings.

The Assessing Officer further discarded the contention of the assessee that income is not chargeable under the head income from other sources.

Having carefully considered the assessment order, we are of the considered view that the assessee has earned income from commodity trading. Even if the same was not disclosed in its regular books of account by the assessee, the same was offered for tax as income from other sources.

In our considered opinion, provisions of section 69C of the Act do not apply as the impugned item is income and not investment. In our view, provisions of section 115BBE of the Act would apply if the income of the assessee is either declared or assessed u/s 68/69/69A/ 69B/69C/69D of the Act. But facts of the case in hand show that the assessee has declared income from commodity trading, which has been accepted as such by the Assessing Officer.

Entries on the documents seized relate to offline commodity trading transactions relating to the assessee and the amount of profit of Rs. 12.45 crores is reflected on the account of these transactions.

In our considered opinion, transaction reflected on the seized paper represents future contract of purchase and sale of gold and silver on various dates. Since the income has been accepted by the Assessing Officer, it can be safely presumed that the transactions recorded in the seized documents do not have any different character than that reflected on the seized paper and that is income of the assessee.

We are of the considered view that the assessee has clearly explained the source of profit earned by him and as the source of income is identifiable, deeming provisions of section 69 cannot be applied.

Considering the totality of the facts on the given circumstances, we have no hesitation to hold that the provisions of section 69 of the Act are not applicable on the profit from trading of speculative transactions. We, therefore, decline to interfere with the findings of the Assessing Officer.

As a result, the appeal of the Revenue stands dismissed.

Since we have dismissed the appeal of the Revenue, we do not find it necessary to dwell into the issues raised vide Ground No. 2 of cross objections.

In the result, the appeal of the Revenue in is dismissed whereas the Cross objection of the assessee in CO No. 32/DEL/2022 is otiose.