INCOME TAX OFFICER - 4(3)(3), MUMBAI vs. M.N.SHARES AND STOCK BROKERS PRIVATE LIMITED, MUMBAI

आदेश / O R D E R

Advocate, defended the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal) by explaining that the assessee is an investor and not a broker and if the broker has done something wrong, the assessee cannot be held responsible for the same.

2.1. I have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of shares and stock broking and trading declared total income of Rs.1,87,294/- in its return filed on 30/09/2009, which was completed u/s 143(1) of the Income Tax Act, 1961 (hereinafter the Act) on 03/11/2010. The assessee received notice u/s 148 dated 29/03/2016 on 30/03/2016 to which the assessee explained that the return filed on 30/09/2009 may be treated as return in pursuance to notice u/s 148 of the Act. However, the Ld. Assessing Officer framed assessment u/s 143(3) r.w.s. 147, vide order dated 23/11/2016 making the addition of Rs.45,84,595/-.

The Ld. Assessing Officer also estimated 3% addition as commission on such transaction as unexplained expenditure. Before the Ld. Commissioner of Income Tax (Appeal) as well as before this Tribunal, the claim of the assessee is that the assessee has not created any fictitious profit/loss by misusing the CCM facility and further when the client code was modified on the same day, there could not be any mala-fide intention, thus, the income should not . be treated as suppressed. There is uncontroverted finding in the impugned order that no spot verification u/s 131(1A) of the Act was carried out against the assessee and the addition was made merely on the basis general information. A search action u/s 132 of the Act was carried out in commodity market group of cases on 19/06/2007, wherein, as per the Revenue, some data pertaining to trade modification and client code changes of the brokers was collected. Subsequently, survey proceedings u/s 133A of the Act was conducted on 25/03/2008 at the business premises of the assessee. The assessee offered additional income of Rs.33,22,000/-. The whole case of the Revenue is that the assessee made huge client code modification resulting into loss of Rs.2,88,55,000/-. The case of the assessee is that all the transactions were made on recognized stock exchange, i.e. MCX, through authorized broker M/s Riddi Siddhi Bullions Ltd. and the assessee also furnished the code of contract note. The Ld. Commissioner of Income Tax (Appeal) dully followed the decision of the Tribunal in the case of Income Tax Officer vs Pat Commodity Services Pvt. Ltd. (ITA NO.3489 & 3499/Mum/2012) order dated 07/08/2015 and Sambhava Investment Ltd. (ITA NO.3109/Mum/2011) order dated 19/12/2013 and deleted the addition. It is also noted that the revenue authorities ignored the reply to question no.9, wherein, the partner of the assessee denied of having made any request for any change in client code.

The assessee also paid a margin money of Rs.2.90 crores to RSBL which is evident from the statement of account of RSBL which has been adjusted against the losses of the assessee. Undisputedly, the transactions have done through recognized exchange and no evidence has been brought on record to defy the transaction by any denial from exchange authorities. Thus, we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal). Identical is the situation for deleting the addition of Rs.1,37,538/- towards unexplained expenditure.

Resultantly, the appeal of the Revenue is dismissed.

Finally, the appeal of the Revenue as well as the cross objection of the assessee is dismissed.

This order was pronounced in the open court in the presence of ld. representative from both sides at the conclusion of the hearing on 03/01/2018.