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Income Tax Appellate Tribunal, KOLKATA BENCH “D” KOLKATA
Before: Shri S.S.Godara & Dr. A.L. Saini
None अपीलाथ� क� ओर से/By Appellant S.M.Tanheed, Addl, CIT-DR ��यथ� क� ओर से/By Respondent 04-06-2018 सुनवाई क� तार�ख/Date of Hearing 15-06-2018 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER S.S.Godara, Judicial Member:- This assessee’s appeal for assessment year 2012-13 is directed against theCommissioner of Income Tax (Appeals)-10, Kolkata’s order dated 10.03.2017, in case No.93/CIT(A)-10/Wd-35(2)/2015-16/Kol, affirming the Assessing Officer’s action disallowing its loss claim of ₹8,47,821/- incurred in dealing with currency derivatives resulting in addition of ₹8,50,591/-, involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’.
Case called twice none appears at assessee’s behest. The registry has already sent the assessee an RPAD notice dated 20.4.2018 for today’s M/s Niraj Kumar Kajaria Vs ITO Wd-35(2),Kol Page 2 hearing. We therefore proceed ex parte against the assessee. The case is now taken up adjudication on merits. 3. It emerges that CIT(A)’s detailed discussion in affirming the impugned disallowance of loss reads as under:- “06. DECISION:
1. 1. I have carefully examined the action of the Ld. AO in making the impugned disallowance of Rs.8,47,821/-, being the amount of trading loss in exchange futures. The Ld. AO has also added a sum of Rs.2,770/- to the total income of the appellant being the actual profit of transactions made through the MCX Stock Exchange Ltd. In total the Ld. AO has added a sum of Rs.~!.50,591/- (Rs.8,47,821/- + Rs.2,770/-) to the returned income for the A.Y 2012~13.
2. In arriving at such conclusions, I find that the main findings and reasons recorded by the Ld. AO are as under: a. The trade has been facilitated by the broker M/s Marigold Vanijya (P) Ltd, and in this case in a search and seizure operation, u/s 132 of the Income Tax Act was carried out by the Department in the case of the broker, and the Director of the Broking Company Shri Sachet Saraf had under oath stated that he was providing profit I loss in currency derivative as per \ requirement of clients, though in actual fact there were no profits and I losses. b, The Ld. AO has written to the MCX Stock Exchange Ltd, and obtained the actual figures of buying and selling of in respect of the transactions of the assessee-individual. According to the Ld. AO, the figures so obtained suggested loss of Rs.2,770/-, where the appellant has claimed losses of Rs.8,47,8217- from trading in the exchange. c. Under oath the Director of the broking company had stated that the impugned losses (as claimed) received through cheque was returned back in cash to the assessee. d. The assessee had never entered into any transactions of dealing in shares I derivatives with the Broker M/s Marigold Vanijya Pvt. Ltd in the past, nor were any dealings entered into in the future. e. The assessee has never entered into any transactions of dealing in future currency in USD in the past or future with any other broker either. f. The Broker M/s Marigold Vanijya Pvt. Ltd was charging an unusually high rate of commission (0.189% ) where the reputed brokers such as M/s Motilal Oswal, ICICI Securities and such others were charging commission in the range of 0.01 % to 0.04 %.
3. Quite on the other hand, in appeal, the appellant I Ld. A.R for the appellant has placed the following arguments/ contentions: a. The appellant is not aware of the statement of the Broker before the IT Authorities, and should not be made to suffer on account of such statement. b. The transactions were carried out in bona fide belief and were recorded in the books of accounts of the assessee.
M/s Niraj Kumar Kajaria Vs ITO Wd-35(2),Kol Page 3 c. The transactions are genuine and supported by valid contract notes, and the loss incurred was genuine and not bogus as claimed by the Ld. AO. The Ld AO has made the disallowance on mere suspicion and conjecture. d. The information obtained by the Ld. AO also matches the information offered by the assessee during scrutiny, and the difference was on account of the brokerage, service tax and other charges of Rs.8,45,051/- on account of eh broker, as evidenced by the contract notes. e. The Ld.AO had made allegation about the broker taking cheques and returning cash, which were without any proof. f. The assessee was not allowed to examine the Broker on whose statement the Ld. AO was depending. g. The direct documentary evidence which was submitted before the Ld. AO had been ignored. h. The appellant has cited several judgments from various Hon'ble Courts including the jurisdictional ITAT in support of its contentions that the losses as claimed were genuine and that the direct evidence in the matter ought not to be ignored in the light of the indirect evidence provided by way of the statement of the broker.
I have carefully considered all the factual issues which emanate from the action of the Ld. AO in making the impugned disallowance. The Ld. AO has mostly - depended on the statement of the broker company's Director Shri Sachet Saraf made before the Department during the search and seizure operation, whereas it is the contention of the appellant that the Ld. AO has ignored all the direct evidence submitted in this regard. On careful perusal, I find that the transactions of the appellant in trading in currency derivatives in the MCX Stock Exchange Ltd do have certain features which have led to suspicion in the minds of the Ld. AO, and that these are mostly that the appellant had no transactions with the broker in earlier or in later years, and that the assessee has also not entered into transactions of dealing in futures currency un USD in past or future. The Ld. AO has also reckoned that the rate of brokerage charged by way of commission to be extremely high as compared to other reputed Brokers of the City. After examination of the matter, I would tend to agree with the Ld. AO that the transactions are of suspicious nature on account of the reasons offered by the Ld.AO. In that view I find that all the other direct evidences are mere arrangements of the parties to give the transactions a sheen of genuineness. There is no reason for any broker to confess to sham transactions were this not the case, as has been done by the Director of the Broking Company while giving the statement during the Search and seizure operations carried out by the Department. The Direct evidence may well be in favour of the assessee, but the same cannot be accepted due to the circumstances of normal probability being against the assessee-individual as brought on record by the Ld. AO. Therefore, I have to record that all the judicial citations do not come to the rescue of the appellant. It is to be said that that the entire transactions were carried out on the Stock Exchange to give it a color of real transactions, with the connivance of the Broker, to which he (the Director of the Braking Company) has confessed.”
M/s Niraj Kumar Kajaria Vs ITO Wd-35(2),Kol Page 4 It emerges that CIT(A) has raised serious doubts on assessee’s claim of the impugned loss to have arise from transaction in currency derivatives. There is no material on record in the case file rebutting the said clinching findings. The assessee has failed to prove its trading in currency derivatives in MCS Stock Exchange Ltd. The Assessing Officer had obtained the relevant information as well as from the said stock exchange against the said details. We keep in mind all these facts on record to reject assessee’s sole substantive ground. Both the lower authorities action in challenge is according confirmed.