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Facts
The Assessing Officer (AO) received information regarding fictitious profits/losses from a broker, Anand Rathi Commodities Ltd., involving the assessee. The AO re-opened the assessment and made an addition of Rs. 21,18,790/- under section 68 of the Income Tax Act. The assessee objected, stating the transactions were already declared, and after a rectification petition, the addition was reduced to Rs. 1,09,660/-. The assessee appealed against this final order.
Held
The Tribunal perused the transactions and noted that the impugned transactions were already part of the income declared by the assessee, specifically arising from Spot Arbitrage. The Tribunal found merit in the assessee's submission that the addition made by the AO was already included in the total declared income.
Key Issues
Whether the addition made by the AO under section 68 of the Income Tax Act for Rs. 1,09,660/- was already part of the income declared by the assessee in the return of income.
Sections Cited
147, 144C(13), 68, 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI SUNIL KUMAR SINGH, JM
Divya Mahadevia ITO (IT)-3(2)(1), Room No. 1627, 16th Floor, E/12, Sea Face Park, Bhulabhai Desai Road, Vs. Air India Building, Mumbai-400026. Nariman Point, PAN : AABPM3640B Mumbai-400021. Appellant) : Respondent) Appellant/Assessee by : Shri Pankaj Jain, AR Revenue/Respondent by : Shri Anil Sant, Add. CIT-DR : 20.08.2024 Date of Hearing : 21.08.2024 Date of Pronouncement O R D E R
Per Padmavathy S, AM:
This appeal by the assessee is against the final order of assessment passed by the Income Tax Officer, International Tax, Ward-3(2)(1), Mumbai [in short 'the AO'] under section 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (the Act) dated 06.01.2023 for Assessment Year (AY) 2013-14.
The assessee is a non-resident individual and filed the return of income for AY 2013-14 on 13.07.2023 declaring a total income of Rs. 6,26,670/-. The Assessing Officer (AO) received information from DDIT (Inv.) stating that the assessee is one of the beneficiaries of Client Code Modification (CCM) done by various brokers to provide fictitious profits / losses to various parties. The office of the DDIT has conducted inquiry in the case of one such broker Anand Rathi Commodities Ltd. and found the following transactions pertaining to the assessee where CCM is carried out.
The AO re-opened the assessment by issuing of notice under section 148 of the Act calling on the assessee to file the return of income and the necessary details pertaining to the impugned transactions. The assessee in response to the notice filed the return of income and also submitted that the impugned transactions have already been declared as part of the income returned by the assessee in the original return of income filed. The AO after considering the submissions of the assessee made an addition of Rs. 21,18,790/- under section 68 of the Act. Aggrieved assessee filed its objections before the DRP. Before the DRP the assessee submitted that the AO while making the addition did not consider the sale value of one of the transactions. The assessee also submitted that the impugned transactions are already part of the return of income filed by the assessee. The DRP after considering the submissions of the assessee directed the assessee to file a petition under section 154 with regard to the sale transactions not factored by the AO and also directed the AO to consider the petition and re-compute the addition. The AO in the final assessment order reduced the addition Rs. 1,09,660/- after considering the sale amount as per the rectification petition filed by the assessee under section 154 of the Act. The assessee is in appeal against the final order of the AO before the Tribunal.
We heard the parties and perused the material on record. The main submission of the ld. AR during the course of hearing was that the impugned transactions are already part of the income declared by the assessee while filing the return of income. In this regard, the ld. AR took us through the impugned transactions as extracted in the earlier part of this order and the breakup of the gain arising from Spot Arbitrage as declared in the return of income. The breakup of the gain arising from Spot Arbitrage is extracted below:
From the perusal of the details submitted by the assessee, we notice that the impugned transactions as tabulated above are part of the income of Rs. 6,12,991/- arising from Spot Arbitrage (refer pg. 1, sl. No. 11, 12, 20 & pg. 4 of PB). Therefore, we see merit in the submissions of the assessee that the addition made by the AO under section 68 to the tune of Rs. 1,09,660/- is already part of the income declared by the assessee in the return of income i.e. the amount of Rs. 1,09,660/- is already included in the income of Rs. 6,12,991/-. Accordingly, in our considered view the AO is not right adding the said amount once again under section 68 of the Act. The addition made by the AO is hereby deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 21-08-2024. Sd/- Sd/- (SUNIL KUMAR SINGH) (PADMAVATHY S) Judicial Member Accountant Member *SK, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER,