MAHENDRA KUMAR GUPTA,INDORE vs. ACIT, NFAC, DELHI

आदेश / O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by appeal-order dated 25.08.2023 passed by learned Commissioner of Income-Tax (Appeals), N.F.A.C., Delhi [“CIT(A)”], which in turn arises out of assessment-order dated 31.03.2022 passed by learned ACIT, N.F.A.C., Delhi [“AO”] u/s 147 r.w.s. 263 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2010-11, the assessee has filed this appeal.

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Shri Mahendra Kumar Gupta ITA No. 378/Ind/2023 – AY 2010-11

information qua the transactions of purchase and sale of shares done by

assessee during previous year 2009-10. The AO issued notice in response to

which the assessee filed return on 29.04.2017 declaring a total income of

Rs. 3,38,420/- consisting of taxable short-term capital gain of Rs. 3,36,948

(+) other income of Rs. 18,650 (-) Deduction u/s 80C of Rs. 17,354. The AO

completed assessment vide order dated 15.09.2017 u/s 147 r.w.s. 143(3).

Thereafter, the PCIT, Gwalior passed revision-order u/s 263 dated

26.03.2021 setting aside the assessment-order passed by AO and directing

the AO to re-frame assessment. Pursuant to such revision-order, the AO re-

framed assessment vide order dated 31.03.2022 u/s 147 r.w.s. 263 wherein

he made a newer addition of Rs. 8,30,189/- on account of unexplained

investment in shares u/s 69. Aggrieved, the assessee carried matter in first-

appeal. But the CIT(A), vide impugned order, dismissed assessee’s appeal

and did not grant any relief. Now, the assessee come before us assailing the

order of CIT(A)/AO.

36, Ld. AR for assessee pleaded only Ground No. 1 which reads as under:

“(1) The Ld. CIT(A) has erred in making confirm of the addition made by Ld. AO of Rs. 830189/- on account of unexplained source of investment of shares whereas there is no such fresh investment. On the facts of the case, during the assessment year, the assessee has not made any investment by paying any amount from the bank account.” Therefore, other grounds are dismissed as non-pressed and only Ground No.

1 is taken in subsequent adjudication.

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revision-order u/s 263 and submitted that the Ld. PCIT noted that as per

ITS, the assessee had made transactions of shares of Rs. 43,66,298/-

(purchase-total of Rs. 25,98,243/- + sale-total of Rs. 17,68,054/-) but those

transactions were not passed through bank a/cs of assessee and the

assessee has also not submitted contract-notes and broker’s account for

those transactions. The PCIT also extracted the datewise/scripwise details of

purchase-transactions totaling to Rs. 25,98,243/- in one table and sales-

transactions totaling to Rs. 17,68,054/- in another table. Thereafter, the

PCIT computed an arithmetical difference of purchase-total of Rs.

25,98,243/- and sale-total of Rs. 17,68,054/-, which comes to Rs.

8,30,189/-, and observed that the assessee has not given any details of

source from which the amount of Rs. 8,30,189/- was paid to the brokers.

Following the same tune of PCIT, the AO made addition of Rs. 8,30,189/-

u/s 69 as unexplained investment. In coming to such conclusion, the

PCIT/AO also noted that the assessee had failed to explain the opening

capital of Rs. 11,90,482/- as on 01.04.2009 (i.e. on the first day of previous

year 2009-10) to justify the source for making investment.

assessee. Ld. AR demonstrated, by referring to a sheet titled “Computation

of Total Income” filed at Page No. 16-20 in Paper-Book, that the assessee

declared a taxable short-term capital gain of Rs. 3,36,948/- and exempted

long-term capital loss of Rs. 78,421/- from ‘delivery transactions’ in the

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return of income. But, however, the assessee did not show the transactions

noted by PCIT for the reason that they were basically ‘intra-day’ or very

‘short duration’ transactions and there was loss from those transactions. Ld.

AR submitted that the assessment-year under consideration is 2010-11 and

the assessee could not collect complete details of transactions, contract-

notes, etc. from brokers despite best efforts; therefore the assessee was

unable to file details/documents before PCIT/AO. Ld. AR submitted that

despite continued efforts, the assessee is still not able to get full details/

documents and only a few documents available with assessee are filed in

paper-book. Ld. AR contended that the PCIT/AO are very much wrong in

just computing an arithmetical difference of two figures, namely purchase-

total of Rs. 25,98,243/- and sale-total of Rs. 17,68,054/- and concluding

that the difference of Rs. 8,30,189/- was unexplained investment. He

submitted that the PCIT/AO has just noted the transactions of purchases

and sales in two separate tables and found the difference of purchase-total

and sale-toral whereas the assessee has prepared a proper analysis-sheet of

those very transactions in one table by placing purchases and sales

transactions of same scripts analogously in side-by-side columns. The sheet

has been filed to ITAT through Ld. AR’s letter dated 15.03.2024

acknowledged by office of ITAT via Inward Entry No. 2071. This sheet is

scanned and re-produced below for a ready reference:

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Drawing our attention to same, Ld. AR submitted (i) that in some

transactions, the assessee suffered losses, and (ii) in some transactions, the

assessee has mentioned “NA” which indicates that the PCIT has noted only

one limb of transaction (purchase or sale) and the information of other limb

is “Not Available”. Ld. AR also referred the details of purchase transactions

and sale transactions noted by PCIT on Page No. 2 & 3 of revision-order to

show that there are 3 transactions which have been double included,

namely (i) purchase of 650 shares of Bhartiship on 09.09.2009 – Rs.

1,39,100/- at S.No. 12 & 15, (ii) purchase of 100 shares of SBIN on

16.09.2009 – Rs. 2,03,590/- at S.No. 14 & 17, and (iii) sale of 1,000 shares

of Suzlon on 26.06.2009 – Rs. 1,21,000/- at S.No. 2 & 13. For clarity, these

double transactions are merged and included at S.No. 3, 14 and 17 in the

analysis-sheet submitted by assessee. Ld. AR submitted that if the missing

information of other limb had been available in all transactions and the

mistakes of double inclusion had not occurred, the difference of purchase-

total and sale-total would have been very negligible or nominal, it could not

be Rs. 8,30,189/- as computed by authorities. He submitted that it is an

honest submission of assessee that all transactions noted by PCIT were

‘intra-day’ or settled in a very short-period. Therefore, no investment was

required and even if any investment was required in any transaction, that

was made from the funds already held with broker from inflow of ‘delivery

transactions’ reported in the return of income; those ‘delivery transactions’

also included sale of opening investment in shares held by assessee as on

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01.04.2009 (in other words closing investment in shares held by assessee as

on 31.03.2009). Since no investment was involved, there was no outflow

from bank a/c of assessee as noted by PCIT/AO. Ld. AR also submitted that

the Balance-Sheet of assessee as on 31.03.2010 was available before

PCIT/AO showing opening capital of Rs. 11,90,482/- as on 01.04.2009 but

the PCIT/AO have not accepted the said opening capital only for the reason

that the assessee did not file any return of income/final accounts of

preceding AY 2009-10. He submitted that the assessee was not required to

file return of preceding year because the income was below exemption-limit.

However, the assessee has subsequently compiled Balance-Sheet as on

3103.2009 of preceding year and the same is also filed in Paper-Book which

shows closing capital of Rs. 11,90,482/- as on 31.03.2009 equivalent to the

opening capital of Rs. 11,90,482/- as on 01.04.2009. Having submitted

thus, Ld. AR expressed assessee’s inability to file any more document or to

make any further submission. With folded hands, Ld. AR prayed the Bench

to dispose of case of assessee taking a suitable judicious view and delete the

entire addition as there was no fresh investment by assessee as alleged by

PCIT/AO. He, however, agreed that even if the Bench decides to grant a

part-relief to assessee, the same would be acceptable to assessee to close the

litigation.

and requested to uphold the addition.

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orders of lower-authorities as also the documents filed by assessee in the

Paper-Book. At first, we take note that the PCIT/AO have merely made two

different tables, one of purchase-transactions and other of sale-transactions,

and computed arithmetical difference of total-purchase of Rs. 25,98,243/-

and total-sale of Rs. 16,68,054/- of the transactions at Rs. 8,30,189/- and

thereby concluded that the assessee had made undisclosed investment of

Rs. 8,30,189/-. However, the assessee submits that the transactions noted

by PCIT/AO were ‘intra-day’ or short period transactions. Ld. AR has also

made a systematic analysis in a tabular format, re-produced above, of those

very transactions to show that in many transactions, the information of one

limb of transaction (purchase or sale) is not available, this is indicated by

assessee as “NA”. The AR has also informed that there are double inclusions

of 3 transactions in the details noted by PCIT. Therefore, we find weightage

in the submission of Ld. AR that if the complete and correct details would

have been available, the gap of purchase and sale could not have been Rs.

8,30,189/-. Therefore, the figure of Rs. 8,30,189/- adopted by PCIT/AO

does not seem to be correct. There is also a submission of assessee that all

transactions noted by PCIT were ‘intra-day’ or settled in a very short-period,

hence no investment was required or even if any investment was required in

any transaction, it was made from the funds available with broker out of

inflow of ‘delivery transactions’. Those delivery transactions also included

the sale of opening investment in shares held by assessee on 01.04.2009

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(i.e. closing investment in shares held by assessee on 31.03.2009). The

submission of assessee that no investment was required, also corroborates

with the observation made by PCIT/AO that the transactions were not

passed through bank a/c of assessee. If we take into these submissions of

assessee, it can be discerned that the quantum of unexplained investment

taken by authorities at Rs. 8,30,189/- is not correct. But, however, the

assessee is also not able to give the missing details of transactions and

expressing inability to submit any further detail or document to arrive at

correct figure of unexplained investment. Needless to mention that the AO

has also not made any effort to collect details directly from broker.

Therefore, in the situation, we find it judicious to apply a short-cut way to

close the litigation. We find that the PCIT/AO have rejected opening capital

of Rs. 11,90,482/- shown by assessee in absence of return of

income/accounts of earlier year. But the assessee has compiled Balance-

Sheet as on 31.03.2009 and submitted in Paper-Book. Since it is a claim of

assessee that the transactions noted by PCIT were ‘intra-day’ or settled in a

very short-period and no investment was required and even if any

investment was required in any transaction, that was made from the funds

available with broker out of inflow of ‘delivery transactions’ which also

included the sale of investment in shares held by assessee on 31.03.2009,

we, as a measure to close the litigation, accept the investment in shares at

Rs. 6,79,253/- as on 31.03.2009 held by assessee as source for making

investment, if not the entire opening capital of Rs. 11,90,482/-. Accordingly,

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out of the addition of Rs. 8,30,189/-, we delete addition to the extent of Rs.

6,79,253/- and uphold remaining addition of Rs. 1,50,936/- for closing the

litigation between parties. The AO shall modify assessment-order

accordingly.

Order pronounced in open court on 22.03.2024.

Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 22.03.2024. CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore

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