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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
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.
The background facts leading to present appeal are such that the case of assessee for AY 2010-11 was taken u/s 147 by AO on the basis of CIB
Shri Mahendra Kumar Gupta 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.
Although the assessee has raised as many as six grounds in Form No. 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.
Shri Mahendra Kumar Gupta AY 2010-11
Ld. AR for assessee drew our attention to Para No. 3 of aforesaid 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.
Having shown thus, Ld. AR carried us to the return of income filed by 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 Shri Mahendra Kumar Gupta AY 2010-11 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:
Shri Mahendra Kumar Gupta AY 2010-11
Shri Mahendra Kumar Gupta AY 2010-11 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 Shri Mahendra Kumar Gupta AY 2010-11 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.
Ld. DR for revenue strongly supported the orders of lower authorities and requested to uphold the addition.
Shri Mahendra Kumar Gupta AY 2010-11
We have considered rival submissions of both sides and perused the 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
Shri Mahendra Kumar Gupta AY 2010-11 (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,
Shri Mahendra Kumar Gupta AY 2010-11 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.
Resultantly, this appeal is partly allowed.
Order pronounced in open court on 22.03.2024.