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2015 (5) TMI 270 - GUJARAT HIGH COURT

2015 (5) TMI 270 - GUJARAT HIGH COURT - TMI - Actual loss incurred in F & O transaction - Tribunal confirmed the addition to the extent of ₹ 14,19,919/- (Rs.12,31,169.88 + ₹ 1,88,750/-) as income of the assessee in respect of the unaccounted bank account in question - Tribunal making addition of peak credit and also gross profit on cash deposit in bank account? - Held that:- It cannot be said that there is any error committed by the learned Tribunal, which calls for the interference .....

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the said transactions regarding the alleged loss. Under the circumstances, for the reasons assigned by the learned CIT(A) with respect to the claim of the assessee with respect to the alleged loss of ₹ 56,99,495/- reproduced hereinabove, we see no reason to interfere with the same. No substantial question of law - Decided against assessee. - TAX APPEAL NO. 256 of 2015 - Dated:- 20-4-2015 - MR. M.R. SHAH, J. FOR THE APPELLANT : MR KETAN H SHAH, ADVOCATE JUDGMENT (PER : HONOURABLE MR.JUSTICE .....

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not appreciating the fact that the appellant has discharged the onus regarding the actual loss incurred in F & O transaction worth ₹ 56,99,495/-? (B) Whether on the facts and in the circumstances of the case the learned Tribunal was right in law in making addition of peak credit and also gross profit on cash deposit in bank account? (C) Whether on the facts and in the circumstances of the case the learned Tribunal was right in law in not appreciating the facts that this is a case of on .....

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rading activities filed the return of income for the Assessment Year 2008-09 declaring the total income at ₹ 2,95,019/-. The case was process under Section 143(1) of the Income Tax Act (hereinafter referred to as the Act ) and subsequently the case was selected for scrutiny and notice under Section 143(2) of the Act was issued on 28/08/2009. During the course of the assessment and on the basis of the AIR information it was found that the assessee was holding a bank account with Prime Co-op .....

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d upon the show cause notice dated 21/12/2010 and was asked to show cause as to how the cash deposit of ₹ 37,75,000/- should not be added to the assessee total income as unexplained money under Section 69A of the Act. In response to the show cause notice, the assessee submitted his reply. The Assessing Officer was not satisfied and / or convinced by the explanation furnished by the assessee with respect to the cash deposit of ₹ 37,75,000/- deposited in the unaccounted bank account an .....

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hare transactions routed through the bank account. The assessee also furnished relevant proof in support of the loss incurred by him. The learned CIT(A) dismissed the said appeal sustaining the addition of ₹ 37,75,000/- to the income of the assessee under Section 69A of the Act. The learned CIT(A) did not agree with the submission on behalf of the assessee with respect to the alleged claim of loss amounting to ₹ 56,99,495/-. [2.3] Feeling aggrieved and dissatisfied with the order pas .....

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ss of ₹ 56,99,495/-. [2.4] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the assessee has preferred the present Tax Appeal with the aforesaid proposed substantial questions of law. [3.0] Shri Ketan Shah, learned advocate appearing on behalf of the assessee has vehemently submitted that the learned Tribunal has materially erred in confirming the order passed by the learned CIT(A) with respect to the claim of the assessee with respect .....

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ribunal ought not to have worked out the peak as well as the profit at the rate of 5%. [3.1] It is submitted that even otherwise since the the addition made at ₹ 14,19,919/- is against the loss incurred and, therefore, there is no justification in making the addition of ₹ 14,19,919/-. [3.2] Shri Shah, learned advocate appearing on behalf of the appellant-assessee has relied upon the decision of the Hon ble Supreme Court as well as the decisions of various High Courts in support of hi .....

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order passed by the learned Tribunal. At the outset, it is required to be noted that during the course of the assessment the Assessing Officer found that the assessee was having unaccounted bank account with one Prime Co-operative Bank Ltd., Surat and had deposited cash totaling to ₹ 37,75,000/- on various dates and, therefore, the assessee was called upon to show cause as to why the cash deposit of ₹ 37,75,000/- should not be added to the total income as unexplained money under Sect .....

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sessing Officer ought to have allowed the loss of ₹ 56,99,495/- arising out of the said bank account wherein cash was deposited. The same came to be negatived by the learned CIT(A) in detail by observing as under; The submissions of appellant and reasons advanced by A.O. in the assessment order has been considered. It is seen that appellant has miserably failed in pointing out any defect in the action of A.O. whereby he has added a sum of ₹ 37,75,000/- u/s.69 of the I.T. Act. The ass .....

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of assessee is justified. A.O. s action is upheld and ground No.II is dismissed. Ground No.III is interlinked with Ground No.II, wherein the appellant has alleged that A.O. followed pick and choose method and focused only on unexplained cash deposit. The A.O., as alleged by appellant, did not consider the share transactions routed through this bank which resulted in net loss of ₹ 56,99,495/-. In this regard, appellant s submissions and A.O. s arguments have been considered. Considering th .....

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the alleged loss. The appellant has not proved original document of alleged share transactions. Merely filing photo copies and saying that it if for A.O. to disprove these papers does not amount to discharging the onus cast on the appellant. iv. Even if we consider the alleged share transactions, it appears that these are speculative transactions and thus speculation loss cannot be allowed to be set-off against other incomes and certainly not against income u/s.69 of the Act. v. The appellant h .....

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as not prepared accounts as to from whom shares purchased to whom sold and what is the closing stock. In the absence of such basic documents, A.O. cannot be expected to fish out evidence from sea. In view of the above and the position of law in this regard, it is unequivocally held that A.O. was perfectly justified in ignoring the alleged claim of loss amounting to ₹ 56,99,495/-. Thus, ground No.III is dismissed. [4.1] However, on further appeal to the learned Tribunal considering the peak .....

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account in question and consequently deleted the addition to the extent of ₹ 23,55,080.12. While holding so, the learned Tribunal in paragraph 14 has observed and held as under; 14. Further, we find that the copy of th statement of account of bank in question was filed by the assessee before us. A perusal of the same shows that deposit of ₹ 37,75 lakhs was not made in the said bank account at a time, but, the same amount represents the aggregate amount of deposit, which was made in .....

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the withdrawals, was not justified. We find that the peak deposits in the said bank was ₹ 12,31,169.88 on 17.01.2008. Further, the frequency of deposit and withdrawal indicates that the assessee was carrying on certain undisclosed deposits. Therefore, it would be reasonable to estimate the said business income, and also to treat the same as business income of the assessee. We, therefore, estimate the assessee s profit from such business at the rate of 5% of ₹ 37.75 lakhs, which come .....

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learned advocate appearing on behalf of the appellant and considering the reasoning given by the learned Tribunal, we are in complete agreement with the view taken by the learned Tribunal. It is required to be noted that the learned Tribunal has first considered the peak deposit for the unaccounted bank account and after noting that the frequency of the deposit and the withdrawal from the account indicates that the assessee was carrying on certain undisclosed deposits and, therefore, even consi .....

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