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2016 (5) TMI 1219 - ITAT MUMBAI

2016 (5) TMI 1219 - ITAT MUMBAI - TMI - Addition u/s 68 - undisclosed cash deposits - Held that:- The assessee has failed to bring on record any material evidence to controvert the findings of the learned CIT(A). We, therefore, see no reason to interfere with or deviate from the findings of the learned CIT(A) that the assessee has failed to satisfactorily explain the source of cash deposits of ₹ 25,93,000/- in his undisclosed bank account with Corporation Bank, Mandvi, Mumbai - Decided aga .....

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iness loss in futures and options and be allowed to be set off as per the provisions of section 70 to 79 of the Act. No material evidence has been placed before us to controvert this finding of the learned CIT(A).- Decided against assessee

Charging of interest under section 234B and 234C is consequential and mandatory and the AO has no discretion in the matter. See Anjum Ghaswala (2001 (10) TMI 4 - SUPREME Court ) - ITA No. 4859/Mum/2014 - Dated:- 25-5-2016 - Shri Jason P. Boaz, Accou .....

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.2009 declaring loss of ₹ 9,66,297/- from business and also declared loss of ₹ 15,03,455/- from futures and options. The case was selected for scrutiny and the assessment was completed under section 143(3) of the Income Tax Act, 1961 (in short 'the Act') vide order dated 22.12.2011, wherein the income of the assessee was determined at ₹ 25,93,000/-; in view of the addition of ₹ 25,93,000/- under section 68 of the Act on account of unexplained cash credits of ͅ .....

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with Corporation Bank, Mandvi , Mumbai and partly allowed the assessee s claim of loss from futures and options at ₹ 15,03,455/- instead of ₹ 17,60,242/- as business loss under section 43(5) of the Act which is allowed to be set off as per the provisions of section 70 to 79 of the Act. 3. Aggrieved by the order of the CIT(A)-34, Mumbai dated 27.03.2014 for A.Y. 2009-10, the assessee has preferred this appeal before the Tribunal raising the following grounds: - 1. The Ld. Commissione .....

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) The Ld. CIT (A) erred in confirming the action of the Ld. A.O. in making addition of ₹ 25,93,000/- under section 69 of the Act (instead under section 68 made by the Ld. A.O.) being cash deposited in his saving bank account maintained with Corporation Bank, Mandvi, Mumbai treating the same as unexplained investment under section 69 of the Act. The Appellant prays that the addition under section 69 of the Act is without any basis and the same may be deleted. (ii) The Ld. CIT(A) failed to a .....

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essment proceedings as well as appellate proceedings to prove the genuineness of cash transactions. Hence, treating the cash amounting to ₹ 25,93,000/- deposited in the saving bank account of the Appellant as unexplained investment under section 69 of the Act is unjustified and the same may be deleted. 3. Denying the benefit of setoff of business loss against the addition made under section 69 of the Act -Rs.9,66,297/- (i) The Ld. CIT(A) erred in confirming the action of the Ld. A.O. in no .....

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Term Capital Loss amounting to ₹ 17,60,242/- incurred during the impugned assessment year without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the disallowance of Short Term Capital Loss is not at all justified. Hence, the same may be deleted. (ii) The Ld. CIT(A) failed to appreciate that during the course of the assessment proceedings, the Appellant has furnished all the relevant details called for, to prove the genuineness of Short Term Capit .....

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xed for hearing on various dates. On one occasion, the case was adjourned at the request of the learned D.R. for Revenue and on the other dates of hearing none was present for the assessee. We find that even the notices for hearing issued by RPAD have returned unserved. On 23.05.2016, when the case was called for hearing, none was present for the assessee, but the learned D.R. was ready and present for Revenue. In these circumstances, we are of the view that the assessee is not interested in pur .....

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on account of cash deposited in his bank account with Corporation Bank, Mandvi, Mumbai under section 69 of the Act. It is contended that the cash deposited in the aforesaid bank account is out of cash sales made by the assessee during the relevant period under consideration and that all relevant details/evidences in this regard were furnished before the authorities below in order to prove the genuineness of the cash deposits. It is submitted that in view of the above, the said addition be delet .....

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7.11.2011. The learned D.R. submitted that after due consideration of the assessee s averments, the AO observed that the said bank account and alleged share transactions were never disclosed in the assessee s financial statements and assessee s claim that the said cash deposits were made from cash in hand and subsequently that they were from cash sales were not supported by any material evidence and consequently brought the same to tax in the assessee s hands i.e. ₹ 25,93,000/- as unexplai .....

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ained regular books of account for his business concern, M/s. Blue Impex, engaged in the business of exporting goods and got them audited, the transactions of cash deposits in the assessee s account in Corporation Bank, Mandvi, Mumbai and in respect of futures and option transactions were neither disclosed or reflected in his returns of income nor were they got audited inspite of the transactions running into crores of rupees. The learned D.R. submitted that in these circumstances the learned CI .....

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cord including the orders of the authorities below. The learned CIT(A) has after considering the findings of the AO (at para 4.2 of the impugned order) and the assessee s submissions (para 4.2 of the impugned order) has held as under: - 4.3 Decision :- I have considered the facts of the case and the submissions made by the assessee. 4.3.1 It is observed from the perusal of sales register and cash book and bank pass book of the savings bank account of the assessee with the Corporation Bank, Mandv .....

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,00,000 12/12/2008 Cash 50,000 06/02/2009 Cash 1,00,000 07/02/2009 Cash 70,000 07/02/2009 Cash 30,000 02/03/2009 Cash 2,50,000 20/03/2009 Cash 1,75,000 20/03/2009 Cash 25,000 20/03/2009 Cash 65,000 20/03/2009 Cash 1,10,000 21/03/2009 Cash 3,00,000 Total 25,93,000 4.3.2 Perusal of the bank book and cash book maintained by the assessee in his books of account and copy of the bank pass book with Corporation Bank, Mandvi, Mumbai reveal that the entries tally exactly and the cash balance and bank bal .....

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pex which was engaged in the business of exporting goods to various countries and whose accounts are tax audited by a tax auditor and another set of personal accounts of which transactions are partially reflected in the pass book of savings bank account of assessee with Corporation Bank, Mandvi, Mumbai and these entries/transactions do not figure anywhere in the business books of the assessee in the name of Blue Impex. Assessee has also not got his accounts in respect of future and options trans .....

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h the cash sales of ₹ 25,93,000/- are reflected in the total sales of ₹ 54,11,64,156/ 50,39,11,658 in accounts and cash and bank balance figures of the business accounts in the name of Blue Impex tally, the entries of transfer of cash totalling ₹ 25,93,000/- exactly tally with the requirement of cash of the assessee to make payment to third parties from his savings bank account with Corporation Bank, Mandvi, Mumbai (CBMM) for trading in shares and on forwarding in futures and o .....

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l sales. Moreover, the entries of cash transfer totalling ₹ 25,93,000/- from the business accounts to the personal account are not reflected in books of the assessee Blue Impex either as a loan to the individual account or by way of debit to the capital account of the assessee as reflected in the books of account of Blue Impex. Either whenever cash was transferred from the business account of Blue Impex which are audited, the sum transferred should have been reflected in the books as a loa .....

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nce amount of ₹ 8,32,758/- (25,93,000 - 17,60,242) may have been adjusted towards some other payments or inflating the bank balance with CBMM which resulted in the bank balance of ₹ 9,34,885/61 by assessee in CBMM as on 31/3/2009. (Since, the accounts of the assessee are not audited for personal transactions in trading in futures and options and shares,) 4.3.5 Thus, it is concluded that these cash sales transactions totalling ₹ 25,93,000/- and the deposits of the same with CBMM .....

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e, 5) names of the purchasers of goods are not available with the assessee 6) assessee could have earned more by exporting these goods and assessee has not been able to identify the goods sold. This clearly indicates that assessee has manipulated his accounts and whenever he needed cash, he has disclosed the amount required as cash sales in his business books and immediately gone ahead with transferring cash from his business accounts to his savings account with CBMM, however, these transactions .....

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y in principle, however, the entries of cash transfer from the business accounts to the personal accounts are not reflected anywhere in business accounts of Blue Impex. Thus, it is held that the deposits of cash made in CBMM account appear to be transfer, to have come by way of cash from Blue Impex to the personal account with Corporation Bank, Mandvi, Mumbai, the entries were systematically made to give them a colour of legitimacy to account for unaccounted cash deposits with Corporation Bank, .....

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assessee s appeal are dismissed. 6.3.2After taking into consideration the submissions of the learned D.R. for Revenue and the findings of the learned CIT(A) (supra), we find that all the submissions put forth by the assessee have been addressed and rebutted in detail by the learned CIT(A). We are of the considered view that, except for raising these grounds, the assessee has failed to bring on record any material evidence to controvert the findings of the learned CIT(A). We, therefore, see no re .....

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ss loss of ₹ 9,66,297/- incurred during the year against the addition of ₹ 25,93,000/-. 7.2 Per contra, the learned D.R. for Revenue supported the finding of the learned CIT(A) in the impugned order in denying the assessee s claim for set off of business loss of ₹ 9,66,297/- against the income of ₹ 25,93,000/- under section 69 of the Act, as no evidence has been brought on record to controvert the findings of the learned CIT(A). 7.3.1 We have heard the learned D.R. at len .....

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₹ 25,93,000/- made under section 68 of I.T. Act, 1961 and the Assessing Officer has erred in denying the same. First of all the income of ₹ 25,93,000/- is assessable to tax under section 69 of I.T. Act, 1961 which is enshrined in chapter VI of I.T. Act, 1961 and each section starting from 68, 69, 69A, 69B and 69D of I.T. Act, 1961 is a separate head of income in itself and income taxed under each one of these sections is taxable as Income of the assessee of that previous year/financi .....

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ion about setting off against the Income from House Property, Business Income, Income from other sources and Capital Gains only. Thus, the provisions of section 70 to 79 of I.T. Act, 1961 are crystal clear and set off of losses from house property, business, capital gains and other sources can be set off only against the incomes from Income from House Property, Business Income, Capital Gains and Income from other sources as per limitations placed in section 70 to 79 of I.T. Act, 1961 only and no .....

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Photo Services Pvt. Ltd. 2012/53/SOT/210 /Chandigarh. The quantification and set off of losses of ₹ 9,66,297/- is further subject to comments made in following paragraphs. In nutshell, ground of appeal number A (4) is rejected. 7.3.2 After taking into account the submissions of the learned D.R. for Revenue and the finding of the learned CIT(A) (supra), we find that the contentions of the assessee have been addressed by the learned CIT(A). In our considered view, except for raising these gr .....

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; (ii) 8.1 In these grounds, the assessee contends that the action of the AO in disallowing the short term capital gains (STCL) of ₹ 17,60,242/- is not justified, as he had furnished all the relevant details to establish the genuineness thereof. 8.2 The learned D.R. supported the finding of the learned CIT(A) in the impugned order in disallowing the STCL of ₹ 2,56,787/- out of ₹ 17,60,242/- claimed by the assessee, as no material evidence has been brought on record to controver .....

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allowance of short term capital loss ₹ 17,60,242/- on the ground that the assessee had submitted all the details in respect of these share transactions of purchase and shares totalling ₹ 9,35,75,657/- (Purchases/Rs.9,18,15,220/- (Sales) which were made out of funds invested with In venture growth with whom assessee had deposited funds out of his savings bank with Corporation Bank, Mandvi, Mumbai and has submitted that the short term capital loss of ₹ 17,60,242/- should be allow .....

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is ₹ 77,164/-, but restricted to ₹ 0/- available profits. Income from Future & options -1503455 -1503455 Total -966297 (3) Assessee s authorised representative in his submissions filed on 21/1/2014 in paragraph 3(vii)(d) has submitted as follows:- In the paragraph 4.3(d) of the assessment order, the ld AO mentioned about the statement furnished by the appellant showing Short Term Capital Loss of ₹ 17,60,242/-. The appellant submits that, due to an inadvertent mistake, the .....

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n the return of income, and was exclusive of the business loss of ₹ 15,03,545/- in future and options claimed in the return of income. However, the facts of the case speak otherwise and these are discussed in following paragraphs. 6.1.3 It is quite apparent that assessee had shown business income from trading at ₹ 5,37,158/- without deducting allowable depreciation u/s. 32 of I.T. Act, 1961 of ₹ 77,164/- and loss from the business of futures and options at ₹ 15,03,455/- i .....

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/- was disallowed by the Assessing Officer. 6.1.4 The transactions in futures and options which resulted in loss of ₹ 15,03,455/- and which was shown as a business loss of ₹ 15,03,455/- in the return of income, were not reflected in the P&L Account and Tax Audit Report which mention only about trading in readymade garments and textiles and only the net profit of ₹ 5,37,157/- is reflected in the P&L Account of the assessee and the so called net loss of ₹ 15,03,455/ .....

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ccount and cash book does not reveal any payment made by the assessee to this person/party notwithstanding the conclusions arrived at by the AO in paragraph 4.3(g) of the assessment order that assessee has filed a copy of global report indicating the loss on F&O transactions which resulted in loss of ₹ 15,03,455/-. Assessee has not filed any details and documents and evidence regarding these transactions of futures and options which resulted in loss of ₹ 15.03,455/- even though t .....

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lected anywhere in accounts at all and is outside the books of account and the only possibility is that these transactions relating to the loss of ₹ 15,03,455/- are reflected in the savings bank account with Corporation bank Mulund, Mumbai mentioned in earlier paragraphs of this order and this loss of ₹ 15,03,455/- relating to futures and options is nothing but the short term capital loss of ₹ 17,60,242/- quantified by assessee by mentioning details of futures and options trans .....

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e it is held that the loss of ₹ 15,03,455/- reflected in the computation of total income instead of ₹ 17,60,242/- represents nothing but business loss in futures and options and the same is allowed as per the details furnished by the assessee. It is also held that the alternate contention in the assessee's and his representative s submission that loss of ₹ 17,60,242/- is different from the loss of ₹ 15,03,455/- in futures and options, is also not valid because the ent .....

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; 17,60,242/- in the computation of total income worked out by the Assessing Officer in the assessment order, was nothing but the business loss of ₹ 15,03,455/- in futures and options claimed in the return of income with the difference of ₹ 2,56,787/- (17,60,242 - 15,03,455) was either a component which was not disclosed in the computation of revised loss ₹ 17,60,242/- in the assessment/ appellate proceedings or loss/expenses of ₹ 2,56,787/- which was wrongly claimed. Ass .....

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reated and classified as business loss under section 43(6) I.T. Act, 1961 and is allowed. it is also held that the classification of business loss of ₹ 15,03,455/- as short term capital loss of ₹ 17,60,242/- by the Assessing Officer was erroneous and the loss of ₹ 15,05,455/- instead of ₹ 17,60,242/- shall be treated as business in futures and options and allowed to be set off as per the provisions of section 70 to 79 of I.T. Act, 1961. In nutshell, assessee s grounds of .....

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