TMI Blog2016 (11) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... ghvi, Prop. Falgun Finvest admitted to the same We find that the learned CIT(A) observed that M/s. Falgun Finvest in letter dated 13.12.2010 has confirmed that it had issued bills to the assessee in respect of certain transactions that took place in Financial year 2002-03 done “off market” and not routed through the main broker, M/s. Ventura Securities Ltd. In this factual matrix of the case, finding that assessee has not been able to bring on record any material evidence to controvert the finding of the learned CIT(A), we uphold the action of the learned CIT(A) in bringing to tax in the assessee’s hands, the undisclosed income as income from other sources, since the facts on record clearly establish that the assessee had not earned any speculation income but had merely laundered his undisclosed income for speculation profits by entering into dubious transactions in order to avail set off against brought forward unabsorbed speculation loss - Decided against assessee - ITA No. 1246/Mum/2014 - - - Dated:- 23-9-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain, Judicial Member For The Appellant : None For The Respondent : Shri Rajnesh K. Arvind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which he confirmed and the learned A.R. for the assessee was allowed to cross examine Shri Niraj Sanghvi on the assessee s behalf. This statement of Shri Niraj Sanghvi and cross examination by the assessee/ learned A.R. is extracted at page 2 of the order of assessment. In these circumstances, the AO was of the view that it was crystal clear that there is no truth in the averments of the assessee put forth in assessment proceedings vide letter dated 22.03.2006 and that the alleged transaction of sale of shares by the assessee regarding speculation profit of ₹ 15,03,799/- was only a paper transaction designed to evade payment of taxes by laundering of his own unaccounted income. In that view of the matter, the AO treated the said amount of ₹ 15,03,799/- as income from unexplained source and brought the same to tax in the assessee s hands under section 68 of the Act. The assessment was accordingly concluded under section 143(3) r.w.s. 254 of the Act vide order dated 16.12.2010. 2.2.2 Aggrieved by the order of assessment for A.Y. 2003-04 dated 16.12.2010 passed under section 143(3) r.w.s. 254 of the Act, the assessee preferred an appeal before the CIT(A)-24, Mumbai. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. 4.1 According to the learned D.R. for Revenue, the crux of grounds of appeal raised by the assessee is that the learned CIT(A) erred in upholding the AO s order by confirming that ₹ 15,03,799/-, which was shown as speculation profit by the assessee, was to be brought to tax in the assessee s hands under section 68 of the Act without taking into account the submissions and details failed by the assessee in this regard. It was submitted that all submissions/details put forth by the assessee, including the additional grounds raised in this regard by the assessee before the learned CIT(A) had been duly considered by the learned CIT(A) before rendering his decision in the impugned order. The learned D.R. contends that the facts on record clearly indicate, as held by the learned CIT(A), that the assessee had not earned any speculation profits but had merely laundered his undisclosed income of ₹ 15,03,799/- for speculation profits by entering into dubious transactions with M/s. Falgun Finvest, Mumbai in order to set off the same against brought forward unabsorbed speculation losses. 4.2 In respect of the additional grounds raised before the learned CIT(A) and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmons U/s. 131 of the I.T. Act dated 08/12/2010 was issued to Mr. Niraj Sanghvi asking him to attend this office on 15/12/2010 at 3.00 p.m. and to allow himself to cross examine to Mr. Vinod K. Dedhia. Accordingly, the following statement of Mr. Niraj Sanghvi, individual as well as authorized representative of Mrs. Charu Sanghvi, Prop. Falgun Finvest was recorded. Q.1. Please identify yourself and confirm that, oath has been administered to you and you have been made aware of the consequences for giving false statement on oath. Ans. I am Niraj H. Sanghvi, aged 36 year, residing at J/103, Vardhaman Nagar, Dr. R.P.Road, Mulund (West), Mumbai - 80. Presently, 1 am working as a Director of. Equilink Capital Management Services Ltd., Office No. 20, Khatau Building, 44, Bank Street, Fort, Mumbai - 400 023. I further confirm that, oath has been administered to me and made aware of the consequences for giving false statement on oath. Q 2. Please produce your Authority letter and the details/ information called for vide notice U/s. 131 dated 2/12/2010 and 13/12/2010. Ans. I am the husband and Authorized Representative of Mrs. Charu N. Sanghvi. I am producing here wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d laundered by the assessee. Under the circumstances, the said amount of ₹ 15,03,799/- is treated as undisclosed source of the assessee U/s. 68 of the l.T. Act. 4.3.2 In the impugned order, the learned CIT(A), after considering the submissions of the assessee and additional grounds raised, has confirmed the order of the AO in bringing to tax the amount of ₹ 15,03,799/- as undisclosed income in the assessee s hands holding as under at paras 4.3 and 4.4 and 4.5.1 to 4.5.4 thereof: - 4.3 Decision: - I have considered the facts of the case and the submissions made by the assessee. 4.3.1 Assessee's advocate, M/s Kshatriya Co. vide letter dated 12/12/2012 have filed additional grounds of appeal numbered as 1.1 to 1.7 which are as follows and have submitted that the additions made on account of sec. 68 in the total income to the extent of ₹ 15,03,799/- be deleted in full as the provisions laid down in the said section are not applicable. 4.3.2 Crux of the original grounds of appeal including the statement of facts and the additional grounds of appeal is that Assessing Officer erred making additions of ₹ 15,03,799/- to the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng/afternoon and that also in odd lots and purchase and sales taking place within seconds and/or minutes, (10) assessee has earned a profit of only ₹ 1,55,676/- in his regular business of packing material business on a turnover of ₹ 30,21,440/- and ₹ 1,37,490/- by way of share of profit from firms and ₹ 13,822/- as income from other sources. 4.3.5 An analysis of these transactions reveals that assessee was some kind of a wizard in dealing in shares in share markets having in depth knowledge of several blue chip companies like Infoways, Digital, MERCK, ACC, CMC, IFLEX, etc. and traded in them with the finesse of market player which gave him huge speculation profits of ₹ 15,03,798/-. Then the next question that arises is why should the assessee who had so much expertise in earning speculation profits in shares and had earned profits continuously in only nine sessions of trading on nine days abandon the same and revert back to normal business activity especially when he had a winning streak and was not even making losses? This is the odd part of the speculation activity claimed to have been carried out by the assessee. Assessee could have earned lit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued Bills to Mr. Vinod K. Dedhia in respect of certain transactions which took place in the financial year 2002-03 and these transactions were done through 'off market transaction' and were not routed through the main broker Ventura Securities Ltd. 4.3.7 All these facts clearly indicate that assessee had not earned any speculation profits but had merely exchanged his undisclosed income of ₹ 15,03,799/- for speculation profits by entering in dubious transactions with M/s. Falgun Finvest, Mumbai to avail off its set off against the brought forward unabsorbed speculation losses of ₹ 15,30,016/- and, therefore, action of the Assessing Officer in assessing the income of ₹ 15,03,799/- as income from other sources is confirmed and assessee's appeal is rejected on this ground. However, assessee is entitled to carry forward this speculation loss of ₹ 15,03,799/- to next assessment year as per law and its set off may be allowed for later assessment years subject to fulfillment of other conditions as per law. 4.4 Decision on Additional Grounds:- . 4.5.1 Crux of ground numbers 1.1 to 1.6 and renumbered ground 1.5 deal wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and transactions of Falgun Finvest, Mumbai to substantiate the main evidence of the transactions entered into by the assessee and other relevant factors like setting off of unabsorbed speculation loss to arrive at and draw conclusions. Therefore, the submissions made in ground of appeal 1.7 of additional grounds are also taken into consideration while deciding the appeal. In short, assessee's appeal is rejected on all the seven grounds 1.1 to 1.7 and another ground renumbered as 1.5 are rejected and Assessing Officer's action is upheld. 4.5.4 In nutshell, assessee's appeal in respect of ground numbers 1.1 to 1.5 of the original appeal memo and ground numbers 1.1 to 1.7 and renumbered/repeated ground 1,5 are dismissed and rejected. 4.3.3 From an appreciation of the orders of the authorities below (as extracted supra) and the material on record, it is seen that the learned CIT(A) has comprehensively considered the grounds raised and contentions put forth by the assessee in the impugned order. The sum and substance of the issue in the grounds raised before us is that the learned CIT(A) erred in confirming the AO s action in bringing to tax in the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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