9911796707
TMI Blog2024 (2) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... rrying on business as sole proprietor in the name and style of M/s B.C. Devidas. Assessee, who was a registered broker of Bombay Stock Exchange, was also engaged in trading in securities and shares. In addition to the profit, assessee also received salary and commission from CIFCO Limited and Food and Inns Limited in which he was a director. 3. Following the allegation of involvement in multi crore securities transactions scam of nineties infamously known as Harshad Mehta Scam, Assessee got labelled as party on 2nd July 1992 under the Special Court's (TORTS) Act, 1992. Assessee was investigated by Central Bureau of Investigation in June 1992 followed by the search and seizure action conducted by the Income Tax Department on 16th Octobe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting the additions made under Sec. 68 of the Act by holding that the additions were made by the AO without proper examination of evidences furnished and proper reasoning; without appreciating the fact that the assessee had failed to meet all the three criteria i.e. identity, creditworthiness and genuineness of the transaction? 2. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in deleting the addition of interest on securities by holding that the AO did not show any reason to the conclusion that the expenditure is excessive in nature; without appreciating the fact that the assessee had failed to furnish evidence for the payments made through journal entries and that it is not matc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, the ITAT has noted that assessee has filed confirmation letter for the years ending 31st December 1984, 31st December 1985 and 31st December 1987. Assessee has expressed his inability to obtain any confirmation letter since the creditor has migrated to USA and also due to passage of long time. Considering the entire matter on the whole, the ITAT came to a finding that there is no reason to suspect the credit obtained from this party. The ITAT, therefore, directed the AO to delete this addition. As regards the cash credit in the name of Ronak Patel, though assessee did not obtain any confirmation letter, he produced evidence on repayment of Rs. 93,000/- made on 10th May 1991 to Ronak Patel. Assessee also showed evidence of having paid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the detailed and well-reasoned order, contrary to the order passed by the AO, this issue, in our view, does not raise any substantial question of law. 10. On the proposed second question of law relating to interest expenditure of Rs. 47,45,108/- debited as interest on securities during the year relevant to AY 1987-88, this account, i.e., interest on securities was showing a debit balance of Rs. 47.45 lakhs and assessee claimed the same as expenditure. 11. Mr. Chhotaray submitted that the AO noticed that the securities purchased by assessee did not remain with assessee for a long time, i.e., sold within few days. Hence the AO took the view that the interest paid on securities and interest received on securities should have been equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the method of accounting explained by assessee without furnishing any valid reason. Since there were sales of securities which were not available on hand, the ITAT has accepted the explanation of assessee that he issued the sales contract when he received the order for purchase of security even if, it is not available in his hands and the amount received from the client is deposited into his overdraft account. According to assessee, he has to pay cum interest at the rate of 6% or may be upto 9% but when the amount is deposited into his overdraft account, it reduced his interest burden by the rate applicable to overdraft facility, which is around 16%. Assessee explained that since there is net gain to him on account of interest leverage, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any reason for coming to this conclusion. The ITAT noted that the AO cannot arrive at the conclusion on certain presumptions and by making general observations. The ITAT has also correctly observed that CIT(A) has simply confirmed the order of the AO without critically examining the same. Therefore, even here no substantial question of law arise. 15. As regards third proposed substantial question of law, the department had made addition of Rs. 3.22 crores on account of negative balance of securities. The AO has made observation, which has been confirmed by CIT(A) on the basis of stock summary prepared by the AO himself without furnishing the basis for arriving at alleged negative stock. The addition has been made without providing releva ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
