Trading Income From Sale Of Scrips Can't Be Conferred As 'Unaccounted Income' If Trading Activity Is Not Disputed At Any Time: Ahmedabad ITAT
On finding that AO as well as the CIT(A) was not right in making/confirming the addition on account of unaccounted business income, the Ahmedabad ITAT deleted the addition made by AO under the Income Tax Act, 1961.The Bench of Suchitra R. Kamble (Judicial Member) observed that, “The summons issued to Shri Ramesh Ajwani, who is an entry provider as per the Assessing Officer, has nothing to...
On finding that AO as well as the CIT(A) was not right in making/confirming the addition on account of unaccounted business income, the Ahmedabad ITAT deleted the addition made by AO under the Income Tax Act, 1961.
The Bench of Suchitra R. Kamble (Judicial Member) observed that, “The summons issued to Shri Ramesh Ajwani, who is an entry provider as per the Assessing Officer, has nothing to do with the assessee and the said statement was not at all verified by the Assessing Officer as well as the assessee was not given any opportunity of confronting this statement. The assessee has rightly claimed the said trading as business income.” (Para 7)
As per the brief facts of the case, the assessee filed his return of income. After receiving the information, it was observed that VAS Infrastructure Ltd. is a penny stock which has been used to provide accommodation entry of bogus Long Term Capital Gain (LTCG)/loss to the beneficiaries. As per the information, the assessee is one of the beneficiaries/members of this accommodation entry syndicate. The assessee has not furnished the details of transaction; therefore, the case was reopened u/s. 147. Notice u/s 148 was issued after recording reason and obtaining necessary approval from the competent authority. In response to the said notice, the assessee filed return of income. Notice u/s 143(2) was issued. The reason recorded for reopening the assessment was provided. The notice u/s 142(1) r.w.s 129 was issued along with a questionnaire. In response to the said notice, the assessee did not file the required details as mentioned in the assessment order, but the assessee furnished the details and stated that income from share trading activity – both delivery based and non-delivery based – are shown in the profit and loss account of the assessee and all the said income form part of total income as disclosed by the assessee in his return of income for the period under consideration. The AO however made addition in respect of sale of VAS Infrastructure Ltd. and treated the same amount as unaccounted business income.
The Bench noted that the AO has made the addition on account of unaccounted business income in respect of selling of the scrip 'VAS Infrastructure Ltd.', but in fact the assessee was majorly dealing with trading activities and that was not disputed at any point of time.
The Bench observed that the assessee has not claimed any Long-Term Capital Gain or Short-Term Capital Gain as well as any loss in respect of these trading of shares.
The Bench also observed that from the perusal of purchase and selling of shares/scrip of VAS Infrastructure Ltd., the assessee has given all the details to the AO during the assessment proceedings, including the details of brokers, details of transactions, credit notes, D-mat account, transaction details which were not taken into account either by the AO or by the CIT(A).
Therefore, on finding that the AO as well as the CIT(A) was not right in making/confirming the addition to that effect, the ITAT allowed the assessee's appeal.
Counsel for Appellant/Taxpayer: Aseem L. Thakkar
Counsel for Respondent/Department: Aashish Rajesh Revar
Case Title: Shripal Sheshmal Jain HUF verses Income Tax Officer
Case Number: ITA No. 657/Ahd/2023