DCIT Vs Dharmdeep Commodities Pvt. Ltd. (ITAT Ahmedabad)
Section 68 Addition Restricted Because Only Profit Element in Commodity Trades Was Taxable; Revenue’s Section 68 Addition Fails Because Earlier ITAT Ruling Covered Identical Transactions; Penalty Relief Upheld Because Quantum Addition Was Sustained Only to Profit Element; Section 68 Addition Reduced Because Documentary Evidence Supported Commodity Transactions.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, decided two departmental appeals arising from the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, for Assessment Year 2014-15. The appeals challenged the relief granted by the CIT(A) in relation to an addition under Section 68 of the Income-tax Act and the consequential deletion of penalty under Section 271(1)(c).
The assessee, engaged in trading in cotton bales and acting as a commission agent, had originally filed its return declaring income of Rs.98,32,060. The original assessment under Section 143(3) accepted the returned income without any additions. Subsequently, reassessment proceedings were initiated. In the first reassessment, the Assessing Officer made additions, including Rs.5,45,43,550 under Section 68 relating to commodity transactions executed through Anand Rathi Commodities Ltd. on the National Spot Exchange Limited (NSEL) platform, alleging that the transactions involved client code modification (CCM). Thereafter, a second reassessment was initiated on similar commodity transactions through the same broker and platform, resulting in a further addition of Rs.4,66,57,670 under Section 68.
