Case Law Details
ITO Vs M/s Prism Share Trading Pvt. Ltd. (ITAT Mumbai)
Conclusion: Where assessee had duly substantiated that it had earned a profit from commodities transactions along with complete details supporting the same, AO was not justified in treating the commodity transactions a fictitious arrangement with its associate concerns and adding the income as an unexplained cash credit under Sec.68.
Held: In the present case, assessee had offered the amount of Rs.5,73,96,307/- as income from commodities trading business along with complete details supporting the same. A.O being of the view that assessee had in the garb of the commodity transactions created a fictitious arrangement with its associate concerns, thus characterised the amount of Rs.5,73,96,307/- as an unexplained cash credit under Sec.68. It was held the same could not be termed as an unexplained cash credit as assessee had placed on record the complete details i.e. name and address of the counter party viz. M/s Sneha Metal Pvt. Ltd. with the A.O, but the latter had not deemed it fit to make any enquiry with the said party. As the commodities transactions were carried out by assessee throughout the year, thus the same clearly dislodged the observation of A.O that the profit generated therefrom was prompted with an intent to ‘set off’ the same against the loss suffered by assessee in the F&O transactions. Insofar the adverse inferences that assessee had settled its account with the broker M/s K Pvt. Ltd.(‘sister concern’ of the assessee) only through journal entries, the same was found to be absolutely misconceived. A.O had arrived on observations on the basis of a half hearted approach and premature observations and assessee had duly substantiated that it had earned profit from commodities transactions, therefore, the same could not be held as an unexplained cash credit under Sec.68.
FULL TEXT OF THE ITAT JUDGEMENT
The present appeal filed by the revenue is directed against the order passed by the CIT(A)-21, Mumbai, dated 14.06.2017, which in turn arises from the assessment order passed by the A.O under Sec.143(3) of the Income Tax Act, 1961 (for short ‘Act’), dated 31.03.2016. The revenue assailing the order of the CIT(A) has raised before us the following grounds of appeal:
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