Case Law Details
PCIT (Central) Vs Sanjay Singhal (Delhi High Court)
Introduction: The recent case of PCIT (Central) vs. Sanjay Singhal before the Delhi High Court delves into the intricate issues surrounding the validity of additions under Section 69A of the Income Tax Act, 1961. The appeal by the revenue challenges the order of the Income Tax Appellate Tribunal (ITAT), which deleted an addition made by the Assessing Officer (AO) concerning undisclosed profit/loss from trading in pulses and menthe on MCX/NCDEX. This analysis explores the key arguments, legal framework, and the court’s reasoning leading to the dismissal of the appeal.
Background: For the Assessment Year (AY) 2015-16, the AO made an addition of Rs. 11,35,85,032, alleging undisclosed profit/loss in trading activities with Raj Laxmi Commodities Private Limited. The AO posited that this transaction was conducted in collusion with Raj Laxmi and invoked Section 69A of the Income Tax Act, 1961. The respondent, Sanjay Singhal, Principal Officer and MD of the Sharp Group of Companies, contested this addition.
Key Arguments:
1. The AO’s Basis: The AO based the addition on the belief that the profit/loss was booked in connivance with Raj Laxmi, and that Raj Laxmi facilitated unauthorized access to an employee of Sharp Corp. Pvt. Ltd.
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