Commission @2% of accommodation entries is as per prevailing market rate and hence sustainable

By POONAM GANDHI Income Tax Judiciary November 6, 2023

TaxGuru Citation: 2023 taxguru.in 7024
Case Name: OPG Securities Pvt. Ltd. Vs DCIT (ITAT Delhi)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2012-13
Courts: All ITAT, ITAT Delhi

Already Upgraded? Log in.

OPG Securities Pvt. Ltd. Vs DCIT (ITAT Delhi)

ITAT Delhi held that commission taxed @2% of the amount of accommodation entries provided by the assessee has not been made on ad hoc basis, however, the same is as per prevailing market rate. Accordingly, the addition is sustained.

Facts- The assessee, a private limited company incorporated under the Companies Act, 1956 is a registered stock broker at National Stock Exchange (NSE) & Bombay Stock Exchange (BSE) and engaged in trading in shares, securities, derivatives, currency, futures & option (F&O), etc., through algorithmic trading, ie, automatic trading through software. The income of the assessee primarily includes income from sale & purchase of securities in its Proprietary Account (PRO account) and brokerage income. The assessee maintains client account for their dealing in shares, securities, etc, and all the trades are executed/ transacted online on an electronic platform in real time and in the open market on recognized stock exchanges all over India.

A search and seizure operation u/s. 132 was carried out at the various premises of the assessee and other persons. During the search operation, various documents, e-mails, printouts from the assessee company’s computers and images retrieved from mobile phones and hard disks, pen drive were found and seized. The said laptop contained a number o f excel worksheets containing details of various receipts and payments.

AO determined an amount of Rs.59,23,46,638/- being the difference between the receipts and payments as the undisclosed income of the assessee for the entire period of assessment u/s 153A. Further, AO determined unaccounted income from trading and commission as undisclosed income of the assessee.

CIT(A) made the addition of the difference between the receipts and payments of Rs.59.23 Cr. was re-determined by resorting to the peak theory and determined the undisclosed amount to Rs.19.86 Cr. Being aggrieved, both revenue and assessee has preferred the present appeal.

Conclusion- Held that these are the entries given by the assessee to various parties by utilizing the services of different broker as mentioned in the seized material on account of short term capital gains which do not form part of the receipts and payments mentioned above which have been already considered separately. Hence, we hold that the commission charged by the Assessing Officer is not on ad-hoc basis but taking into consideration the prevailing market trend in providing such accommodation entries. Keeping in view the facts, we hereby affirm the order of the ld. CIT(A).

FULL TEXT OF THE ORDER OF ITAT DELHI

The present appeal has been filed by the assessee and the Revenue against the orders of ld. CIT(A)-24, New Delhi dated 13.08.2021.

2. In ITA No. 1818/Del/2021, following grounds have been raised by the assessee:

“1. That on the facts and circumstances of the case, the order passed by the learned CIT(A) in modifying and enhancing the addition made by the A.O. from an amount of Rs.90,66,389/- u/s 69A of the Act to Rs. 94,65,189/- (Rs. 91,30,339/- as peak credit and Rs. 3,34,850/- as unexplained expenditure u/s 69C), is unwarranted and is bad both in the eyes of law and on facts.

2. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying and enhancing the addition made by the AO, without rebutting the claim of the appellant that:

(i) the alleged party wise breakup into 48 parties provided to the appellant vide notice dated 30.10.2019 for explanation is not the verbatim data retrieved from the alleged personal laptop but redesigned, rearranged purposely.

(ii) the appellant had neither received nor paid alleged receipts and payments in the nature of investments, expenditure etc. mentioned against alleged parties in the notice dated 30.10.2019.

3. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law in not appreciating “that the alleged data in Excel worksheets retrieved from said computer as well as recreated 48 ledgers / parties does not qualify to admit as an “evidence” under section 65B of the Indian Evidence Act, 1872″.

4. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact in not appreciating that the additions made by invoking provisions of Section 69A of the Act are bad in law as the appellant has not been found in possession of alleged cash which is pre-requisite condition for invoking provisions of Section 69A.

5. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in making separate addition of Rs. 3,34,850/- as unexplained expenditure u/s 69C of the Act when all such debit and credit entries alleged to be found recorded in data / excel sheet retrieved from the personal laptop of Shri Saurabh Gupta have already been considered while making peak credit addition by the La CIT(A) which tantamount to double addition and hence bad in law and is liable to be deleted.

6. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact by arbitrarily and mechanically discrediting Affidavits of the concerned parties and also rejecting the contention of the appellant by making opinion that there was no need requirement of conducting independent enquiries by the Ld. AO from the alleged parties.

7. That on the facts and circumstances of the case, the addition made / enhanced by the learned AO / CIT(A) is untenable in the eyes of law having been made without providing the opportunity to cross-examine Saurabh Gupta from whose personal laptop the alleged data/excel sheets retrieved, which was found from the premises of his in-laws, which is the sole basis of making addition in the instant case and without following the principle of natural justice

8. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact by arbitrarily and mechanically holding that proper opportunity of cross examination was provided to the appellant while no such cross examination of the alleged parties/ deponents were provided even though specifically requested by the appellant before both the lower authorities.

9. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying and enhancing additions made by Ld. AO by ignoring the fact that such additions were made on the basis of un-authenticated seized document which were not found from the premises of the appellant during search action u/s 132 of the Act and hence, bad in law and is outside the scope of proceedings u/s 153A of the Act.

10. That on the facts and circumstances of the case, the learned CIT(A) has erred) both on facts & in law in modifying and enhancing additions made by Ld. AO by ignoring the fact that the case of relevant assessment year has already been concluded u/s 143(3) which could not abate on the date of search and no such additions were made on the basis of any incriminating material found / seized during search action at the premises of the appellant.”

3. In ITA No. 1819/Del/2021, following grounds have been raised by the assessee:

“1. That on the facts and circumstances of the case, the order passed by the learned CIT(A) in modifying and enhancing the addition made by the A.O. from an amount of Rs.63,50.507/- u/s 69A of the Act to Rs. 3,14,06,822/- (Rs. 2.75,56,842/- as peak credit and Rs. 38,49,980/- as unexplained expenditure u/s 69C) and confirming addition of Rs 4,20,400/- being ad-hoc estimated commission income, is unwarranted and is bad both in the eyes of law and on facts.

2. That on the facts and circumstances of the case, the leamed CIT(A) has erred both on facts & in law in modifying and enhancing the addition made by the AO, without rebutting the claim of the appellant that:

(ii) the appellant had neither received nor paid alleged receipts and payments in the nature of investments, expenditure etc. mentioned against alleged parties in the notice dated 30.10.2019

3. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law in not appreciating that the alleged data in Excel worksheets retrieved from said computer as well as recreated 48 ledgers / parties does not qualify to admit as an “evidence” under section 658 of the Indian Evidence Act, 1872″.

4. That on the facts and in the circumstances of the case, the Learned CIT(A) is erred in law and on fact in not appreciating that the additions made by invoking provisions of Section 69A of the Act are bad in law as the appellant has not been found in possession of alleged cash which is pre-requisite condition for invoking provisions of Section 69A.

5. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in making separate addition of Rs.38,49,980/- as unexplained expenditure u/s 69C of the Act when all such debit and credit entries alleged to be found recorded in data / excel sheet retrieved from the personal laptop of Shri Saurabh Gupta have already been considered while making peak credit addition by the Ld. CIT(A) which tantamount to double addition and hence bad in law and is liable to be deleted.

6. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact in confirming addition of Rs 4,20,400/- made by AO by ad-hoc estimating commission income at 2% of the alleged accommodation entries as per the unsubstantiated data/ excel sheet allegedly retrieved from the personal laptop of Shri Saurabh Gupta, merely on the basis of assumption and presumption.

7. That on the facts and in the circumstances of the case, when the Learned CIT(A) himself has made peak credit addition in the case of appellant by considering all such debit and credit entries alleged to be found recorded in data / excel sheet retrieved from the personal laptop of Shri Saurabh Gupta, no separate addition of Rs. 4,20,400/- made by AO, should be sustained.

8. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact by arbitrarily and mechanically discrediting Affidavits of the concerned parties and also rejecting the contention of the appellant by making opinion that there was no need / requirement of conducting independent enquiries by the Ld. AO from the alleged parties.

9. That on the facts and circumstances of the case, the addition made / enhanced by the learned AO / CIT(A) is untenable in the eyes of law having been made without providing the opportunity to cross-examine Saurabh Gupta from whose personal laptop the alleged data/ excel sheets retrieved, which was found from the premises of his in-laws, which is the sole basis of making addition in the instant case and without following the principle of natural justice.

10. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact by arbitrarily and mechanically holding that proper opportunity of cross examination was provided to the appellant while no such cross examination of the alleged parties/ deponents were provided even though specifically requested by the appellant before both the lower authorities.

11. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying and enhancing additions made by Ld. AO by ignoring the fact that such additions were made on the basis of unauthenticated seized document which were not found from the premises of the appellant during search action u/s 132 of the Act and hence, bad in law and is outside the scope of proceedings u/s 153A of the Act.

12. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying and enhancing additions made by Ld. AO by ignoring the fact that the case of relevant assessment year has already been concluded u/s 143(3) which could not abate on the date of search and no such additions were made on the basis of any incriminating material found / seized during search action at the premises of the appellant.”

4. In ITA No. 1820/Del/2021, following grounds have been raised by the assessee:

“1. That on the facts and circumstances of the case, the order passed by the learned CIT(A) in modifying and enhancing the addition made by the A.O. from an amount of Rs.9,20,911/- u/s 69A of the Act to Rs. 1.13.41.196/- (Rs. 4,51,648/- as peak credit and Rs 1,08,89,548/- as unexplained expenditure u/s 69C), is unwarranted and is bad both in the eyes of law and on facts.

(ii) the appellant had neither received nor paid alleged receipts and payments in the nature of investments, expenditure etc. mentioned against alleged parties in the notice dated 30.10.2019.

5. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in making separate addition of Rs.1,08.89.548/- as unexplained expenditure u/s 69C of the Act when all such debit and credit entries alleged to be found recorded in data / excel sheet retrieved from the personal laptop of Shri Saurabh Gupta have already been considered while making peak credit addition by the Ld. CIT(A) which tantamount to double addition and hence bad in law and is kable to be deleted.

6. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact by arbitrarily and mechanically discrediting Affidavits of the concerned parties and also rejecting the contention of the appellant by making opinion that there was no need / requirement of conducting independent enquiries by the Ld. AO from the alleged parties.

7. That on the facts and circumstances of the case, the addition made / enhanced by the learned AO/CIT(A) is untenable in the eyes of law having been made without providing the opportunity to cross-examine Saurabh Gupta from whose personal laptop the alleged datal excel sheets retrieved, which was found from the premises of his in-laws, which is the sole basis of making addition in the instant case and without following the principle of natural justice.

10. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying and enhancing additions made by Ld. AO by ignoring the fact that the case of relevant assessment year has already been concluded u/s 143(3) which could not abate on the date of search and no such additions were made on the basis of any incriminating material found / seized during search action at the premises of the appellant.”

5. In ITA No. 1821/Del/2021, following grounds have been raised by the assessee:

“1. That on the facts and circumstances of the case, the order passed by the learned CIT(A) in modifying the addition made by the A.O. from an amount of Rs 5,33,00,383/- u/s 69A of the Act to Rs. 4,10.01.018/- (Rs. 3,94,77,039/- as peak credit and Rs 15,23.979/- as unexplained expenditure u/s 69C) and confirming addition of Rs 13,60,604/- being ad-hoc estimated commission income, is unwarranted and is bad both in the eyes of law and on facts.

2. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying the addition made by the AO, without rebutting the claim of the appellant that:

(ii) the appellant had neither received nor paid alleged receipts and payments in the nature of investments, expenditure etc. mentioned against alleged parties in the notice dated 30.10.2019.

5. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in making separate addition of Rs.15.23.979/- as unexplained expenditure u/s 69C of the Act when all such debit and credit entries alleged to be found recorded in data / excel sheet retrieved from the personal laptop of Shri Saurabh Gupta have already been considered while making peak credit addition by the Ld. CIT(A) which tantamount to double addition and hence bad in law and is liable to be deleted.

6. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in not appreciating the claim of the appellant that it has not incurred the alleged renovation expenses of Rs. 41,88,000/- outside its books of account for the Flat 504.CWG Village forming part of fixed assets of the appellant.

7. Without prejudice to the Ground of Appeal No. 6, the learned CIT(A) has erred both on facts & in law in not considering the amount of Rs. 41,88,000/- alleged to be incurred outside books of the appellant for renovation of Flat 504 CWG Village in peak credit calculation.

8. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact in confirming addition of Rs 13,60,604/- made by AO by ad-hoc estimating commission income at 2% of the alleged accommodation entries as per the unsubstantiated data/ excel sheet allegedly retrieved from the personal laptop of Shri Saurabh Gupta, merely on the basis of assumption and presumption.

9. That on the facts and in the circumstances of the case, when the Learned CIT(A) himself has made peak credit addition in the case of appellant by considering all such debit and credit entries alleged to be found recorded in data / excel sheet retrieved from the personal laptop of Shri Saurabh Gupta, no separate addition of Rs. 13,60,604/- made by AO, should be sustained.

10. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact by arbitrarily and mechanically discrediting Affidavits of the concerned parties and also rejecting the contention of the appellant by making opinion that there was no need requirement of conducting independent enquiries by the Ld. AO from the alleged parties.

11. That on the facts and circumstances of the case, the addition made / modified by the learned AO CIT(A) is untenable in the eyes of law having been made without providing the opportunity to cross-examine Saurabh Gupta from whose personal laptop the alleged data/ excel sheets retrieved, which was found from the premises of his in-laws, which is the sole basis of making addition in the instant case and without following the principle of natural justice.

12. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact by arbitrarily and mechanically holding that proper opportunity of cross examination was provided to the appellant while no such cross examination of the alleged parties/ deponents were provided even though specifically requested by the appellant before both the lower authorities.

13. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying and sustaining additions made by Ld. AO by ignoring the fact that such additions were made on the basis of un-authenticated seized document which were not found from the premises of the appellant during search action u/s 132 of the Act and hence, bad in law and is outside the scope of proceedings u/s 153A of the Act.

14. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying additions made by Ld. AO by ignoring the fact that the no such additions were made on the basis of any incriminating material found / seized during search action at the premises of the appellant.”

6. In ITA No. 1822/Del/2021, following grounds have been raised by the assessee:

“1. That on the facts and circumstances of the case, the order passed by the learned CIT(A) in modifying the addition made by the A.O. from an amount of Rs. 17.49,29,190/- u/s 69A of the Act to Rs. 13,53,76,6171- (Rs. 12,19,96,443/- as peak credit and Rs 1,33,80,174/- as unexplained expenses u/s 69C) and confirming addition of Rs.560/- being ad-hoc estimated commission income, is unwarranted and is bad both in the eyes of law and on facts.

2. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying and sustaining the addition made by the AO. without rebutting the claim of the appellant that:

(ii) the appellant had neither received nor paid alleged receipts and payments in the nature of investments, expenditure etc. mentioned against alleged parties in the notice dated 30.10.2019.

4. That on the facts and in the circumstances of the case, the Leamed CIT(A) erred law and a fat in het appealing that the additions made by invoking provisions of Section 6A of the Act are bad as the appellant has not been found in possession of alleged cash which is pre-requite condition for invoking provisions of Section 69A.

5. That in the facts and in the cumstances of the case the Learned CIT(A) erred making separate addition of Rs 1,33,80,174 an unexplained expenditure u/s 69C of the Act when all such debt and credit entries alleged to be found den data excel sheet retrieved from the personal laptop of Shri Saurabh Gupta have already been considered while making peak credit addition by the ld. CIT(A) which tantamount to double addition and hence bad in law and is be to be deleted.

6. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in not appreciating the claim of appellant that it has not pad aged amount of Rs. 17,00,00,000 for purchase of house at E-24, Preet Vihar without adducing any corroborative evidence on record which could prove that the same was actually paid by the appellant and without conducting independent enquiry or getting valuation of the said property from approved Get valuer even though specifically requested by the appellant.

7. Without prejudice to the Ground of Appeal No. 6 the leamed CIT(A) has erred both facts & in law in not considering the amount of Rs. 17,00,00,000 alleged to be paid for purchase of house at E24, Preet Vihar in peak credit calculation.

8. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact in confirming addition of Rs 560/- made by AO by ad-hoc estimating commission income at 2% of the alleged accommodation entries as per the unsubstantiated data/ excel sheet allegedly retrieved from the personal laptop of Shri Saurabh Gupta, merely on the basis of assumption and presumption

14. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying additions made by Ld. AO by ignoring the fact that the no such additions were made on the basis of any incriminating material found/seized during search action at the premises of the appellant.”

7. In ITA No. 1823/Del/2021, following grounds have been raised by the assessee:

“1. That on the facts and circumstances of the case, the order passed by the learned CIT(A) in modifying the addition made by the A.O. from an amount of Rs.27,45,37,948/- u/s 69A of the Act to Rs.4,41,95,030/- as unexplained expenditure u/s 69C and confirming addition of Rs.2,03,000/- being ad-hoc estimated commission income, is unwarranted and is bad both in the eyes of law and on facts.

2 That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying and sustaining the addition made by the AO, without rebutting the claim of the appellant that

(1) the alleged party wise breakup into 48 parties provided to the appellant vide notice dated 30.10.2019 for explanation is not the verbatim data retrieved from the alleged personal laptop but redesigned, rearranged purposely.

(ii) the appellant had neither received nor paid alleged receipts and payments in the nature of investments, expenditure etc. mentioned against alleged parties in the notice dated 30.10.2019

5. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in making separate addition of Rs.4,41,95,030/- as unexplained expenditure u/s 69C of the Act when all such debit and credit entries alleged to be found recorded in data / excel sheet retrieved from the personal laptop of Shri Saurabh Gupta have already been considered while making peak credit addition by the Ld. CIT(A) which tantamount to double addition and hence bad in law and is liable to be deleted.

6. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact in confirming addition of Rs 2,03,000/- made by AO by ad-hoc estimating commission income at 2% of the alleged accommodation entries as per the unsubstantiated data/ excel sheet allegedly retrieved from the personal laptop of Shri Saurabh Gupta, merely on the basis of assumption and presumption.

7. That on the facts and circumstances of the case, when the Learned CIT(A) himself has made peak credit addition in the case of appellant by considering all such debit and credit entries alleged to be found recorded in data / excel sheet retrieved from the personal laptop of Shri Saurabh Gupta, no separate addition of Rs. 2,03,000/- made by AO, should be sustained.

8. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact by arbitrarily and mechanically discrediting Affidavits of the concerned parties and also rejecting the contention of the appellant by making opinion that there was no need requirement of conducting independent enquiries by the Ld. AO from the alleged parties.

9. That on the facts and circumstances of the case, the addition made / modified by the learned AO CIT(A) is untenable in the eyes of law having been made without providing the opportunity to cross-examine Saurabh Gupta from whose personal laptop the alleged data/ excel sheets retrieved, which was found from the premises of his in-laws, which is the sole basis of making addition in the instant case and without following the principle of natural justice.

11. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying additions made by Ld. AO by ignoring the fact that the no such additions were made on the basis of any incriminating material found/seized during search action at the premises of the appellant.

12. That on the facts and circumstances of the case, the learned CIT(A) has erred in law in arbitrarily and mechanically invoking deeming provisions of Section 69C read with Section 115BBE of the Act on addition made on account of unexplained expenditure without considering the fact that said expenses would even otherwise, qualify as business expenditure on which provisions of Section 115BBE is not applicable

13. That on the facts and circumstances of the case, the learned CIT(A) has erred in law in arbitrarily and mechanically invoking deeming provisions of Section 69C read with Section 115BBE of the Act on addition made on account of unexplained expenditure without considering the fact that the amendment made by Second Amendment Act, 2016 has no retrospective application.”

8. In ITA No. 1824/Del/2021, following grounds have been raised by the assessee:

“1. That on the facts and circumstances of the case, the order passed by the learned CIT(A) in modifying the addition made by the AO, from an amount of Rs.7.3241.310 u/s 69A of the Act to Rs 4,08,39,093/- as unexplained expenditure u/s 69C and confirming addition of Rs.2,71,000/- being ad-hoc estimated commission income, is unwarranted, bad both in the eyes of law and on facts

2. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in modifying and sustaining the addition made by the AO, without rebutting the claim of the appellant that:

(ii) the appellant had neither received nor paid alleged receipts and payments in the nature of investments, expenditure etc. mentioned against alleged parties in the notice dated 30.10.2019.

5. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in making separate addition of Rs.4,08,39,093/- as unexplained expenditure u/s 69C of the Act when all such debit and credit entries alleged to be found recorded in data / excel sheet retrieved from the personal laptop of Shri Saurabh Gupta have already been considered while making peak credit addition by the Ld. CIT(A) which tantamount to double addition and hence bad in law and is liable to be deleted.

6. That on the facts and circumstances of the case, the learned CIT(A) erred both on facts & in law in not appreciating the claim of the appellant that it has not paid alleged amount of Rs. 1,00,00,000/- as advance to Best View Properties without adducing any corroborative evidence on record which could prove that the same was actually paid by the appellant and without conducting independent enquiry even though specifically requested by the appellant.

7. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on fact in confirming addition of Rs 2,71,000/- made by AO by ad-hoc estimating commission income at 2% of the alleged accommodation entries as per the unsubstantiated data/ excel sheet allegedly retrieved from the personal laptop of Shri Saurabh Gupta, merely on the basis of assumption and presumption.”

9. The issue involved in ITA Nos. 1204 to 1206/Del/2022 are similar they were heard together and being adjudicated by a common order. The grounds raised by the assessee in ITA No. 1204/Del/2022 are as under:

“1. That on the facts and circumstances of the case, the order passed by the learned CIT(A) imposing penalty of Rs. 1,19,640/- under section 271(1)(c) of the Act on estimated enhanced addition of Rs. 3,98,800/- by the CIT(A) himself by modifying additions made by AO from an amount of Rs.90,66,389/- u/s 69A of the Act to Rs. 94,65,189/-, is bad both in the eyes of law and on facts.

2. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in imposing penalty of Rs. 1,19,640/- u/s 271(1)(c) of the Act without appreciating the fact that there was no concealment of particulars of income by the appellant as contemplated u/s 271(1)(c) of the Act.

3. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in imposing penalty of Rs. 1,19,640/- u/s 271(1)(c) of the Act without considering the fact that the explanation offered by the appellant was not acceptable to the learned CIT(A) would not itself amount to concealment of particulars of income by the appellant as contemplated u/s 271(1)(c) of the Act.

4. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in imposing penalty of Rs. 1,19,640/- u/s 271(1)(c) of the Act read with Explanation 5A of the said section without appreciating the fact that provisions of Explanation 5A of Section 271(1)(c) of the Act are not applicable in the case of the appellant.

5. That on the facts and circumstances of the case, the penalty imposed u/s 271(1)(c) of the Act is not tenable in law as the judicial pronouncements relied on by the learned CIT(A) are
distinguishable on the facts of the case.

6. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in imposing penalty u/s 271(1)(c) of the Act on addition enhanced by him being the additions made / modified/ enhanced on the basis of alleged data in Excel worksheets retrieved from laptop as well as recreated 48 ledgers / parties, does not qualify to admit as an “evidence” under section 65B of the Indian Evidence Act, 1872.”

10. The issue involved in ITA Nos. 57 to 59/Del/2022 are similar, they were heard together and being adjudicated by a common order. The grounds raised by the Revenue in ITA No. 57/Del/2022 are as under:

“1. The Ld. CIT(A) has erred in law and on the facts in deleting the addition of Rs. 3,95,52,573/- out of total addition of Rs.17,49,29,190/- made on account of unaccounted cash received.

2. The Ld. CIT(A) has erred in law and on the facts relying on peak credit / highest credit while computing addition made on account of unaccounted cash received by considering that the nature of transactions made by the assessee are similar to that of an Entry Operator. In the assessment order in Para 6.1, the assessing officer distinguished the assesee’s modus operandi different from the entry operator. So, the case laws relied upon the Ld. CIT(A) is not applicable on the facts of the assessee. Hence, peak credit / highest credit for unaccounted income is not applicable in this case as relied upon by the Ld. CIT(A).”

11. The assessee, a private limited company incorporated under the Companies Act, 1956 is a registered stock broker at National Stock Exchange (NSE) & Bombay Stock Exchange (BSE) and engaged in trading in shares, securities, derivatives, currency, futures & option (F&O), etc., through algorithmic trading, ie, automatic trading through software. The income of the assessee primarily includes income from sale & purchase of securities in its Proprietary Account (PRO account) and brokerage income. The assessee maintains client account for their dealing in shares, securities, etc., and all the trades are executed/ transacted online on a electronic platform in real time and in open market on recognized stock exchanges all over India. Further, all the transactions of purchase and sale of securities, derivatives etc. are executed by the respective clients through their own trading code/account maintained with the assessee company in the open market on recognized stock exchange through banking channel and any profit or loss earned on these transactions is the profit or loss of the client.

12. A search and seizure operation u/s 132 of the Income Tax Act, 1961 was carried out at the various premises of the assessee and other persons on 15.11.2017. During the search operation, various documents, soft data, e-mails, printouts from the assessee company’s computers and images retrieved from mobile phones and hard disks, pen drive were found and seized. Simultaneously a search and seizure operation were also carried out at the residential premises of Saurabh Gupta an employee of appellant at 3031/1, Old Ranjeet Nagar, New Delhi from where a laptop was found and Annexurized as Annexure No. A-2. The said laptop contained a number of excel worksheets containing details of various receipts and payments.

Income from Trading:

13. The AO has re-arranged the data found on the laptop. It consisted of 48 sub-heads. The total receipts for the period of assessment u/s 153A was Rs.164,77,58,330/- and total payments were to the tune of Rs.161,96,48,112/-. The Assessing Officer after examination of the inflow and outflow and after eliminating the repeated, duplicate entries collated the excel sheets into 7 main heads and tabulated the receipts and payments depicted as under: