DCIT Vs M B Trade Link Pvt. Ltd. (ITAT Mumbai)
Section 68 Cannot Tax The Same Profit Twice – Client Code Modification Allegation Needs More Than An SFIO Report
Commodity profit caught in the NSEL net
The assessee was engaged in regular business activities & also undertook commodity trades through an authorised broker.
The assessment was reopened on the basis of information received from the Serious Fraud Investigation Office [SFIO] concerning alleged irregular transactions undertaken on the National Spot Exchange Ltd. [NSEL] platform.
According to the information, several persons had booked bogus speculative or non-speculative gains & losses through NSEL transactions. The assessee was alleged to be one of the beneficiaries of Client Code Modification [CCM] transactions carried out through its broker, Anand Rathi & Associates.
The Revenue also relied upon a broker’s statement that no actual delivery of commodities had taken place in the trades executed on the NSEL platform.
Based principally upon this information, the AO treated commodity-trading profit of ₹1,50,460 as unexplained income u/s 68.
Profit was already sitting in the return
The assessee had filed a revised return & subsequently furnished another return in response to notice u/s 148.
In that return, it disclosed aggregate profit of ₹4,77,852 from trading in securities & forward commodity transactions as business income. The disputed amount of ₹1,50,460 was already included in this disclosed trading profit.
