ACIT Vs Akshat Vinimay Private Limited (ITAT Mumbai)
ITAT Mumbai upholds deletion of bogus F&O loss addition – No incriminating material found during search, Project Falcon report is post-search & cannot justify 153A additions in an unabated year
Assessee originally filed its return declaring ₹7.71 lakh. Assessment u/s 143(3) was completed in 2016 determining income at ₹63.47 lakh. A search u/s 132 was conducted on 22.03.2018. Since the original assessment was already completed, AY 2014-15 became an unabated/completed year on the date of search.
In the 153A reassessment, AO did not find any incriminating material during search relating to Assessee’s F&O loss. Instead, AO relied purely on the post-search Investigation Wing “Project Falcon” report alleging that certain brokers facilitated bogus F&O losses through illiquid options & expiry trades. Based only on this external report & post-search inquiries, AO disallowed Assessee’s F&O trading loss of ₹2,74,39,330 as bogus accommodation entry & added ₹5,48,787 as commission @2%.
Before CIT(A), Assessee raised a legal additional ground that as per PCIT vs Abhisar Buildwell Pvt. Ltd. (SC), no addition can be made in 153A for a completed year unless it is based on incriminating material found during search. CIT(A) admitted the ground, called remand report, & after detailed discussion found:
