Manoj Kumar Damani Vs ACIT (ITAT Kolkata)
Assessee under consideration has done the transaction through recognised stock exchange and produced before us the contract notes, details of the transactions, and details of payment through account payee cheques. We note that transactions have been carried out through proper banking channels/account payee cheques, through the existence of the brokers and stock exchangeand these facts were not disputed by the ld DR for the Revenue. In the assessee’s case, the Assessing Officer treated the transactions as bogus only on the basis that the broker,M/s. Sunchen Securities Ltd., has been blacklisted by SEBI and its registration was cancelled subsequently. The fact that the registration has been cancelled subsequently does not mean that the transactions are invalid. The assessee cannot be punished for the default of the brokers and therefore the share transactions cannot be held to be bogus.
FULL TEXT OF THE ITAT JUDGMENT
By way of this appeal, the assessee/appellant has challenged the correctness of the order dated 3rd October, 2016, passed by the ld. Commissioner of Income Tax (Appeals)-13, Kolkata, in the matter of assessment u/s 143(3)/263 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’), for the Assessment Year 2008-09.
2. The grievances of the assessee are as follows:-
1.That in the facts and circumstances of the case,the Ld. Commissioner of Income Tax (Appeals)-13, Kolkata, erred in confirming the disallowance made by the ld. Assessing Officer on loss in F & O amounting to Rs.45,32,817/-which is bad in law and on facts.
2.That in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals)-13, Kolkata erred in confirming the addition made by the ld. Assessing Officer for a sum of Rs.8,88,000/- towards salary which is bad in law and on facts.
3.That in the facts and circumstances of the case, the Ld. Commissioner of the Income Tax (Appeals)-13, Kolkata erred in confirming the disallowance made by the ld. Assessing Officer on account of consultancy charges amounting to Rs.12,36,500/- which is bad in law and on facts.
4.That in the facts and circumstances of the case, the Ld. Commissioner of the Income Tax (Appeals)-13, Kolkata erred in confirming the action of the ld. Assessing Officer in not granting rebate claimed u/s 88E of the I.T. Act, 1961 amounting to Rs.12,75,452/- which is bad in law and on facts.
5.That in the facts and circumstances of the case, the appellant craves leave to add, alter, modify and/or submit further or more ground(s) of appeal either before or at any time during the hearing of the appeal.
3.The first ground raised by the assessee relates to disallowance made by the Assessing Officer on account of transactions done by assessee in Future and Option(F&O) segment, amounting to Rs.45,32,817/-
4. The brief facts apropos this issue are that the assessee has done share transaction in cash segment and F & O segment during the Assessment Year 2008-09. During the assessment proceedings, the Assessing Officer noted that the assessee had operated his transactions, in the stock exchange through three brokers, namely, K.Damani Securities Pvt. Ltd., ICICI Brokerage Services Ltd. and Sunchen Securities Pvt. Ltd. The NSE Authorities furnished information to AO, vide their letter dated 10/03/2014 separately for capital market segment and F & O Segment. The NSE provided certain client code modifications pertaining to future and option segment with M/sSunchen Securities Ltd., a broker under the client code No. NHM071 from 07-01-2008 to 25-03-2008, through whom the assessee had transacted in the NSE. Details of the transactions are as follows:-
