Provisions of section 69 not applicable on the profit from trading of speculative Transactions
In a recent judgment, ITAT has held that provisions of section 69 of the Income Tax Act, 1961 (the Act) not applicable on the profit from trading of speculative Transactions, hence higher rate of tax u/s 115BBE of the Act would not apply.
ABCAUS Case Law Citation:
ABCAUS 3935 (2024) (04) ITAT
A seizure and search operation u/s 132 of the Act was conducted in different business and residential premises of a Business Group of Companies.
During the course of search and seizure operation at the premises of the company, incriminating documents which were found and seized contained details of commodity trading in crores done by the respondent assessee. Documents so found were confronted to the brother of the assessee who admitted unaccounted income on account of commodity trading.
The assessee admitted the income as not recorded in the regular books of account and accepted the same as income from other sources and agreed to pay taxes on the same.
Accordingly, the assessee filed return of income including the said income as income from other sources being the amount disclosed during the course of search and seizure operation.
However, invoking provisions of section 69 of the Act, the Assessing Officer was of the firm belief that income has to be charged to tax u/s 69 read with section 115BBE of the Act as income was never disclosed by the assessee and would never have been disclosed had there been no search proceedings.
The Tribunal opined that provisions of section 69C of the Act do not apply as the impugned item was income and not investment. The Tribunal observed that provisions of section 115BBE of the Act would apply if the income of the assessee is either declared or assessed u/s 68/69/69A/ 69B/69C/69D of the Act. But the assessee had declared income from commodity trading, which had been accepted as such by the Assessing Officer.
The Tribunal opined that transaction reflected on the seized paper represented future contract of purchase and sale of gold and silver on various dates. Since the income had been accepted by the Assessing Officer, it can be safely presumed that the transactions recorded in the seized documents do not have any different character than that reflected on the seized paper and that is income of the assessee.
The Tribunal opined that the assessee had clearly explained the source of profit earned by him and as the source of income is identifiable, deeming provisions of section 69 cannot be applied.
Accordingly, the Tribunal held that the provisions of section 69 of the Act are not applicable on the profit from trading of speculative transactions.
As a result, the appeal of the Revenue was dismissed.
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