INCOME TAX ACT, 1961

Section 143(3)

Assessment - Addition to income - AO made estimated addition on account of payment made to brokers -

AIR information available on record showed that assessee had made share and commodity transactions with Multi-Commodity Exchange amounting to Rs. 107 crores during assessment year under consideration and no return was filed. Accordingly, AO reopened assessment and made trading addition. Assessee's case was that no exact amount was specified in the reasons for escapement of income. No bank account or any tangible material was brought for recording reasons for reopening of assessment and no prior enquiry was made under section 133(6) or section 142 prior to recording the reasons and since no amount was quantified, therefore, it could not be unexplained investment made by assessee. Held: AO without any justification and without bringing any material on record as to which broker to whom assessee had given margin money for trading, made addition. When AO did not know as to who was the broker to whom alleged amount was given, AO was not justified in making estimate based on general information that assessee had given impugned amount to the broker for transaction in MCX. Since it is an admitted case that assessee suffered loss in MCX transactions, hence, there was no justification to make estimated addition.

REFERRED :

FAVOUR : In assessees favour.

A.Y. : 2011-12

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