The ITO, Ward-6(2), Ahmedabad V. M/s. R.D.S. Investment, Ahmedabad

ITA 1305/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6134 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-05-2010
• Assessment Year: 1993-1994
• Appeal Filed On: 30-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B D BAROT
• Assessee Lawyers: D K PARIKH
• Keywords: Speculation loss; Set aside
• Section: 142(1); 251; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.1305/AHD/2007 ASSESSMENT YEAR:1993-94 - DATE OF HEARING:20.5.10 DRAFTED:1.6.10 INCOME TAX OFFICER, WARD-6(2), AHMEDABAD V/S. M/S. R.D. S INVESTMENT, 17, RUTURAJ SOCIETY, DRIVE-IN-ROAD, AHMEDABAD PAN NO. NOT FOUND (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI B.D. BAROT, DR RESPONDENT BY:- SHRI D.K. PARIKH, AR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT THE ORDE R OF COMMISSIONER OF INCOME-TAX(APPEALS)-XII, AHMEDABAD IN APPEAL NO. CI T(A)-XII/WD.6(2) /65 / 06-07 DATED 29.12.2006. THE ASSESSMENT WAS FRAMED BY ACIT (OSD) RANGE-6, AHMEDABAD U/S.144 R.W.S. 254 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 29-03-2006 FOR A SSESSMENT YEAR 1993-94. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE OF CIT(A) TO GRANT SET OFF OF SPECULATION LOSS OF RS.10,79,875/- AGAINST S PECULATION PROFIT OF RS.28,90,460/-. FOR THIS, REVENUE HAS RAISED THE GROUND NO.1 :- ITA 1305/AHD/2007 A.Y.1993-94 ITO WD-6(2) ABD V. M/S. R.D.S. INVESTMENT PAGE 2 (1) THE LD. COMMISSIONER OF INCOME TAX(A)-XII, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO GRANT SET OFF OF S PECULATION LOSS OF RS.10,79,875/- AGAINST SPECULATION PROFIT OF RS.28, 90,460/- WITHOUT APPRECIATING THAT NO EVIDENCE REGARDING EARNING OF SPECULATION PROFIT WAS EVER PRODUCED BEFORE THE AO. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME FOR ASST. YEAR 1993-94 DECLARING INCOME OF RS.480282/-. THE CASE WAS SELECTED U/S 143(2) OF THE ACT AND WAS FINALIZED ON 20.03.1995 B Y THE ACIT, CIRCLE 8(3) BY DISALLOWING THE CLAIM OF SET OFF OF SPECULATION LOS S OF RS.10,79,875/- TO THE RETURNED INCOME. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO SET ASIDE THE MATTER TO THE AO. AGAINST THE ORDER OF CI T(A), DEPARTMENT PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND VIDE ITS ORDER DATED 24.08.2004 IN ITA NO.2244/AHD/1997, UPHELD THE ORDER OF CIT(A). THE A O PASSED THE ORDER DATED 29.3.2006, IN CONSEQUENCE OF THE ABOVE ORDER OF THE TRIBUNAL. A NOTICE U/S 142(1) REQUIRING THE ASSESSEE TO SUBSTANTIATE ITS CLAIM OF SPECULATIVE PROFIT WAS ALSO SENT BUT NONE APPEARED BEFORE THE AO. THE AO THEN FINALI ZED THE ASSESSMENT AT AN INCOME OF RS.15,51,030/-. AGGRIEVED, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE BY FOLLOWING THE ORDER OF HIS PREDECESSOR. THE REVENUE IS AGGRIEVED AND HENCE IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THAT NOTICE U/S.143(2) OF THE I.T. ACT DA TED 15.03.2005 WAS ISSUED AND ALSO NOTICED U/S.142(1) OF THE ACT WAS ISSUED, WHICH REM AINS NON-COMPLIED. WE FIND FROM THE DETAILS, FILED BEFORE US AND EVEN BEFORE THE LO WER AUTHORITIES THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THESE DETAILS DURING THE COURSE OF GIVING EFFECT TO THE ORDER OF CIT(A). WE FURTHER FIND FROM THE RECORDS AND DETAILS REGARDING TRANSACTIONS IN SHARES, A NOTICE DATED 13.09.1994 WAS ISSUED BY THE ACIT, CIR.8(3), AHMEDABAD, REQUIRING THE ASSESSEE AT SR. NO.3 OF THE NOTICE TO FILE SCRIPT WISE DETAILS, IN WHICH TRANSACTIONS ARE MADE SPECIFYING QUANTITY AND PRICE . WE FIND THAT THE ASSESSEE IN COMPLIANCE TO THAT NOTICE FILED REQUIRED DETAILS SC RIPT WISE IN NUMBERS AND VALUE AS PER SR. (III) OF REPLY. IT MEANS THAT ALL THE DETAI LS REGARDING TRANSACTIONS, THE RESULT OF WHICH ARE APPEARING IN THE PROFIT & LOSS A/C. IN TH E SHAPE OF PROFIT & LOSS IN SUCH ITA 1305/AHD/2007 A.Y.1993-94 ITO WD-6(2) ABD V. M/S. R.D.S. INVESTMENT PAGE 3 TRANSACTIONS, THE A.O HAS PICKED UP ONLY ONE ITEM S HOWING LOSS OF RS.10 LACS, WHICH HAS BEEN DISCUSSED IN THE ORDER AND NO ANY OTHER IT EMS HAVE BEEN CONSIDERED. SINCE ALL THE DETAILS OF TRANSACTIONS WERE ALREADY AVAILABLE WITH THE A.O. EVEN DURING THE COURSE OF ORIGINAL ASSESSMENT, IT IS NOT FAIR O N THE PART OF THE A.O. TO SAY THAT NO RESPONSE WAS MADE BY THE ASSESSEE TO SUBSTANTIATE I TS CLAIM OF SPECULATIVE PROFITS. EVEN BEFORE US, THE ASSESSEE FILED THE COPIES FOR T HE ABOVE REFERRED LETTER DATED 13.09.1994 ISSUED BY THE ACIT, CIR.8(3), AHMEDABAD TO THE ASSESSEE AND THE COPY OF LETTER OF COMPLIANCE MADE BY THE ASSESSEE BEFORE THE A.O. FROM THE EVIDENCE FILED BY THE LD. COUNSEL FOR THE ASSESSEE, IT IS CL EAR THAT SPECULATIVE PROFIT TO THE EXTENT OF RS.28,90,460/- HAS BEEN EARNED BY THE ASS ESSEE, DURING THE RELEVANT YEAR AND SO FAR AS SPECULATIVE LOSS IS CONCERNED, THE CI T(A) IN EARLIER ORDER HAS ALREADY DISCUSSED IN DETAILED AND THE SPECULATIVE LOSS AT R S.10 LACS HAS ALREADY BEEN HELD TO BE GENUINE. THE ITAT HAS ALREADY CONCURRED WITH THE FINDINGS FOR THE CIT(A). ACCORDINGLY, WE ARE OF THE VIEW THAT THE SPECULATIV E LOSS IS ALREADY PROVED. IN SUCH CIRCUMSTANCES, WHEN THE SPECULATIVE PROFIT IS CLEAR LY ESTABLISHED, THE ASSESSEE IS ENTITLED TO GET THE SET OFF OF SPECULATIVE LOSS CLA IMED A RS.10,79,875/- DURING THE YEAR UNDER CONSIDERATION. THE CLAIM OF THE ASSESSEE HAS RIGHTLY BEEN ALLOWED BY CIT(A) AND WE CONFIRM THE SAME. EVEN OTHERWISE, THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJESH BABUBHAI DAMANIA V. CIT (2001) 251 ITR 541 (GUJ) HAS CLEARLY HELD THAT IN CASE THE DETAILS ARE AVAILABLE BEFORE ASSESSING OFFICER AND HE OVERLOOKS AND DOES NOT GIVE ANY FINDING IN REGARD TO THAT, TH E SECOND INNINGS SHOULD NOT BE ALLOWED TO HIM. THE HONBLE COURT HAS HELD AS UNDE R:- THE TRIBUNAL TOTALLY OVERLOOKED THE ASSESSMENT OF EVIDENCE DONE BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND DEALT WITH THE MATTER AS IF IT WAS ENTERTAINING AN APPEAL AGAINST THE ORDER OF THE ASS ESSING OFFICER. HERE WAS NO QUESTION OF GIVING ONE MORE INNINGS TO THE ASS ESSING OFFICER. THE APPEALS ARE NOT TO BE DECIDED FOR GIVING ONE MORE INNINGS, TO THE LOWER AUTHORITIES. IN THE APPELLATE JURISDICTION THE APPE LLATE COURT HA TO CONSIDER WHETHER THERE IS JUSTIFICATION FOR UPSETTING THE OR DER AGAINST WHICH THE APPEAL IS FILED. IN THIS CASE, WHERE THE ASSESSEE HAD REPE ATEDLY PRODUCED THE CREDITORS BEFORE THE INCOME-TAX OFFICER AND HAD FIL ED AFFIDAVITS IN SUPPORT OF HE CREDIT ENTRIES AND ALSO FILED CONFIRMATIONS AND GIV EN NAMES AND ADDRESSES OF THE CONCERNED PARTIES AS WELL AS PROVED REPAYMENT O F THE AMOUNTS BY ACCOUNT PAYEE CHEQUES AND DONE ALL THAT WAS WITHIN HIS POWER NOT PROVE THE GENUINENESS FOR THE LOANS, THE FINDING ARRIVED AT B Y THE APPELLATE AUTHORITY ON THE BASIS OF SUCH RELIABLE MATERIAL COULD NOT HAVE BEEN SO CURSORILY DEALT WITH BY THE TRIBUNAL FOR THE PURPOSE OF GIVING ONE MORE INNINGS TO THE ASSESSING ITA 1305/AHD/2007 A.Y.1993-94 ITO WD-6(2) ABD V. M/S. R.D.S. INVESTMENT PAGE 4 OFFICER. IT WAS THE DUTY OF THE TRIBUNAL TO ASCERTA IN THE REASONS WHICH WERE GIVEN BY THE COMMISSIONER OF INCOME-TAX (APPEAL S) IN WHOSE ORDER HE ORDER OF THE ASSESSING OFFICER HAD MERGED AND NOT TO BASE IS DECISION MERELY ON A BIT OF NEGLIGENCE OF HE ASSESSING OFFICER IN NO CR OSS-EXAMINING THE PARTIES WHO WERE PRODUCED BEFORE HIM FOUR TO FIVE TIMES. IN OUR OPINION, THE TRIBUNAL HAS REACHED THE CONCLUSION WHICH CANNOT REASONABLY BE REACHED BY ANY ONE, AND THERE IS NO WARRANT FOR RESORTING THE MATTER TO THE ASSESSING OFFICER ON SUCH SPECIOUS GROUNDS AS ARE GIVEN BY THE TRIBUNAL. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DI SMISS THE APPEAL OF THE REVENUE. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 04/06/2010 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SIN GH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 04/06/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-XII, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD