ITO,Ward-9(3), Kolkata, Kolkata V. M/s. Calcum Consultancy Services(P)Ltd, Kolkata

ITA 1324/KOL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0501 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 07-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 13-09-2012
• Court: TRIBUNAL
• Department Lawyers: K L KANAK
• Assessee Lawyers: S M SURANA
• Keywords: Transactions in derivatives; Speculation loss; Wrong claim; Assessment record; Futures and options; Speculative transactions
• Section: 133(6); 43(5); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM & HON BLE SHRI B.P.JAIN, AM ] I.T.A NO.1324/KOL/2012 ASSESSMENT YEAR: 2009 - 10 I.T.O., WARD - 9 (3) . VS. M/S. CALCUM CONSULTAN CY KOLKATA SERVICES PVT. LTD., KOLKATA (APPELLANT) ( RESPONDENT) (PAN: AABCC 0899 F) FOR THE APPELLANT : SHRI K.L.KANAK, SR.DR FOR THE RESPONDENT : SHRI S.M.SURANA, ADVOCATE DATE OF HEARING : 13.05 . 2015. DATE OF PRONOUNCEMENT: 09.06.2015. ORDER PER SHRI B.P.JAIN , AM : THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF LD. CIT(A) - VI II , KOLKATA DATED 21.06.2012 FOR ASSESSMENT YEAR 2009 - 10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1 . FINDING OF THE LD. CIT(A) THAT T HE CLAIM OF THE ASSESSEE OF INCURRING OF LOSS OF RS.35,02,235/ - IN FUTURES AND OPTIONS SEGMENT IS ACCEPTABLE AS SPECULATION LOSS IS WITHOUT ANY EVIDENCE, CONTRARY TO THE EVIDENCE AND THERE IS NO DIRECT NEXUS BETWEEN THE CONCLUSION OF FACT AND PRIMARY FACT UPON WHICH THAT CONCLUSION IS BASED AND AS SUCH IS PERVERSE. 2. LD.CIT(A) HAS ERRED IN DRAWING A CONCLUSION THE CLAIM OF THE ASSESSEE OF INCURRING OF THE ABOVE LOSS IS ACCEPTABLE AS SPECULATION LOSS CANNOT BE DRAWN BY ANY REASONABLE PERSON OR AUTHORITY ON THE MATERIAL AVAILABLE ON RECORD AND FACTS PLACED BEFORE IT AND AS SUCH HIS FINDING IS BAD IN LAW AND PERVERSE. 3. LD. CIT(A) HAS ERRED ON NOTING A FACT THAT NO NOTICE U/S 131 WAS ISSUED TO THE CONCERNED BROKER EDEN FINANCIAL SERVICES WHICH WAS CONSIDERED BY HIM AS MATERIAL FACT TO THE ISSUE OF LOSS OF RS.35,02,235/ - IN FUTURES AND OPTIONS SEGMENT WHILE A NOTICE U/S 133(6) WAS ACTUALLY ISSUED ON 30.11.2011 IN COURSE OF THE ASSESSMENT PROCEEDINGS WHICH WAS AVAILABLE ON ASSESSMENT RECORD WHICH HE HAS OMITTED TO ENQUIRE AND NOTE. 4.LD. CIT(A) HAS ERRONEOUSLY CONSIDERED THE ONUS WITH REFERENCE TO THE ASSESSEE S CLAIM OF LOSS IN FUTURES AND OPTIONS SEGMENT (DERIVATIVE TRANSACTIONS) AS HAVING BEEN SHIFTED TO THE DEPARTMENT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DIRECTING TO TREAT THE CLAIM OF LOSS OF RS.35,02,235/ - IN FUTURES AND OPTIONS SEGMENT AS SPECULATION LOSS. ITA NO. 1324/KOL/2012 M/S.CALCUM CONSULTANCY SERVICES PVT.L TD . A.YR. 2009 - 10 2 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY AND / OR WITHDRAW ANY GROUND (S) OF APPEAL AT THE TIME OF H EARING. 3. THE BRIEF FACTS OF THE CASE AS PER AO S ORDER AT PAGES 2 TO 6 ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE : BOGUS CLAIM OF LOSS OF RS.35,02,235.35 IN DERIVATIVE TRANSACTIONS OF SHARES (FUTURE & OPTION) : DURING THE YEAR UNDER CO NSIDERATION, THE ASSESSEE - COMPANY HAS CLAIMED THAT THEY HAVE SUFFERED LOSS OF RS.35.02 LAKHS IN DERIVATIVE TRANSACTION OF SHARES. BEFORE GOING FURTHER, IT IS BETTER TO DISCUSS, WHETHER DERIVATIVE TRANSACTIONS IS SPECULATIVE TRANSACTION OR NOT. PROVIS ION OF SECTION 43(5) OF THE I.T.ACT PROVIDES : SPECULATIVE TRANSACTIONS MEANS A TRANSACTION IN WHICH A CONTRACT FOR THE PURCHASE OR SALE OF ANY COMMODITY, INCLUDING STOCKS AND SHARES, IS PERIODICALLY OR ULTIMATELY SETTLED OTHERWISE THAN BY THE ACTUAL D ELIVERY OR TRANSFER OF THE COMMODITY OR SCRIPS. PROVIDED THAT FOR THE PURPOSE OF THIS CLAUSE (A) ------------------------------------- ; OR (B) ------------------------------------ ; OR (C) -------------------------------------- ; OR (D) AN ELIGIBLE TRANSACTI ON IN RESPECT OF TRADING IN DERIVATIVES REFERRED TO IN CLAUSE (AC)] OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1956) CARRIED OUT IN A RECOGNIZED STOCK EXCHANGES; SHALL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION. IT EMERGES F ROM THE ABOVE PROVISIONS THAT DERIVATIVE TRANSACTIONS SHALL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION IF IT IS CARRIED OUT IN A RECOGNISED STOCK EXCHANGE . 3.01. ON BEING ASKED, THE ASSESSEE PRODUCED CONTRACT NOTES OF DERIVATIVES TRANSACTIONS. IT IS NOTED FROM THE DETAILS AVAILABLE ON RECORD THAT THE ASSESSE HAS SHOWN INCOME MAINLY FROM INTEREST AMOUNTING TO RS.96,50,666/ - . IT IS FURTHER NOTED THAT THE ASSESSEE HAS EARNED SUCH INCOME SYSTEMATICALLY RIGHT FROM THE MONTH OF APRIL, 2008 AND KNOWING FULLY THAT THEY WERE GOING TO EARN SUBSTANTIAL INTEREST INCOME DURING THE ENTIRE YEAR. WHILE VERIFYING THE CLAIM OF LOSS ON ACCOUNT OF DERIVATIVE, IT IS NOTED THAT THE ASSESSEE HAS ENTERED INTO SUCH TRANSACTIONS ONLY TOWARDS THE END OF THE YEAR I.E. IN TH E MONTH OF JANUARY, 2009. THE Q UESTION EMERGES IN MIND THAT WHY THE ASSESSEE DECIDED TO GO INTO SPECULATIVE TRANSACTION AT END OF YEAR AND WITH A BROKER OF MUMBAI I.E. M/S. EDEN FINANCIAL SERVICES, ALTHOUGH THE ASSESEE - COMPANY WAS HAVING ACCOUNT WITH A BRO KER OF KOLKATA I.E. M/S. ASHIKA STOCK BROKING LTD. THIS IS ALSO NOTED THAT THE ASSESSEE HAS ALSO ENSURED TO BOOK SUCH LOSS WHICH RESULTED IN MINIMUM TAX LIABILITY. HENCE, CIRCUMSTANCES POINTING TOWARDS THE FACT THAT WHAT IS APPARENT IN THE CASE IS NOT THE REAL AND THERE IS A PRE - DETERMINED OR ARRANGED AFFAIR OF THE ASSESSEE TO ARRIVE AT A DESIRED TOTAL INCOME, IS SUSPECTED. THEREFORE, IT IS NECESSARY TO EXAMINE WHETHER THE ASSESSEE HAS INDEED DONE ANY TRANSACTIONS WITH M/S. EDEN FINANCIAL SERVICES. WITH THI S IMPRESSION, A NOTICE U/S 133(6) OF THE I.T.ACT WAS ISSUED TO THE NATIONAL STOCK EXCHANGE OF INDIA LTD. I.E. IN SHORT NSE , WHERE THE ALLEGED BROKER OF THE ASSESSEE IS CLAIMED TO BE A MEMBER OF THE STOCK EXCHANGE. BEFORE GOING FURTHER, IT MUST BE POIN TED OUT HERE THAT EVERY TRANSACTION DONE BY THE MEMBER (BROKER) OR ITS CLIENTS ARE RECORDED IN DATABASE OF EXCHANGE IN THE NAME OF THE PARTY/CLIENT WHO HAS DONE THE TRANSACTIONS (IF IT IS DONE BY THE BROKER, IT WILL RECORDED IN THE NAME OF BROKER AND I F IT IS DONE BY THE BROKER S CLIENT, IT WILL RECORDED IN THE NAME OF CLIENT). IT MUST ALSO BE POINTED OUT THAT EVERY MEMBER (BROKER) OF EXCHANGE ITA NO. 1324/KOL/2012 M/S.CALCUM CONSULTANCY SERVICES PVT.L TD . A.YR. 2009 - 10 3 HAVE TO ALLOT CLIENT CODE FOR ITS CLIENTS AFTER GETTING KYC (KNOW YOUR CLIENT) FROM CLIENTS. 3.01. IN RESPON SE TO THE SAID NOTICE, THE NSC HAS INFORMED AS UNDER : AS PER RECORDS AVAILABLE WITH THE EXCHANGE, EDEN FINANCIAL SERVICES IS NEITHER A REGISTERED TRADING MEMBER NOR A SUB - BROKER AFFILIATED TO ANY REGISTERED TRADING MEMBER IN THE FUTURES AND OPTIONS SEGMENT OF THE EXCHANGE. PLEASE NOTE THAT NO TRADES ARE FOUND TO BE EXECUTED FOR THE COMBINATION OF MEMBER AND CLIENT M/S.CALCUM CONSULTANCY SERVICES PVT. LTD. DURING THE PERIOD 01 ST APRIL, 2008 TO 31 ST MARCH, 2009 IN THE FUTURES & OPTIO NS SEGMENT. IT IS CLEAR FROM ABOVE FACT THAT THE ASSESSEE - COMPANY HAS NOT DONE ANY TRANSACTION. ON THIS ISSUE, AN EXPLANATION WAS CALLED FOR, VIDE OFFICE LETTER NO.484 DATED 28/10/2011, AS TO WHY THE AFOREMENTIONED LOSS SHOULD NOT BE TREATED AS BOGUS LO SS AND SHOULD NOT BE DISALLOWED AND THE ASSESSEE WAS REQUESTED TO SUBMIT ITS EXPLANATION BY 08.11.2011. 3.02. IN RESPONSE TO THE ABOVE QUERY REGARDING DERIVATIVES TRADING LOSS AND IT PROPOSED TREATMENT AS BOGUS LOSS IN TERMS OF INFORMATION RECEIVED FRO M NSE THE ASSESSEE FILED THE SUBMISSION AND RELEVANT PORTION IS STATED AS UNDER : THE TRANSACTIONS WERE ENTERED THROUGH M/S. EDEN FINANCIAL SERVICES FOR WHICH VALID CONTRACTS NOTES WERE ISSUED BY THE SAID PARTY MENTIONING THEREIN THAT THEY WERE MEMBE R OF NATIONAL STOCK EXCHANGE OF INDIA LTD. NOT ONLY THAT THE CONTRACT NUMBERS WERE DULY MENTIONED BY THEM IN CONFIRMATION OF TRANSACTION ISSUED BY THEM ALONG WITH THE REPORTING NO. TO THE NSE. THE SAID PARTY ALSO HAD PAN WHICH IS ALSO MENTIONED ON THE CON TRACT NOTES ITSELF. THE ENTIRE PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUES. THEREFORE, AS FAR AS WE ARE CONCERNED, WE HAVE ENTERED INTO A GENUINE TRANSACTIONS THROUGH THE SAID WITH REASONABLE BELIEVE THAT THE BROKER IS A MEMBER OF THE NATIONAL STOCK EXCHANGE OF INDIA LTD. NOT ONLY THAT ON THE TRANSACTION THE APPLICABLE TAXES WERE ALSO LEVIED AND PAID. AS FAR AS WE ARE CONCERNED, THE LOSS WAS GENUINE LOSS. THE TRANSACTIONS WERE ENTERED INTO AT THE PREVAILING MARKET RATE ON THE RELEVANT DATES & TIME. THE LOSS W AS, THEREFORE, NOT A BOGUS LOSS. EVEN IF FOR THE ARGUMENT SAKE IT IS PRESUMED THAT SAID PARTY IS ACTED FRAUDULENTLY IN REPRESENTING THAT THEY WERE THE MEMBERS OF NSE, THE LOSS BEING GENUINE LOSS BECOMES A SPECULATION LOSS AND NOT A BOGUS LOSS. HOWEVER, WE AGAIN REITERATE AND REQUEST YOU TO KINDLY TAKE NECESSARY STEPS AS PROVIDED UNDER THE LAW TO EXAMINE THE PARTY AND ALSO ALLOW US OPPORTUNITY TO CROSS EXAMINE THEM TO PROVE THAT AS FAR AS WE ARE CONCERNED WE HAVE GENUINELY ENTERED INTO THE TRANSACTION WITH T HE PARTY AND THE LOSS CLAIMED BY US WAS NOT A BOGUS LOSS. 3.03. THE SUBMISSION OF THE ASSESSEE HAS BEEN CONSIDERED CAREFULLY IN THE LIGHT OF INFORMATION AVAILABLE ON RECORD AND SURROUNDING CIRCUMSTANCES INVOLVED IN THE CASE. THE QUESTION FOR CONSIDERAT ION CENTERS AROUND GENUINENESS OF TRANSACTION. IN THE INSTANT CASE, IT HAS BEEN ESTABLISHED FROM THE FACT RECEIVED FROM NATIONAL STOCK EXCHANGE OF INDIA LTD. THAT THE ASSESSEE - COMPANY DID NOT CARRY OUT ANY DERIVATIVE TRANSACTIONS WITH RECOGNISED STOCK EXCH ANGE AND FURNISHED BOGUS CONTRACT NOTES BEFORE THE UNDERSIGNED. HENCE, IT IS FOUND THAT WHAT IS APPARENT IS NOT THE REAL IN THIS CASE. AS FAR AS ASSESSEE S CONTENTION THAT THEY HAVE ENTERED INTO A GENUINE TRANSACTIONS THROUGH THE SAID BROKER WITH REASONABL E BELIEVE THAT THE BROKER IS A MEMBER OF THE NATIONAL STOCK EXCHANGE OF INDIA LTD. IN THIS REGARD, THERE IS NO NEED TO FURTHER DISCUSSION WHEN IT IS ESTABLISHED THAT NO TRANSACTION WAS CARRIED OUT BY THE ASSESSEE COMPANY THROUGH ALLEGED BROKER. AS FAR AS R EASONABLE BELIEVE OF THE ASSESSEE IN RESPECT OF ALLEGED BROKER IS CONCERNED, THE UNDERSIGNED COULD NOT ABLE FIND THE ANSWER OF THE FOLLOWING QUESTIONS. ITA NO. 1324/KOL/2012 M/S.CALCUM CONSULTANCY SERVICES PVT.L TD . A.YR. 2009 - 10 4 IT IS GENERAL PRACTICE THAT THE B ROKERS DO NOT EXECUTE ORDER WITHOUT TAKING DEPOSIT OF MARGIN MONEY WHIC H MAY VARY FROM 10% TO 20% OF VALUE OF THE TRANSACTION. ON GOING THROUGH THE CONTRACT NOTE SUBMITTED BY THE ASSESSEE, IT IS FOUND FROM THE CONTRACT NOTE OF SINGLE DAY I.E. ON 01.01.2009 THAT THE ASSESSEE COMPANY HAS BOUGHT DERIVATIVE TRANSACTIONS OF RS.73. 29 LACS AND SOLD THE SAME AT RS.71.55 LACS WITHOUT PAYING ANY MARGIN MONEY TO THE ALLEGED BROKER WHICH IS UNTHINKABLE. THE STORY DOES NOT END HERE, THE ALLEGED BROKER OF THE ASSESSEE DID NOT ASK FOR ANY MONEY FOR THE LOSSES SUFFERED BY THE ASSESSE COMPANY IN ALMOST EVERY TRANSACTION AND CONTINUOUSLY EXECUTING ORDERS FOR THE ASSESSEE COMPANY. THE ASSESSEE COMPANY DID NOT PAY A SINGLE RUPEE DURING THE FINANCIAL YEAR, BUT PAID ON 23.09.2009 I.E. AFTER EIGHT MONTHS FROM THE TRANSACTIONS OCCURRED. THE BROKER IS EXECUTING ORDERS OF SUCH A HIGH VALUE TRANSACTION WITHOUT TAKING MARGIN MONEY AND THE BROKER IS AGAIN EXECUTING FURTHER ORDERS WITHOUT TAKING MONIES OF THE LOSSES SUFFERED BY THE CLIENT IN EARLIER TRANSACTION, THIS IS NOTHING BUT A STORY SCRIPTED BY THE AS SESSEE COMPANY WHICH IS VERY HARD TO DIGEST. THE NEXT QUESTION ARISEN THAT HOW DID THE ASSESSEE PLACED ORDERS TO BROKER OF MUMBAI. IN THIS REGARD, THE ASSESSEE HAS BEEN REQUESTED TO PRODUCE DOCUMENTARY EVIDENCES IN SUPPORT OF PLACING OF ORDERS WITH THE ALL EGED BROKER OF MUMBAI AND THEY HAVE ALSO REQUESTED TO PRODUCE BROKER BEFORE THE UNDERSIGNED, BUT THE ASSESSEE COULD NOT ABLE TO PRODUCE ANY EVIDENCE AS WELL AS BROKER. IF THE ASSESSEE HAD PLACED THEIR ORDERS OVER TELEPHONE, THEY CAN EASILY TAKE TELEPHONIC CONVERSATION DETAILS FROM TELECOM COMPANY AND PRODUCE THE SAME DETAILS/DOCUMENTS, IF AT ALL PLACED ORDER. IN VIEW OF THE ABOVE OBSERVATIONS, THE UNDERSIGNED IS CONSTRAINED TO CONCLUDE THAT THE ASSESSEE S ASSERTION THAT THE ASSESEE HAVE ENTERED INTO A GENUI NE TRANSACTIONS THROUGH THE SAID BROKER WITH REASONABLE BELIEVE THAT THE BROKER IS A MEMBER OF THE NATIONAL STOCK EXCHANGE OF INDIA LTD., IS NOTHING BUT A STORY, WHICH DESERVES TO BE REJECTED. IT IS CRYSTAL CLEAR FROM THE ABOVE FACTS THAT THE CONTRACT NOTE S WERE AN AFTERTHOUGHT AND THIS ONLY SHOWED THAT THE ASSESSEE IN CONNIVANCE WITH M/S. EDEN FINANCIAL SERVICES HAD PROCURED FORGED CONTRACT NOTES BY RESORTING TO THIS DUBIOUS AND UNHOLY MEANS TO SHOW LOSSES TO LOWER ITS INCOME & DEFRAUD THE EXCHEQUER. OBSER VATION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS SUMATI DAYAL 214 ITR 801 (SC) IN THIS CONTEXT MAY BE RELIED UPON IN WHICH IT IS STATED THAT THE EACH AND EVERY MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HUMAN PROBABILITIES. ANY REASONABLE PERSON CONS IDERING THE SURROUNDING CIRCUMSTANCES IN THE CASE AND APPLYING THE TEST OF HUMAN PROBABILITIES WILL CONCLUDE THAT THE ASSESSEE ARRANGED THESE LOSSES WITH THE HELP OF BROKER TO MINIMIZE ITS TAX LIABILITY WHICH IS OTHERWISE PAYABLE BY THE ASSESSEE COMPANY LE GITIMATELY AND THE CLAIM OF THE ASSESSEE REGARDING LOSSES IN DERIVATIVE TRADING IS NOT GENUINE ALTHOUGH IN PAPER IT APPEARS SO. DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE 82 ITR 540 MAY ALSO BE RELIED UPON IN WHICH THEIR LOR DSHIP HAS OBSERVED AS IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PR ESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS. RESPECTFULLY FOLLOWING THE ABOVE OBSERVATIONS OF THE HON BLE COURT, IT IS FOUND IN THE PRESENT CASE THAT THE CONTRACT NOTES WHICH WERE ISSUED BY THE BROKER IS BOGUS OR FORGED AND THUS NOT GENUINE AS DISCUSSED ABOVE. HEN CE, IT IS HELD THAT THE ASSESSEE HAS ARRANGED THESE LOSSES WITH CLEAR INTENTION OF ILLEGALLY SETTING OFF ITS TAX BURDEN WHICH CANNOT BE ITA NO. 1324/KOL/2012 M/S.CALCUM CONSULTANCY SERVICES PVT.L TD . A.YR. 2009 - 10 5 ALLOWED. SO, THE CLAIM OF THE ASSESSEE REGARDING LOSS ON ACCOUNT OF DERIVATIVE TRADING IS DISALLOWED. 3.1. THE LD. CI T(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ACTION OF AO IN NOT TREATING THE LOSS AS SPECULATIVE LOSS BUT DIRECTED THE AO TO TR EAT THE SAME AS SPECULATIVE . AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US BY WAY OF VARIOUS GROUNDS REPRODUCED HEREIN ABOVE. THE LD. DR, AT THE OUTSET, SUBMITTED A REPLY FROM EDEN FINAN CIAL SERVICES DATED 26.12.2011. AND ARGUED THAT THE ASSESSMENT WAS MADE ON 20 TH DECEMBER, 2011 AND THIS LETTER WAS NOT MADE AVAILABLE TO THE LD. CIT(A). IT IS A LETTER WH ICH GOES TO THE ROOT OF THE MATTER IN WHICH M/S. EDEN FINANCIAL SERVICES HAS DENIED OF HAVING ENTERED INTO ANY BUSINESS TRANSACTIONS WITH THE ASSESSEE OR HAVING ANY CONTRACT NOTES OF FUTURE & OPTION SEGMENT ETC. IT WAS ALSO ARGUED BY THE LD. DR THAT NO NO TICE U/S 131 OF THE ACT HAS BEEN ISSUED TO THE CONCERNED BROKER M/S.EDEN FINANCIAL SERVICES BY THE LD. CIT(A). HAD IT BEEN DONE , THE POSITION WOULD HAVE BEEN CLEAR THAT THE BOGUS CONTRACT NOTES ARE PRODUCED BY THE ASSESSEE AND WHAT IS APPARENT IS NOT REAL IN THE PRESENT CASE. ACCORDINGLY THE LD. DR PRAYED TO CONFIRM THE ORDER OF AO. HOWEVER, HE PRAYED TO SEND THE MATTER BACK TO THE FILE OF AO SO THAT THE NOTICE U/S 131 OF THE ACT CAN BE ISSUED TO THE CONCERNED BROKER M/S.EDEN FINANCIAL SERVICES, WHO HAS DE NIED OF ANY TRANSACTION OR CONTRACT NOTES HAVING BEEN ISSUED TO THE ASSESSEE VIDE LETTER DATED 17 TH DECEMBER, 2011 RECEIVED IN THE DEPARTMENT ON 26.12.2011. 4. THE LD. COUNSEL FOR THE ASSESSEE SHRI S.M.SURANA, ADVOCATE, ON THE OTHER HAND, STRAIGHTAWAY AG REED TO THE PROPOSITION ARGUED BY THE LD. DR TO SEND THE MATTER TO THE FILE OF AO AND EXAMINE THE ISSUE DENOVO. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACT IN THE PRESENT CASE ARE THAT NOTICE U/S 133(6) OF THE ACT WAS ISSUED TO NATIONAL STOCK EXCHANGE (NSE) WHICH IS REPLIED AS UNDER : - AS PER RECORDS AVAILABLE WITH THE EXCHANGE, EDEN FINANCIAL SERVICES IS NEITHER A REGISTERED TRADING MEMBER NOR A SUB - BROKER AFFILIATED TO ANY REGISTERED TRADING MEMBER IN T HE FUTURES AND OPTIONS SEGMENT OF THE EXCHANGE. PLEASE NOTE THAT NO TRADES ARE FOUND TO BE EXECUTED FOR THE COMBINATION OF MEMBER AND CLIENT M/S.CALCUM CONSULTANCY SERVICES PVT. LTD. DURING THE PERIOD 01 ST APRIL, 2008 TO 31 ST MARCH, 2009 IN THE FUTURES & OPTIONS SEGMENT. ITA NO. 1324/KOL/2012 M/S.CALCUM CONSULTANCY SERVICES PVT.L TD . A.YR. 2009 - 10 6 5.1. THE SAID REPLY IS AVAILABLE AT PAGE 3 OF THE AO S ORDER. IT IS ALSO A FACT THAT M/S.EDEN FINANCIAL SERVICES , SECOND BROKER HAS REPLIED TO THE LETTER OF THE DEPARTMENT ISSUED U/S 133(6) WHICH IS DATED 17 TH DECEMBE R, 2011 RECEIVED IN THE DEPARTMENT ON 26 TH DECEMBER, 2011. FOR THE SAKE OF CONVENIENCE THE SAME IS REPRODUCED HEREIN BELOW : - TO DATE: 17 TH DEC., 2011 THE INCOME TAX OFFICER, WARD - 9(3), KOLKATA, P - 7, CHOWRINGHEE SQUARE, AYKAR BHAVAN, 5 TH FLR., KO LKATA 700096. DEAR SIR, REF : YOUR LETTER DATED 30/11/2011 VIDE REF NO.IT/W - 9(3)/ SCRUTINY 11 - 12/NOTICE U/S 133(6) SUB : WRITTEN SUBMISSION WITH REFERENCE TO YOUR LETTER WITH REFERENCE TO ABOVE SUBJECT I WOULD LIKE TO STATE AS UNDER : 1 . I HAVE N EVER ENTERED INTO ANY BUSINESS TRANSACTION WITH M/S. CALCUM CONSULTANCY SERVICES PVT. LTD. DURING THE PERIOD 2008 - 2009. 2 . I HAVE NEVER ISSUED ANY CONTRACT NOTES OF FUTURE & OPTION SEGMENT OR CASH SEGMENT TO CALCUM CONSULTANCY SERVICES PVT. LTD. DURING FINANC IAL YEAR 2008 - 2009. THUS QUESTION OF ISSUING TAKE CONTRACT NOTES FROM MY SIDE DOESN T ARISE. 3 . IN ABSENCE OF PROPER INFORMATION REGARDING RECEIPT OF CHEQUES, I DENY THE SAME. I HOPE THIS INFORMATION WOULD BE SUFFICIENT. I AM ENSURING YOU MY FULL CO - OPERATION IN THIS MATTER. THANKING YOU, YOURS FAITHFULLY FOR EDEN FINANCIAL SERVICES SD/ - PROPRIETOR (VIJAY UDANI) 5.2. THIS LETT ER IN FACT WAS PLACED ON RECORD DURING THE COURSE OF HEARING BEFORE US AND WHICH WAS NEVER REBUTTED TO THE ASSESSEE. THE CLAIM OF THE A O IS THAT THE ASSESSEE HAS NEVER ENTERED INTO ANY TRANSACTIONS WITH BROKER M/S.EDEN FINANCIAL SERVICES AND THE CONTRACT NOTES PRODUCED AND PLACED ON RECORD ARE BOGUS AND THIS HAS BEEN SAID IN THE LETTER BY M/S. EDEN FINANCIAL SERVICES DATED 17 TH DECEMBER, 2011 (SUPRA) WHICH IN FACT HAS NOT BEEN REBUTTED AS MENTIONED HEREIN ABOVE. THE ASSESSEE HAS BEEN CONTENDING THAT THE AO FAILED TO ISSUE NOTICE U/S 131 TO M/S. EDEN FINANCIAL SERVICES. THE SAME HAS NOT BEEN DONE BUT THE AO HAS ISSUED A LETTER U/S 133(6) OF THE ACT WHICH HAS BEEN REPLIED THOUGH RECEIVED AFTER THE COMPLETION OF THE ASSESSMENT WHICH HAS ITA NO. 1324/KOL/2012 M/S.CALCUM CONSULTANCY SERVICES PVT.L TD . A.YR. 2009 - 10 7 BEEN REPRODUCED HEREIN ABOVE. IT WILL BE IN THE INTEREST OF JUSTICE IF THE MATTER IS SET ASIDE TO THE FILE OF AO, WHO AFTER EXAMINING THE ISSUE IN DETAIL AND R EBUTTING THE LETTER DATED 17 TH DECEMBER, 2011 FROM M/S. EDEN FINANCIAL S ERVICES AS REPRODUCED HEREI N ABOVE TO THE ASSESSEE AND COMES TO A CONCLUSION WHETHER THE TRANSACTIONS IN FACT IS BOGUS OR NOT. IN FACT THE LD. CIT(A) S DECISION TO HOLD THE TRANSACTION AS SPECULATIVE LOSS IS WITHOUT ANY BASIS AND THEREFORE AS HELD HEREIN ABOVE THE MATTER IS SET ASIDE TO THE FILE OF AO, WHO WILL DECIDE THE ISSUE DE NOVO IN VIEW OF OUR FINDINGS HEREIN ABOVE. ALL THE GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDE R PRONOUNCED IN THE COURT ON 0 9.06.2015. SD/ - SD/ - [ MAHAVIR SINGH ] [ B.P.JAIN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 09.06.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . M/S. CALCUM CONSULTANCY SERVICES PVT.LTD., 214/216, J.L.BAJAJ STREET, 5 TH FLOOR, KOLKATA - 700007. 2 I.T.O., WARD - 9(3 ), KOLKATA 3 . CIT(A) - VI II , KOLKATA 4. CIT - KOLKATA. 5. CIT - DR, KOLKA TA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES