Darshanaben Rajeshkumar Thakkar, Ahmedabad V. The ITO, Ward-6(1)(2)., Ahmedabad

ITA 1477/AHD/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0785 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-12-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 15-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K GOYAL
• Assessee Lawyers: AMAN SHAH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Opportunity of being heard; Principle of natural justice; Transactions in derivatives; Cost of acquisition; Speculative transactions; Set aside
• Section: 50C; 142(1); 133(6); 143(1); 143(2); 73; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 1477/AHD/2017 (ASSESSMENT YEAR: 2013-14) DARSHANABEN RAJESHKUMAR THAKKAR C/O KETAN H. SHAH, ADVOCATE 512, TIMES SQUARE-I, OPP. RAMBAUG BUNGALOW, THALTEJ, AHMEDABAD V/S INCOME TAX OFFICER, WARD- 6(1)(2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ADDPT 3112A APPELLANT BY : SHRI KETAN SHAH & AMAN SHA H, AR RESPONDENT BY : SHRI N.K. GOYAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 03 -12-201 9 DATE OF PRONOUNCEMENT : 12 -12-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-6, AHMEDABAD DATED 30.01.2017 PERTAINING TO A.Y. 2013-14 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 1477 /AHD/2017 . A.Y. 2013-14 2 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS. 5,89,868/- TOWARDS UNDERSTATEMENT OF CAPITAL GAIN I NCOME U/S 50C OF THE I. T. ACT BY TAKING RS. 42,89,868/-AS SALE CONSIDERATION INST EAD OF RS. 40,00,000/- OF WHICH SALE DEED HAS BEEN EXECUTED, DISALLOWING COST OF IM PROVEMENT OF RS. 1,50,000/- AND TRANSFER EXPENSE OF RS. 1,50,000/-. THE ADDITIO N IMPOSED BY THE LEARNED ITO DESERVES TO BE DELETED. THE SAME TO BE DELETED NOW. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS. 21,01,5007- INCURRED ON TRADING BUSINESS OF SEE DS GRAIN (GHANA) & INITIATED PENALTY PROCEEDINGS U/S 271(L)(C). THE DISALLOWANCE MADE BY THE LEARNED ITO DESERVES TO BE DELETED. THE SAME TO BE DELETED NOW. 3. THE LEARNED ITO ASKED FOR THE DIRECTIONS FROM THE JCIT U/S 144A AND THE DIRECTIONS WERE GIVEN WITHOUT GIVING THE APPELLANT OPPORTUNITY OF BEING HEARD. THEREFORE, APPLICATION U/S 144A IS ITSELF VOID AND THEREFORE, ADDITION MAY PLEASE BE DELETED. 4. THE LEARNED ITO COLLECTED VARIOUS MATERIALS A T THE BACK OF THE APPELLANT AND USED THE SAME IN FRAMING THE ASSESSMENT ORDER WITHO UT CONFRONTING THE SAME TO THE APPELLANT AND WITHOUT GIVING OPPORTUNITY TO THE APPELLANT TO EXPLAIN THE SAME. THEREFORE, ADDITION MADE IS IN CONTRAVENTION OF RULE OF NATURAL JUSTICE AND LIABLE TO BE QUASHED. 5. THE ORDER PASSE BY THE LEARNED ITO IS ILLEGAL , INVALID AND BAD IN LAW AND ILLEGAL AND THEREFORE, SAME SHOULD BE QUASHED. 6. THE APPELLANT CRAVES LEAVE TO ADD/DELETE/ALTE R AND/OR AMEND ANY OF GROUNDS AS AFORESAID AS AND WHEN NECESSARY. 2. THIS APPEAL IS DELAYED BY 58 DAYS. AND IN SUPPORT O F ITS CONTENTION, ASSESSEE HAS FILED AN APPLICATION SUPPORTED BY AN AFFIDAVIT. WE ARE CONVINCED WITH THE PLEA OF THE ASSESSEE AND CONDONE THE DELAY AND PROC EED WITH THE APPEAL. 3. FACTS OF THE CASE ARE AS EMANATED FROM THE ORDER OF THE LD. CIT(A): '4.1. ADDITION U/S. 50 C OF THE I T ACT: DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SOLD AN IMMOVABLE PROPERTY AT 222, OLD SRV. NO.164, VILLAGE KHODIYAR, TALUKA DASCROI, AHMEDABAD. ON THE SALE OF THIS PROPERTY, THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAIN AMOUNTING TO RS.2 4,99,704/- IN HIS RETURN OF INCOME FILED FOR A.Y.2013-14. 4.2. ON VERIFICATION OF COMPUTATION OF INCOME ANNEX ED WITH THE RETURN OF INCOME FILED BY THE ASSESSEE, IT IS FOUND THAT WHILE COMPU TING CAPITAL GAIN ON SALE OF THE AFORESAID PROPERTY, THE ASSESSEE HAD TAKEN FULL VAL UE OF CONSIDERATION OF THE PROPERTY AT RS.40,00,000/-. HOWEVER, AS PER INFORMA TION RECEIVED FROM THE SUB- REGISTRAR AND ALSO FROM STAMP DUTY PAID AS PER SALE DEED, THE MARKET VALUE OF THE ITA NO. 1477 /AHD/2017 . A.Y. 2013-14 3 AFORESAID PROPERTY ADOPTED BY THE STAMP VALUATION A UTHORITIES IS FOUND TO BE AT RS.42,89,868/-. 4.3. SINCE THE CONSIDERATION DECLARED TO BE RECEIVE D BY THE ASSESSEE AT RS.40,00,000/- ON TRANSFER OF THE AFORESAID HOUSE P ROPERTY IS LESS THAN THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITIES AT RS. 42,89,868/-FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF THE TRANSFER, S ECTION 50C IS DULY APPLICABLE IN THE ASSESSEE'S CASE AND THUS THE VALUE SO ASSESS ED BY STAMP VALUATION AUTHORITIES RS. 42,89,868/- IS DEEMED TO BE FULL VA LUE OF CONSIDERATION OF THE CAPITAL ASSET FOR TRANSFER. ACCORDINGLY, VIDE LETTE R DATED 18.01.2016, THE ASSESSEE WAS REQUESTED TO SHOW CAUSE AS TO WHY AN ADDITION S HOULD NOT BE MADE IN ASSESSEE'S TOTAL INCOME ON ACCOUNT OF CAPITAL GAIN U/S.50C OF THE INCOME TAX ACT TAKING FULL VALUE OF CONSIDERATION AT RS. 42,89,868 /- AS AGAINST RS.40,00,000/- DECLARED BY THE ASSESSEE. 4.4 VIDE HIS REPLY DATED 15.02.2016, IN PARA (1), THE ASSESSEE SUBMITTED AS UNDER: 'IT IS MENTIONED THAT STAMP VALUATION AUTHORITIES HA VE VALUED THE PROPERTY SOLD BY THE ASSESSEE AT RUPEES 428986S/-. IT IS ALSO MEN TIONED THAT THE ASSESSEE HAS DECLARED SALE CONSIDERATION AT RS. 40,00,000/-. IN THAT CONNECTION YOU HAVE PROPOSED ADDITION U/S 50C. YOU HAVE ALSO SUBMITTED THE COPY OF THE CALCULATION SHEET SUBMITTED BY THE SUB REGISTRAR. IN THAT CONNE CTION WE WOULD ALSO LIKE TO SUBMIT THE JANTRI VALUE CALCULATION ISSUED BY THE S UPRETENDANT OF STAMP, GANDHINAGAR, GUJARAT IN WHICH THE RATES OF JANTRI G IVEN HAS DECIDED ON 18/04/2011 IS MENTIONED. AS PER THE SHEET THE RATE FOR IRRIGATED AGRICULTURE LAND IS 1225 PER SEQ. MTR., WHILE THE RATE GIVEN IN YOU? SHEET IS 1413 WHICH IS FOR LAND WITH CONSTRUCTION (COMPOSITE) THE ASSESSEE HAS SOLD ONLY LAND AND THERE IS NO CONSTRUCTION THERE ON SO THE COMPOSITE RATE CANNOT BE APPLIED AND THE RATE FOR LAND WITHOUT CONSTRUCTION CAN ONLY BE APPLIED. IT I S FURTHER SUBMITTED THE NOWHERE IN THE SALE DEED THERE IS ANY REFERENCE OF THE CONSTRUCTION OF THE SAID LAND. SO THE RATE FOR IRRIGATED AGRICULTURE LAND WI THOUT CONSTRUCTION HAS TO BE APPLIED. IN THAT CASE THERE, WILL NOT BE ANY ADDITI ON U/S 50C. WE ALSO REQUEST YOU TO CALL FOR CALCULATION SHEET FROM THE REGISTRAR WI TH RATE FOR IRRIGATED AGRICULTURE LAND WITHOUT CONSTRUCTION.' 4.5 THE REPLY OF THE ASSESSEE IS CONSIDERED BUT NOT FOUND SATISFACTORY. AS PER THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT' WHE RE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VA LUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED [ASSESSABLE] SHALL, FOR THE PURPOSE OF SECTION 45, BE DEEMED TO BE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER.' THE ASSESSEE PAID STAMP DUTY AS PER THE VALUATION MADE BY THE STAMP V ALUATION AUTHORITIES AT .RS.42,89,868/- AND NO OBJECTION WAS MADE AT THE TI ME OF PAYING STAMP DUTY AT HIGHER AMOUNT WHILE EXECUTION OF SALE DEED. ITA NO. 1477 /AHD/2017 . A.Y. 2013-14 4 IN VIEW OF THE ABOVE, FULL VALUE OF CONSIDERATION O F THE CAPITAL ASSET SOLD BY THE ASSESSEE IS TAKEN AT RS. 42,89,868/- U/S50C OF THE INCOME TAX ACT. 5. DISALLOWANCE OF COST OF IMPROVEMENT: IN COMPUTATION OF SHORT TERM CAPITAL GAIN AS SUBMIT TED WITH RETURN, THE ASSESSEE HAD CLAIMED COST OF IMPROVEMENT OF RS.1,50,000/- TO WARDS PAYMENT OF MATI- PURAN WORK (SOIL WORK). HOWEVER, NO EVIDENCE IN SUP PORT OF THIS CLAIM WAS SUBMITTED FROM ASSESSEE EXCEPT Z SELF MADE VOUCHER. THEREFORE, VIDE LETTER DATED 18.01.2016, THE ASSESSEE WAS REQUESTED TO SHOW CAUS E AS TO WHY HER CLAIM OF COST OF IMPROVEMENT SHOULD NOT BE DISCARDED AND ADD ITION OF RS. 1,50,000/- SHOULD NOT BE MADE ON THIS ACCOUNT. THE ASSESSEE VI DE REPLY DATED SUBMITTED AS UNDER: 'THE OSSESSEE HAS ALSO PAID RS. 1,50,0007- /OR MOT/P URON (SOIL WORK). WE HAVE SUBMITTED THE VOUCHER GIVING ALL THE DETAILS OF THE PAYEE. TO FURTHER SUPPORT OUR CASE AND TO PROVE WITH THE GENUINE LIST WE ARE SUBM ITTING AFFIDAVIT FROM THE PARTY. WE REQUEST YOU TO ALLOW THE CLAIM OF IMPROVE MENT AND NOT TO MAKE ADDITION FOR THE SAME.' 5.1. THE REPLY OF THE OSSESSEE IS CONSIDERED BUT NO T FOUND PLAUSIBLE. THE AFFIDAVIT OFSHRI AMRUTBHAI H VANZARA SUBMITTED BY THE OSSESSE E HAS NO EVIDENTIAL SIGNIFICANCE SINCE IT IS NOTHING BUT A SELF MADE ST ATEMENT. MOREOVER, SHRI AMRUTBHAI H VANZARA HAS NOT FILED RETURN OF INCOME FOR A.Y.2013-14 SHOWING ANY SUCH RECEIPT OR HAVING ANY BUSINESS INCOME FROM SOI L FILLING OR EARTHEN WORK. FURTHER, NO EVIDENCE IN RESPECT OF PAYMENT MADE TOW ARD THIS WORK IS FURNISHED DURING THE COURSE OF ASSESSMENT. INSPECTOR OF THIS WARD, WAS DEPUTED TO CONDUCT FIELD ENQUIRY TO VERIFY WHETHER ANY SOIL FILLING WO RK HAS BEEN DONE ON THE LAND SOLD BY THE ASSESSEE. AS PER THE REPORT OF THE INSPECTOR , NO ANY SOIL FILLING WORK WAS CARRIED OUT ON THE SAID LAND. I THEREFORE REJECT TH E ABOVE CONTENTION OF THE ASSESSEE AND DISALLOW THE ASSESSES'S CLAIM OF COST OF IMPROVEMENT OF RS.1,50,000/-. PENALTY PROCEEDINGS U/S 271(L)(C) AR E INITIATED ALSO. 6. DISALLOWANCE OF TRANSFER EXPENSE: FURTHER, ON PERUSAL OF COMPUTATION OF SHORT TERM CA PITAL GAIN AS SUBMITTED WITH RETURN, IT IS SEEN THAT THE ASSESSEE HAD CLAIMED CO ST OF TRANSFER OF RS.1,50,000/- TOWARDS PAYMENT OF DALALI TO SHRI POPATBHAI THAKKAR . HOWEVER, NO EVIDENCE IN SUPPORT OF THE CLAIM WAS SUBMITTED EXCEPT A SELF MA DE VOUCHER. THEREFORE, VIDE LETTER DATED 18.01.2016, THE ASSESSEE WAS REQUESTED TO SHOW CAUSE AS TO WHY HER CLAIM OF COST OF TRANSFER SHOULD NOT BE DISCARDED A ND ADDITION SHOULD NOT BE MADE ON THIS ACCOUNT. THE ASSESSEE VIDE REPLY DATED SUBMITTED AS UNDER: 'IT IS MENTIONED THAT THE ASSESSEE HAS SPENT RS. 1,5 0,000/- TOWARD COST OF TRANSFER. WE HAS ALREADY SUBMITTED THE VOUCHER SIGN ED BY THE RECIPIENT WITH ALL DETAILS. WE ARE ALSO ENCLOSING AFFIDAVIT FROM THE S AID PERSON IT WILL PROVE THAT THE PAYMENT IS GENUINE AND ADDITION CANNOT BE MADE ON T HIS COUNT.' 6.1 THE REPLY OF THE ASSESSEE IS CONSIDERED BUT NOT FOUND TENABLE. THE AFFIDAVIT OF SHRI POPATBHAI BHIKHABHAI PARMAR SUBMITTED BY THE A SSESSEE HAS NO EVIDENTIAL SIGNIFICANCE SINCE IT IS NOTHING BUT A SELF MADE ST ATEMENT. ON PERUSAL OF PURCHASE DEED OF THE LAND SOLD, IT IS SEEN THAT THE OSSESSEE , SMT. DARSHNABEN R THAKKAR ITA NO. 1477 /AHD/2017 . A.Y. 2013-14 5 PURCHASED THIS LAND IN YEAR, 2010, JOINTLY WITH SMT . MAMTA THAKKAR AND INITIALLY THE SHARE OF SMT. DARSHNABEN R THAKKAR WAS 80% AND THE SHARE OF SMT. MAMTA THAKKAR WAS 20%. NOW, THE SALE TRANSACTION UNDER CO NSIDERATION ON WHICH THE ASSESSEE DECLARED SHORT TERM CAPITAL GAIN IS ANALYZ ED, IT IS FOUND FROM THE SALE DEED THAT DURING THE YEAR UNDER ASSESSMENT (F.Y.201 2-13), THE ASSESSEE SMT. DARSHNABEN R THAKKAR HAS SOLD HER SHARE IN THE SAME LAND TO MAMTABEN THAKKAR TO THE EXTENT IT BECOMES 50% IN THE HANDS OF ASSESS EE HERSELF AND 50% IN THE HANDS OF SMT. MAMTABEN THAKKAR. SINCE, THE ASSESSEE SOLD LAND TO ONLY CO-OWNER OF LAND WITH HER AND NOT TO A OUTSIDER THIRD PARTY. THUS, IT SOUNDS VERY ILLOGICAL AND IRRATIONAL THAT DALALI HAD TO PAY BY THE OSSESS EE TO SELL LAND TO A CO-OWNER OF THE LAND. IT WOULD NOT BE OUT OF PLACE TO MENTION H ERE THAT SMT. MAMTABEN THAKKAR IS SISTER IN LAW OF THE ASSESSEE IN RELATIO N AND 'DALALI' IS CLAIMED TO HAVE BEEN PAID ON SALE OF LAND TO MAMTA THAKKAR. MOREOVE R, SHRI POPATBHAI BHIKHEABHAI PARMAR HAS NOT FILED RETURN OF INCOME F OR A.Y.2013-14 SHOWING ANY SUCH RECEIPT OR HAVING ANY BUSINESS INCOME FROM PRO PERTY DEALING WORK. EVEN, SHRI POPATBHAI BHIKHABHAI PARMAR IS FOUND TO BE A N ON FIER AND HAS NEVER FILED ANY RETURN OF INCOME FOR ANY ASSESSMENT YEAR. FURTH ER, NO EVIDENCE IN RESPECT OF PAYMENT MADE TOWARD DALALI IS FURNISHED DURING THE COURSE OF ASSESSMENT. I THEREFORE REJECT THE ABOVE CONTENTION OF THE ASSESS EE AND DISALLOW THE ASSESSEE'S CLAIM OF COST OF TRANSFER OF RS.1,50,000/-. PENALTY PROCEEDINGS U/S.27L(L)(C) ARE INITIATED ALSO. IN VIEW OF THE ABOVE DISCUSSION IN PARAS 4, 5 & 6, THE SHORT TERM CAPITAL GAIN CHARGEABLE TO TAX IS RECOMPUTED AS UND ER: FULL VALUE OF CONSIDERATION (U/S. 50C OF THE ACT): RS.42,89,868/- (SALE DATE 15/06/2012) LESS: COST OF ACQUISITION: RS. 12,00,296/- (PURCH ASE DATE 17/05/2010) SHORT TERM CAPITAL GAIN CHARGEABLE TO TAX: RS.30,89 ,572/-' 5.2 THE APPELLANT HAS NOT FILED ANY WRITTEN SUBMISS ION HOWEVER IN THE STATEMENT OF FACTS SUBMITTED AS UNDER : '1. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE TRA DING BUSINESS OF SEEDS GRAIN (GHANA) AND DERIVES INCOME FROM CAPITAL GAIN & INCO ME FROM PARTNERSHIP FIRM.. 2. THE RETURN OF INCOME WAS FILED ON 31/10/2013 DEC LARING TOTAL INCOME OF RS. 9,76,320/-. 3. ITR WAS PROCESSED U/S 143(1) OF THE I.T. ACT. 4. THE CASE BEING SELECTED FOR SCRUTINY UNDER CASS, STATUTORY NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 10/09/2014 WHICH WA S DULY SERVED UPON THE ASSESSEE BY R.P.A.D. 5. NOTICE U/S 142(1) WAS ISSUED ON 24/06/2015 & 12/ 08/2015 CALLING FOR PRELIMINARY DETAILS WHICH WAS SERVED UPON THE ASSES SEE. 6. FURTHER NOTICE U/S 142(1) DATED 24/09/2015 ALONG WITH QUESTIONNAIRE ISSUED WHICH WAS ALSO DULY SERVED UPON THE ASSESSEE. 7. AGAINST NOTICES THE ASSESSEE FILED VARIO US DETAILS AND MADE SUBMISSION. 8. DIRECTION U/S 144 A OF THE INCOME TAX ACT WERE A LSO SOUGHT FOR FROM THE JCIT, RANGE -6(1), AHMEDABAD. ITA NO. 1477 /AHD/2017 . A.Y. 2013-14 6 9. THE LEARNED ITO MADE ADDITION RS. 5,89,868/- TOW ARDS UNDERSTATEMENT OF CAPITAL GAIN INCOME U/S 50C OF THE I.T. ACT BY TAKI NG RS. 42,89,868/- AS SALE CONSIDERATION INSTEAD OFF RS. 40,00,000/- OF WHICH SALE DEED HAS BEEN EXECUTED, DISALLOWING COST OF IMPROVEMENT OF RS. 1,50,000 & . TRANSFER EXPENSES OF RS 1,50,000/-. '7. DISALLOWANCE OF BUSINESS LOSS: FURTHER, ON VERIF ICATION OF RETURN OF INCOME WITH THE SUBMISSION FURNISHED DURING THE COURSE OF ASSES SMENT, IT IS SEEN THAT THE ASSESSEE HAS STATED TO HAVE BUSINESS LOSS OF RS. 21 ,01,500/- DURING THE YEAR AND CLAIMED SET OFF OF THE SAME AGAINST OTHER PROFITS A ND SHORT TERM CAPITAL GAIN AROSE TO HER DURING THE YEAR. ON FURTHER VERIFICATI ON, IT IS FOUND THAT BUSINESS LOSS OF RS. 2101500/- STATED TO DERIVED BY THE ASSESSEE IS ON COMMODITY TRANSACTIONS IN SEED-GRAIN (CHANA). HOWEVER, GENUINENESS OF THES E COMMODITY TRANSACTIONS HAS NOT AT ALL BEEN PROVEN SATISFACTORILY DURING TH E ASSESSMENT. THEREFORE, VIDE LETTER DATED 18.01.2016, THE ASSESSEE . WAS REQUEST ED TO SHOW CAUSE AS FOLLOWING: 'IT IS SEEN THAT YOU HAVE STATED BUSINESS LOSS OF RS .21,01,500/- DURING THE YEAR AND CLAIMED SET OFF OF THE SAME AGAINST OTHER PROFI TS AND SHORT TERM CAPITAL GAIN AROSE TO YOU DURING THE YEAR. ON FURTHER VERIFICATI ON, IT IS FOUND THAT BUSINESS LOSS OF RS.2101500/- STATED BY YOU IS ON COMMODITY TRANS ACTIONS IN GRAIN (CHANA). HOWEVER, GENUINENESS OF THE TRANSACTIONS HAS NOT BE EN PROVEN SATISFACTORILY IN YOUR SUBMISSIONS FURNISHED TIME TO TIME. SINCE NO P AYMENTS TOWARDS PURCHASE OF 'CHANA' WERE MADE BY YOU NOR ANY PAYMENT WAS RECEIVED BY YOU WHILE SELLING OF 'CHANA' BUT AS PER YOUR SUBMISSION, YOU CLAIMED THAT YOU HAVE MADE PAYMENT OF RS.21,01,500/- IN SINGLE STRIKE ON ACCOUNT OF DIFFE RENCE IN COST OF PURCHASE OF 'CHANA ' AND SALE RECEIPTS OF THE SAME AND CLAIMED TH E SAME AS A BUSINESS LOSS. EVEN, IT IS NOT EXPLICITLY EXPLAINED OR ASCERTAINED BY YOU THAT TO WHOM YOU HAVE MADE THIS PAYMENT OFRS. 21,01,500/-. THEREFORE, IT APPEARS THAT THE BUSINESS LOSS OF RS. 21,01,500/- AS CLAIMED BY YOU IS FABRICATED AND SHAM. ANYWAY, EVEN IF THE BUSINESS TRANSACTIONS ARE TREAT ED TO BE AS ACTUALLY EXISTING, THE LOSS SO OCCURRED OF RS .21,01,500/- IS NOT ALLO WABLE TO SET OFF AGAINST THE OTHER PROFITS/SHORT TERM CAPITAL GAIN AS PER SECTIO N 73 OF THE INCOME TAX ACT BEING OF SPECULATIVE NATURE U/S.43(5) OF THE INCOME TAX ACT. ON ENQUIRY, IT IS FOUND THAT NEITHER YOU ARE A REGISTERED MEMBER/CLIE NT OF ANY MEMBER OF RECOGNIZED STOCK EXCHANGE NOR M/S. PRACHI COMMODITY , BHABHAR, GUJARAT THROUGH WHOM YOU HAVE CLAIMED TO HAVE MADE THE COMM ODITY TRANSACTIONS IN 'GHANA' IS A REGISTERED MEMBER/BROKER/SUB-BROKER/CLIE NT OF ANY MEMBER OF RECOGNIZED STOCK EXCHANGE. AS PER YOUR SUBMISSION, YOU HAVE EXECUTED COMMODITY TRANSACTION IN 'CHANA' FOR O PERIOD OF ONLY FOR ONE MONTH DURING THE YEAR AND INCURRED LOSS WHICH ITSELF INDICATES THE A DVENTUROUS NATURE OF TRANSACTIONS AND OF SPECULATIVE NATURE. YOU ARE THE REFORE REQUESTED TO SHOW CAUSE AS TO WHY YOU CLAIM OF SET OFF OF BUSINESS LO SS OF RS. 2101500/- SHOULD NOT BE REFUSED AND YOUR INCOME CHARGEABLE TO TAX SHOULD NOT BE RECOMPUTED ACCORDINGLY.. ITA NO. 1477 /AHD/2017 . A.Y. 2013-14 7 7.1. VIDE REPLY DATED 15.02.2016, THE ASSESSE E SUBMITTED AS UNDER: 'IT IS MENTIONED THAT RS. 21,01,500/- WHICH IS LOST IN COMMODITY TRADING IS FABRICATED AND YOU DESIRE TO TREAT THE LOSS AS SPEC ULATION LOSS. IT IS ALSO MENTIONED THAT NEITHER THE ASSESSEE NOR THE BROKER IS A REGISTERED MEMBER OF ANY RECOGNIZED STOCK EXCHANGE. IN THAT CONNECTION IT IS SUBMITTED THAT THE BROKER M/S PRACHI COMMODITY BHABHAR IS A TRADER IN COMMODITY W HO DEALS IN PURCHASE AND SALE OF COMMODITIES IN PHYSICAL FORM. TO DO SUCH TY PE OF TRADING ONE IS NOT REQUIRED TO BE A REGISTERED MEMBER OF ANY RECOGNIZE D STOCK EXCHANGE. TO TREAT THE TRANSACTION AS SPECULATIVE ONE, IT HAS TO BE SE TTLED WITHOUT DELIVERY. IN THIS CASE THE ASSESSEE HAS DONE TRADING IN COMMODITY AND HAS PHYSICALLY TAKEN DELIVERY OF THE GOODS AND HAS SOLD THE SAID GOODS A T A LOSS AND HAS GIVEN THE PHYSICAL DELIVERY OF THE GOODS. SO THE TRANSACTIONS HAVE SETTLED WITH DELIVERY AND IN THAT CASE THE TRANSACTIONS CANNOT BE TERMED AS S PECULATIVE ONE. WE ARE ENCLOSING THE COPY OF THE ACCOUNT OF PRACHI COMMODI TY, LETTER FROM THE TRADER CONFIRMING THE DELIVERY TAKEN AND GIVEN FOR AND ON BEHALF OF THE ASSESSEE AND THE BHADA CHITHHI SHOWING THE MOVEMENT OF GOODS. IT IS OUR SUBMISSION THAT ON THE BASSES OF ABOVE DOCUMENTS THE TRANSACTIONS CANNOT B E REGARDED AS FABRICATED AND SHAM AND ALSO OF SPECULATIVE NATURE. SO IN OUR HUMBLE SUBMISSION THE BUSINESS LOSS CANNOT BE DISALLOWED AND ITS SET OFF HAS TO BE GIVEN AGAINST OTHER INCOME.' 7.2. THE REPLY OF THE ASSESSEE WAS CAREFULLY CONSID ERED, BUT NOT FOUND ACCEPTABLE IN VIEW OF THE FOLLOWING FINDINGS: 7.2.1. THE ASSESSEE HAS SHOWN BUSINESS LOSS OF RS. 21,01,500/- AND THE SAME HAS BEEN SET OFF AGAINST THE OTHER PROFITS AND SHORT TE RM CAPITAL GAIN AROSE TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE A BOVE MENTIONED BUSINESS LOSS HAS BEEN CLAIMED BY THE ASSESSEE ON COMMODITY TRANS ACTION OF SEED GRAIN {CHANA) FOR WHICH THE ASSESSEE HAS SUBMITTED THE PU RCHASE AND SALE DETAILS. FROM THE DETAILS SO PROVIDED BY THE ASSESSEE, A CHART IS ACCORDINGLY PREPARED AS BELOW: SALE PURCHASE DATE KG. TOTAL AMT. /RATE PER KG. DATE KG. TOTAL AMT. /RATE PER KG 8/10/12 60000 30.60.000 51 2/10/12 50000 27,50,000 55 15/10/12 25000 1530000 51 5/10/12 60000 3360000 56 17/10/12 25000 13.00.00052 13/10/12 50000 29.00.00058 20/10/12 45000 23.62,000 52.50 18/10/12 40000 23,20,00058 24/10/12 40000 20.80,00052 22/10/12 40000 23,60,00059 25/10/12 40000 20, 40.000 51 25/10/12 60000 34.80.000 58 ITA NO. 1477 /AHD/2017 . A.Y. 2013-14 8 30/10/12 60000 30,90.000 51.50 27/10/12 25000 14.87.000 59.50 3/11/12 25000 12,95,000 51.80 29/10/12 15000 8,97,000 59.50 4/11/12 15000 7.68,000 51.20 31/10/12 10000 5,84,000 58.40 6/11/ 12 10000 5,11,000 51.15 TOTAL 350000 18036000 350000 20138000 7.2.2. FROM THE ABOVE CHART, IT IS SEEN THE PURCHAS ES PER KG. MADE BY THE ASSESSEE ARE ON THE HIGHER SIDE THEN THE SALES PER KG. REFLECTED IN THE CHART AS MENTIONED ABOVE. IN FACT, IF THE PURCHASES ARE VERI FIED, IT IS OBSERVED THAT ON 25/10/12 ONE KG. OF CHANA IS PURCHASED FOR RS. 58 W HEREAS ON THE SAME DATE SALE OF ONE KG. OF CHANA IS ALLEGEDLY SHOWN AT RS. SI/-. SIMILARLY, ON 31/10/12 ONE KG. OF CHANA IS PURCHASED AT RS. 58.40 WHEREAS ON 30/10 /12 ONE KG. OF CHANA IS ALLEGEDLY SOLD AT RS. 51.50. NO PRUDENT <& RATIONAL BUSINESS PERSON WILL PURCHASE THE GOODS OH HIGHER RATE AND SALE THE SAME AT A MUC H LOWER RATE ON A VERY SAME DAY. FROM THE ABOVE FACES, THE ABOVE TRANSACTIONS A PPEARS TO BE EITHER SPECULATIVE TRANSACTIONS OR BOGUS, SHAM ACCOMMODATI ON ENTRIES ONLY TO REDUCE THE TAX LIABILITIES PAYABLE ON SHORT TERM CAPITAL G AIN AS EARNED BY THE ASSESSEE ON SALE OF LAND DURING THE YEAR. FURTHER, THESE TRANSA CTIONS HAVE BEEN EXECUTED FOR A PERIOD OF ONLY ONE MONTH DURING THE YEAR ITSELF IND ICATE ADVENTUROUS NATURE OF TRANSACTION AND OF SPECULATIVE NATURE. ALSO, INFORM ATION RECEIVED U/S. 133(6) FROM MCX AS WELL AS NCDEX AND IT IS FOUND THAT THE ASSESSEE OR M/S. PRACHI COMMODITY, BHABHAR, GUJARAT IS NEITHER REGISTERED A S THE MEMBER NOR AS A CLIENT WITH THESE EXCHANGES. THEREFORE, THE ASSESSEE WAS I SSUED SHOW CAUSE AS ABOVE PROPOSING THEREIN DISALLOWANCE OF BUSINESS LOSS OF RS. 21,01,500/-VAS CLAIMED BY THE ASSESSEE ON COMMODITY TRANSACTION IN 'CHANA' DURI NG THE YEAR. 7.2.3. IN REPLY TO SHOW CAUSE NOTICE, IT IS CONTEND ED THAT THE ASSESSEE DID THESE TRANSACTIONS IN 'CHANA' ON PHYSICAL DELIVERY BASIS A ND THUS THE TRANSACTIONS CANNOT BE REGARDED AS FABRICATED AND SHAM AND ALSO OF SPECULATIVE NATURE. A LETTER FROM THE TRADER, M/S. PRACHI COMMODITY, CONF IRMING THE DELIVERY TAKEN AND GIVEN FOR AND ON BEHALF OF THE ASSESSEE AND THE BHA DA CHITHHI IN SUPPORT OF THE MOVEMENT OF GOODS WERE SUBMITTED. SCANNED COPIES OF SOME BHADA CHITTHIS ARE PRODUCED BELOW. 7.2.4. THE ABOVE BHADA CHHITTHIS NOWHERE MENTION NA ME OF THE TRANSPORTER, RTO REGISTRATION NO. OF TRUCK, DRIVER'S NAME ETC. O N IT HAVING NO GENUINENESS. THE ONLY THING THAT THESE BHADA CHHITTHIS MENTION IS TH E PLACE OF DELI VERY/STORAGE I.E. CENTRAL WARE HOUSE, SHAH ALAM, AHMEDABAD, THE PLACE WHERE THE SEED GRAINS ARE STORED. TO VERIFY THE GENUINENESS OF THE BHADA CHHITTHIS, A NOTICE U/S.133(6) WAS ISSUED TO THE MANAGER, CENTRAL WARE HOUSE, SHAH ALAM, AHMEDABAD, CALLING ITA NO. 1477 /AHD/2017 . A.Y. 2013-14 9 FOR THE INFORMATION THAT WHETHER THE ASSESSEE, SMT. DARSHNABEN THAKKAR OR M/S. PRACHI COMMODITY, BHABHAR, GUJARAT HAS AVAILED THE SERVICES OF CENTRAL WARE HOUSE, SHAH ALAM, AHMEDABAD FOR STORAGE OF 'CHANA' D URING F.Y.2012-13 (COPIES OF BHADA CHITTHIS AS SUBMITTED BY THE ASSES SEE WERE ALSO PROVIDED TO THEM FOR VERIFICATION). THE MANAGER, CENTRAL WARE H OUSE, SHAH ALAM, AHMEDABAD, VIDE REPLIES DATED 26.02.2016 & 23.02.20 16 INFORMED THAT DURING F.Y.2012-13, NO BOOKING WAS MADE BY SMT. DARSHNABEN THAKKAR OR M/S. PRACHI COMMODITY, BHABHAR, GUJARAT FOR STORAGE OR DELIVERY OF 'CHANA' IN THEIR GODOWN. SCANNED COPIES OF REPLIES OF THE MANAGER, CENTRAL W ARE HOUSE, SHAH ALAM, AHMEDABAD ARE AS UNDER: 7.3. FROM THE ABOVE DISCUSSION AND EVIDENCES, IT BE COMES CLEAR THAT THE BHADA CHITTHIS AND CONFIRMATION OF M/S. PRACHI COMMODITY, BHABHAR, GUJARAT ARE BOGUS , SHAM A FABRICATED. THE ABOVE DISCUSSION PROVES TH AT NO PHYSICAL DELIVERY TRANSACTIONS OF 'CHANA' TOOK PLACE DURING THE YEAR AND ASSESSEE'S CONTENTION IS INCORRECT AND WITHOUT ANY BASE. I, THEREFORE, DISAL LOW THE ASSESSEE'S CLAIM OF SET OFF OF THE BUSINESS LOSS OF RS.21,01,500/-IN COMMOD ITY TRANSACTIONS IN 'CHANA' AND ACCORDINGLY THE TAXABLE INCOME OF THE ASSESSEE IS RECOMPUTED. 4. AGAINST THE ORDER OF LD. A.O., ASSESSEE PREFERRED F IRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. BUT ASSESSEE BECAUSE OF SOME REASON COULD NOT FILED HIS SUBMISSI ON AND LD. CIT(A) PASSED THE ORDER WITHOUT THE SUBMISSION OF THE ASSESSEE. 5. SINCE LD. CIT(A) HAS NOT HEARD THE ASSESSEE, THEREF ORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THIS MATTER TO THE FILE OF THE LD. CIT (A) TO DECIDE AFRESH AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE SUBJE CT TO THE CONDITION THAT ASSESSEE SHALL DEPOSIT A COST OF RS. 10,000/- WITH THE DEPARTMENT AND ON PRODUCTION OF COST OF DEPOSIT OF RS. 10,000/- LD. C IT(A) SHALL PROCEED WITH THE APPEAL. ASSESSEE SHALL DEPOSIT A COST OF RS. 10,000 /- WITHIN 60 DAYS FROM RECEIPT AT THE DATE OF THIS ORDER AND ON PRODUCTION OF RECEIPT OF COST, LD. CIT(A) SHALL PROCEED WITH THE APPEAL. HOWEVER, WE REFRAIN OURSELVES FROM MAKING ANY COMMENTS ON MERIT OF THE CASE. ITA NO. 1477 /AHD/2017 . A.Y. 2013-14 10 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 12- 12- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASA D) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 12/12/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD