Mrs. Vaidehi Raghunathan, Pune V. Income-tax Officer, Pune

ITA 1486/PUN/2011

• Counselvise Citation: 148624514 RSA 2011
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 23-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Keywords: Opportunity of being heard; Principle of natural justice; Speculation loss
• Section: 143(3); 43(5); 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI R.K. PANDA, AM I.T.A. NO. 1486/PN/2011: A.Y. 2004-05 MRS. VAIDEHI RAGHUNATHAN A-23 PINNAC GARDEN KOTHRUD, PUNE-52 PAN AEYPR 2584 Q APPELLANT VS. I.T.O. WARD 3(4) PUNE RESPONDENT APPELLANT BY : SHRI C.H. NANIWADEKAR RESPONDENT BY: SHRI MUKESH VERM A DATE OF HEARING: 18-6-2013 DATE OF PRONOUNCEMENT: 26-6-2013 ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-II PUNE DATED 18-8-2011 FOR A.Y . 2004-05 ON THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN DISMISSING THE ASSESSEES APPEAL IN LIMINE AND WITHOUT DECIDING THE GROUNDS ON MERITS. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE CI T ACTING U/S 263 HAS MERELY DIRECTED THE AO TO PASS A FRESH ORDER IN ACCORDANCE WITH LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. H E FURTHER FAILED TO APPRECIATE THAT ON FACTS OF THE C ASE, THE VIEWS EXPRESSED BY THE CIT IN HIS ORDER U/S 263 CANNOT BE CONSTRUED AS DIRECTIONS TO THE AO. HE ALSO ERRED IN OBSERVING THAT THE ISSUE COVERED IN T HE ORDER U/S 263 HAS ATTAINED FINALITY. THE LEARNED CIT(A)S RELIANCE ON THE DECISION IN 221 ITR 294 (BOM) IS MISPLACED AND IN ANY CASE THE SAID DECISION IS DISTINGUISHABLE ON FACTS. 2. THE ASSESSEE AN INDIVIDUAL IS A HOUSEWIFE WHO IN ORDER TO EARN BETTER RETURNS HAD INVESTED IN SHARES. THE AS SESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE ACT ON 27 -12-2006 ITA 1486/PN/2011 VAIDEHI RAGHUNATHAN A.Y. 2004-05 2 ON ASSESSED INCOME. SUBSEQUENTLY, VIDE ORDER U/S 2 63 OF THE ACT DATED 19-3-2009 THE CONCERNED CIT SET ASIDE THE ORDER PASSED U/S 143(3) WITH A DIRECTION TO VERIFY THE CL AIM OF SET OFF OF SPECULATION BUSINESS LOSS AGAINST SHORT TERM CAP ITAL GAIN OF SHARES AND PASS A FRESH ASSESSMENT ORDER AFTER GIVI NG PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQ UENTLY, THE A.O PASSED AN ORDER U/S 143(3) R.W.S. 263 AND RECOM UTED THE TOTAL INCOME AFTER DISALLOWING SET OFF OF THE SPECU LATION LOSS AGAINST THE LOSS ON ACCOUNT OF SHARE TRADING CLAIME D BY THE ASSESSEE. THE DISALLOWANCE ON ACCOUNT OF WRONG SET OFF OF SPECULATION LOSS OF RS. 18,65,267/- WAS MADE ON THE GROUND THAT ALL INTRADAY SHARE TRANSACTIONS DONE BY THE AS SESSEE ULTIMATELY SETTLED WITHOUT DELIVERY, WITHOUT APPREC IATING THE EVIDENCES AND SUBMISSIONS MADE BY THE ASSESSEE. AS STATED ABOVE, THE SAID ORDER WAS PASSED SUBSEQUENT TO THE ORDER PASSED U/S 263 REMITTING THE ISSUE TO THE FILE OF T HE A.O FOR RE- EXAMINATION. 3. ACCORDING TO THE LEARNED CIT(A) THE CONCERNED CI T IN THE ORDER PASSED U/S 263 HAS CATEGORICALLY GIVEN A FIND ING THAT THE A.O HAS NOT EXAMINED THE ISSUE IN THE LIGHT OF PRO VISIONS OF SEC. 73 R.W.S. 43(5) AND ACCORDINGLY THE ORDER OF T HE A.O WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. ACCORDING TO THE CIT(A) THE REVISIONAL ORDER OF THE CIT HAD RECORDED A DEFINITE FINDING ON THE POINT THAT THE A SSESSEE HAD PURCHASED AND SOLD SHARES OF DIFFERENT COMPANIES. MAJOR TRANSACTIONS OF PURCHASE/SALE OF SHARES WERE N THE SAME DAY ITA 1486/PN/2011 VAIDEHI RAGHUNATHAN A.Y. 2004-05 3 OR CARRIED OUT WITHIN A SPAN OF ONE OR TWO DAYS AND PERIODICALLY SETTLED OTHERWISE THAN BY ACTUAL DELIV ERY OF SHARES. THE SET OFF OF LOSSES OF SPECULATIVE TRANSACTIONS A GAINST THE PROFITS ON SHARE TRANSACTIONS ACCOMPANIED WITH DELI VERY WAS NOT PERMISSIBLE IN VIEW OF SEC. 73 OF THE ACT AND T HE A.O HAD NOT EXAMINED THE ISSUE IN THE LIGHT OF THE PROVISIO N OF SEC. 73 R.W.S. 43(5) OF THE ACT. SO, THE CIT HELD THAT THE ORDER OF THE A.O WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN SET ASIDE PROCEEDINGS, THE CIT(A) OBSER VED THAT THE CONCERNED CIT HAS ALREADY TAKEN THE DECISION RE GARDING THE ASSESSEES INDULGING IN SPECULATIVE TRANSACTION S AS PER THE PROVISIONS OF SEC. 43(5) OF THE ACT AND THEREFORE, EVEN THOUGH THE MATTER HAS BEEN REMITTED BACK TO THE FILE OF TH E ASSESSING OFFICER TO RE-EXAMINE THE MATTER AFRESH BY GIVING O PPORTUNITY OF BEING HEARD, THE ASSESSING OFFICER HAS ONLY FOLL OWED THE DIRECTIONS GIVEN BY THE CIT IN THE ORDER U/S 263 OF THE ACT. THE ASSESSING OFFICER IN HIS ORDER U/S 143(3) R.W.S . 263 HAS ALSO HELD THAT LOSS ON ACCOUNT OF SHARE TRADING OF RS. 18,65,267/- BE TREATED AS SPECULATION LOSS AND HENC E NOT ALLOWED SET OFF OF THE SPECULATIVE LOSS AGAINST THE SHORT TERM CAPITAL GAIN OF THE ASSESSEE. TAKING AN OVERALL VI EW, THE CIT(A) OBSERVED THAT HE CANNOT ADJUDICATE THE SAME ISSUE I N THE APPELLATE PROCEEDINGS ARISING OUT OF THE SET ASIDE PROCEEDINGS. ACCORDINGLY, THE APPEAL HAS BEEN DISMISSED. THE SA ME HAS BEEN OPPOSED ON BEHALF OF THE ASSESSEE. ITA 1486/PN/2011 VAIDEHI RAGHUNATHAN A.Y. 2004-05 4 4. THE LEARNED AR SUBMITTED THAT EVEN IF THE CIT HA S PASSED THE ORDER U/S 263 DIRECTING THE ASSESSING OFFICER T O PASS A FRESH ASSESSMENT ORDER AND ASSESSING OFFICER PASSED AN ORDER U/S 143(3) R.W.S. 263 OF THE ACT. IN CASE THE ASSES SEE IS AGGRIEVED BY THE SAME, HE CAN AGITATE THE ISSUE BEF ORE THE CIT(A) AND THE CIT(A) IS ALSO DUTY BOUND TO PASS A SPEAKING ORDER IN CASE THE APPEAL IS FILED BEFORE HIM. THE C IT(A) IS NOT JUSTIFIED TO STATE THAT SINCE THE ASSESSING OFFICER HAS PASSED THE ORDER AS PER THE DIRECTIONS U/S 263 THE CIT(A) SHOULD NOT SIT OVER THAT IN SECOND ROUND WHILE THE MATTER WAS ALREADY WITH HIM AGAINST THE ORDER OF THE ASSESSING OFFICER AS PER DIRECTIONS OF THE CIT. WITHOUT PREJUDICE TO THE ME RITS OF THE CASE, WE AGREE WITH THE CONTENTION OF THE LEARNED A R THAT THE CIT(A) OR ANY OTHER QUASI JUDICIAL BODY IS SUPPOSED TO PASS A SPEAKING ORDER WHILE MATTER WAS SET ASIDE TO ASSESS ING OFFICER TO PASS AN ORDER AFRESH. NON-SPEAKING ORDER AMOUNTS TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE WHICH CA NNOT BE ENCOURAGED. SO, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO HIM W ITH A DIRECTION TO PASS A SPEAKING ORDER ON THE ISSUE AT HAND. SINCE WE ARE SETTING ASIDE THE ISSUE TO THE FILE OF THE C IT(A) ON A TECHNICAL POINT, SO WE ARE REFRAINING TO COMMENT ON MERITS OF THE ISSUE AT HAND. BEFORE PARTING, IT IS PERTINENT TO MENTION HERE THAT THE CASES RELIED UPON BY THE PARTIES HAVE BEEN TAKEN INTO CONSIDERATION, THOUGH THEY HAVE NOT BEEN SPECI FICALLY DEALT WITH. ITA 1486/PN/2011 VAIDEHI RAGHUNATHAN A.Y. 2004-05 5 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 26 TH JUNE 2013 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT(A) II PUNE (4) CIT- II PUNE (5) THE D.R. PUNE BENCH A PUNE BY ORDER SENIOR PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE