Smt. Payal Goyal, Panchkula V. DCIT, Chandigarh

ITA 153/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80941 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-10-2014
• Assessment Year: 2011-2012
• Appeal Filed On: 06-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI SHRI J S NAGAR
• Keywords: Business income; Search and seizure; Deemed to accrue or arise in india; Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A,B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 153/CHD/2014 ASSESSMENT YEARS : 2011-12 SMT. PAYAL GOYAL V D.C.I.T. H NO. 105 CENTRAL CIRCLE I SECTOR 6, PANCHKULA CHANDIGARH AJRPG 1035 D ITA NO. 130/CHD/2014 ASSESSMENT YEARS : 2011-12 SH. SANJIV GOYAL V D.C.I.T. H NO. 105 CENTRAL CIRCLE I SECTOR 6, PANCHKULA CHANDIGARH AANPG 8228 P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: SMT. JYOTI KUMARI SHRI J.S. NAGAR DATE OF HEARING 15.10.2014 DATE OF PRONOUNCEMENT 17.10. 2014 O R D E R PER T.R. SOOD, A.M THESE APPEALS ARE DIRECTED AGAINST THE ORDERS OF TH E LD CIT(A), GURGAON DATED 27.11.2013. ITA NO. 153/CHD/2014 SMT. PAYAL GOYAL 2. IN THIS APPEAL ONLY DISPUTE IS REGARDING CONFIRM ATION OF ACTION OF ASSESSING OFFICER FOR NOT ALLOWING SET OFF OF SP ECULATIVE LOSS AMOUNTING TO RS. 91,67,504/-. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT A SEA RCH WAS CONDUCTED IN THIS GROUP OF CASES AND ULTIMATELY A S URRENDER OF RS. 15 CRORES WAS MADE. THIS AMOUNT WAS DECLARED IN TH E HANDS OF VARIOUS PERSONS OF THE GROUP. A SUM OF RS. 1 CRORE WAS SURRENDERED 2 IN THE HANDS OF THE ASSESSEE I.E. SMT. PAYAL GOYAL ON ACCOUNT OF AMOUNT OF RECEIVABLES WHICH INCOME HAS BEEN DERIVE D FROM SPECULATIVE DEALAINGS IN COMMODITIES OUTSIDE THE BO OKS OF ACCOUNTS. WHEN THE RETURN WAS FILED AGAINST THIS I NCOME, THE ASSESSEE REDUCED BROUGHT FORWARD LOSS (SPECULATIVE ) AMT OF RS. 91,67,504/-. THUS NET TAXABLE RETURN REMAINED ONLY RS. 8,11,670/-. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKE D TO FURNISH DETAILS OF TOTAL DISCLOSED DOCUMENTS/ASSETS/INVESTM ENT WISE, MANNER IN WHICH ADDITIONAL INCOME WAS EARNED, THE AMT OF T AXES PAID. FURTHER THE ASSESSEE WAS REQUESTED TO FURNISH FOLLO WING DETAILS: A) SPECIFY THE COMMODITY (NAME OF THE COMMODITY, CA PITAL AMOUNT, TRANSACTION DATES AND AMOUNT OF PROFIT) B) SPECIFY THE NAMES OF PERSONS THOUGH WHOM SUCH TR ANSACTION WERE ENTERED C) MENTION THE NAMES OF BROKERS THROUGH WHOM THESE TRANSACTION WERE DONE D) MENTION THE BROKERAGE PAID IN THE COURSE OF SUCH SPECULATION BUSINESS. IN RESPONSE THE ASSESSEE SIMPLY MENTIONED THE AMO UNT. IN THIS BACKGROUND THE ASSESSING OFFICER OBSERVED THAT BROU GHT FORWARD LOSS IS NOT ALLOWAB LE AGAINST SURRENDERED INCOME IN VIE W OF THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN CASE O F M/S KIM PHARMA (P) LTD V. CIT, ITA NO. 106 OF 2011. HE ALS O PLACED RELIANCE ON THE DECISION OF HON'BLE GUJARAT HIGH CO URT IN CASE OF FAKIR MOHMED HAJI HASAN V. CIT, 247 ITR 290. HE FU RTHER OBSERVED THAT IN ANY CASE THE ASSESSEE HAD DECLARED SURRENDE RED INCOME FROM SPECULATIVE BUSINESS BUT DESPITE OF VARIOUS OP PORTUNITIES THE ASSESSEE FAILED TO PROVE THAT THE INCOME WAS REALLY FROM SPECULATIVE ACTIVITIES. THEREFORE NO BENEFIT CAN BE GIVEN FOR CARRY FORWARD OF SPECULATIVE BUSINESS LOSS. THUS HE REFUSED TO GIVE SET OFF OF CARRY FORWARD SPECULATIVE LOSS. 3 4 ON APPEAL VARIOUS DETAILED SUBMISSIONS HAVE BEEN MADE BEFORE THE LD. CIT(A) AND RELIANCE HAS ALSO BEEN MA DE ON VARIOUS CASE LAWS. THE LD. CIT(A) EXAMINED THESE SUBMISSION S AND DISMISSED THE APPEAL OF THE ASSESSEE VIDE PARA 6 WH ICH IS AS UNDER: 6 I HAVE CONSIDERED THE SUBMISSIONS. IT IS SEEN F ROM THE IMPUGNED ORDER THAT THE ASSESSEE HAD MADE A TOTAL SURRENDER OF RS. 1 CRORE AS UNDISCLOSED INCOME OVER AND ABOVE REGULAR INCOME U/ S 132(4) VIDE HIS SURRENDER LETTER. IN FACT IT TRANSPIRES AS PER THE RELEVANT EXTRACT OF SURRENDER LETTER, AS BELOW, THAT THE GROUP HAS SURR ENDER RS. 15 CRORES. WE HEREBY READY TO SURRENDER ADDITIONAL INCOME OF RS. 15 CRORES (FOR NECTOR GROUP AND ITS DIRECTOR AND THEIR FAMILY MEMBERS/EMPLOYEE) OVER AND ABOVE THE REGULAR INCOME OF THE NECTOR GROUP FOR THE FY 2010-11, RELEVANT TO THE A SSESSMENT YEAR 2011-12 U/S 132(4) OF THE IT ACT SUBJECT TO N O PENAL ACTION/PROSECUTION. THE BREAKUP OF THE SURRENDER A ND ITS MEANS OF INCOME WILL BE GIVEN IN THE DUE COURSE. THE ASSESSING OFFICER OBSERVED THAT IN THE COMPUTAT ION OF INCOME, THE ASSESSEE HAS SHOWN THE SURRENDER INCOME OF RS. 1 CR ORE AS INCOME FROM SPECULATIVE BUSINESS (PROFIT IN COMMODITY TRADING) AND CLAIMED SET OFF OF BROUGHT FORWARD LOSSES OF SPECULATIVE BUSINESS OF R S. 91,67,504/- FROM ASSESSMENT YEAR 2007-08 TO 2010-11. THIS ACTION W AS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER AS SHE MAINTAIN ED THAT THE SURRENDERED INCOME COULD NOT BE SAID TO BE INCOME F ROM SPECULATIVE BUSINESS IN ABSENCE OF DOCUMENTARY EVIDENCE TO SU BSTANTIATE THE MANNER OF EARNING SUCH INCOME. SHE ALSO EXPRESSED THAT THE CLAIM WOULD DILUTE THE SURRENDER. ON A FURTHER PERUSAL I T IS SEEN THAT SHE ALSO ASKED THE ASSESSEE TO PROVIDE FINER DETAILS VIZ. OF THE COMMODITY TRADED IN, THE INVESTMENT, THE PERSONS AND BROKERS INVOLVE D. THUS RELYING ON THE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH CO URT IN THE CASE OF M/S KIM PHARMA (P) LTD V. CIT, ITA NO. 106 OF 2011 (O&M ) DATED 27.4.2011, APART FROM LIBERTY PLYWOOD (P) LTD. V AC IT OF ITAT, CHANDIGARH AND FAKIR MOHAMAD HAJI HASAN V. CIT, 247 ITR 290 (GUJ), SHE PROCEEDED TO TREAT THIS ADDITIONAL INCOME AS PA RT OF DEEMED INCOME OF THE ASSESSEE. THE ASSESSEE HAS VEHEMENTLY TRIED TO DISTINGUISHE D THE CASES RELIED UPON BY THE ASSESSING OFFICER. HOWEVER, I A M AFRAID THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF M/S KIM PHARMA (P) LTD (SUPRA). THUS AS HELD BYTHE ASSESSING OFFICER THE BROUGHT FORWARD BUSINESS LOSSES ARE NOT ALLOWED TO BE SET OFF AGAIN ST THE SURRENDERED INCOME. CONSEQUENTLY THE SUM OF RS. 34,42,535/- AD DED BACK TO THE RETURNED INCOME OF THE ASSESSEE IS CONFIRMED. ASSE SSEE FAILS ON THIS GROUND. 5 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE NARRA TED THE FACTS AND REFERRED TO PAGE 4 WHICH IS A COPY OF COMPUTATI ON AND POINTED OUT THAT THE ASSESSEE HAD DULY DECLARED INCOME OF R S. 1 CRORE WHICH WAS SURRENDERED DURING THE SEARCH. HE FURTHER SUBMI TTED THAT THE ASSESSEE HAS REDUCED THE SPECULATIVE LOSS AMOUNTING TO RS. 91,67,504/- WHICH WAS ON ACCOUNT OF SPECULATIVE TRA NSACTION. HE VEHEMENTLY ARGUED THAT THE ASSESSEE HAS EARNED SPE CULATIVE 4 BUSINESS INCOME IN EARLIER YEAR ALSO, THEREFORE SUR RENDERED INCOME SHOULD HAVE BEEN TREATED ONLY AS SPECULATIVE INCOME . 6 ON THE OTHER HAND, THE LD. D.R FOR THE REVENUE ST RONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 7 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND T HAT ONCE AN INCOME IS SURRENDERED THE ASSESSEE IS DUTY BOUND TO GIVE THE PARTICULARS OF INCOME. PARTICULARLY WHEN THE ASSES SEE WANTS TO CLAIM BENEFIT OF CARRY FORWARD OF LOSSES. THE ASSE SSEE HAS NOT BEEN ABLE TO GIVE ANY PROOF THAT THE INCOME WAS EARNED O UT OF SPECULATIVE SOURCES BEFORE THE ASSESSING OFFICER OR THE LD. CIT (A) OR EVEN BEFORE US. SECTION 73 OF IT ACT CLEARLY PROVIDES T HAT THE LOSS FROM SPECULATIVE BUSINESS CAN BE CARRIED FORWARD AND SET OFF ONLY AGAINST SPECULATIVE INCOME. IN VIEW OF THIS CLEAR PROVISION , CARRY FORWARD OF SPECULATIVE LOSS CANNOT BE ALLOWED TO BE SET OFF OF AGAINST NORMAL INCOME. THEREFORE WE SET ASIDE THE ORDER OF LD. CI T(A) AND CONFIRM THE SAME. ITA NO. 130/CHD/2014 SANJIV GOYAL 8 THE FACTS AND CONTENTIONS IN THIS CASE ARE IDENTI CAL TO THE CASE OF SMT. PAYAL GOYAL, ITA NO. 153/CHD/2013 WHICH WE HAVE ADJUDICATED IN ABOVE NOTED PARAS AND FOLLOWING THE SAME THE ISSUES RAISED IN THIS APPEAL ARE DECIDED AGAINST THE ASSES SEE. 9 IN THE RESULT, BOTH THE APPEALS OF THE ASSESSES A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.10.2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17.10.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 5