ITO, New Delhi V. Shri Prem Lakhotia, New Delhi

ITA 1532/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7539 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 06-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHARVAN GOTRU
• Assessee Lawyers: ALOK PERIWAL
• Keywords: Revised return
• Section: 139; 43(5); 139(5)

Judgement Text

1 1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI H S SIDHU JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.:- 1532/DEL /2014 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER, WARD 22 (1), ROOM NO. 1015, 10 TH FLOOR, E-2 BLOCK, CIVIC CENTRE NEW DELHI. VS. SHRI PREM LAKHOTIA R-22, NEHRU ENCLAVE OPP. NEHRU PLACE, NEW DELHI-19 PAN AADPL3864A (APPELLANT) (RESPONDENT) O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) IX, NEW DELHI DATED 17.12.2013 WHEREIN HE DELETED THE ADDITION OF RS. 20,94,678/- DISCLOSED BY THE ASSESS EE IN HIS RETURN OF INCOME FILED BEYOND TIME PROVIDED U/S 139 (5) OF THE INCOME TAX ACT 1961 FOR REVISING IT. THE FOLLOWING GROUNDS OF APPEAL OF THE REVENUE ARE RAISED BY THE REVENUE : DEPARTMENT BY : SHRI SHARVAN GOTRU, SR DR ASSESSEE BY: SHRI ALOK PERIWAL, CA DATE OF HEARING 06/04/2016 DATE OF PRONOUNCEMENT 13/06/2016 2 1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY I. WHETHER ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION O F RS. 20,94,678/- WHICH WAS DISCLOSED FOR THE FIRST TIME IN RETURN OF INCOME, WHICH WAS INVALID BEING FILED BEYOND THE TIME PROVIDED U/S 139(5) OF THE I.T. ACT 1961. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, LD. CIT (A) WAS RIGHT IN ALLOWING SET OFF LOSSES CLAIMED FOR THE FIRST TIME BY ASSESSEE THROUGH AN INVALID RETUR N FILED BEYOND THE TIME PROVIDED U/S 139(5) OF THE I.T. ACT , 1961. III. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE CO URSE OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE IS THAT ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME ON 30.9.2008 DECLARING I NCOME OF RS. 4,08,662/-. DURING THE ASSESSMENT PROCEEDINGS ASSES SEE VIDE LETTER DATED 6.8.2010 FILED A COPY OF REVISED RETUR N OF INCOME FOR ASSTT. YEAR 2008-09 WHEREIN ASSESSEE HAS INCLUD ED SEVERAL INCOMES AND LOSSES IN THE REVISED RETURN. LD. AO RE JECTED THE CLAIM OF THE ASSESSEE AS THE REVISED RETURN WAS FIL ED FOR ASSTT. YEAR 2008-09 ON 6.8.2010, THIS SHOULD HAVE BEEN FIL ED BY 31ST MARCH 2010. BY VIRTUE OF THIS, THE REVISED RETURN W AS IGNORED AND THE SHORT-TERM CAPITAL GAIN OF RS. 20,94,678/- INCLUDED IN THE REVISED RETURN WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE TAKING THE ORIGINAL RETURN INCOME. ASSESSE E BEING 3 1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY AGGRIEVED WITH THE ORDER OF LD. AO PREFERRED AN APP EAL BEFORE THE LD. CIT(A) WHO IN TURN ALLOWED THE APPEAL OF TH E ASSESSEE. THE MAIN REASON FOR ALLOWING THE CLAIM OF THE ASSES SEE IS THAT IN THE ORIGINAL RETURN ASSESSEE DECLARED RS. 5 LACS AS TAXABLE INCOME WHEREIN RS. 20,94,678/- WAS INCLUDE AS SHORT TERM CAPITAL GAIN BUT WAS ADJUSTED AGAINST LOSS FROM SPE CULATIVE BUSINESS I.E. TRADING IN F & O. SUBSEQUENTLY THE AS SESSEE FILED THE REVISED RETURN CLAIMING THAT LOSS IN SPECULATIV E BUSINESS SHOULD BE TREATED AS BUSINESS LOSS AND THEN SHORT-T ERM CAPITAL GAIN SHOULD BE ADJUSTED AGAINST IT. LD. CIT(A) RELI ED ON THE DECISION OF CIT VS. NASA FINLEASE PVT. LTD. 358 IT R 305. LD. CIT(A) FURTHER DISCUSSED THE DECISION RELIED UPON B Y THE AO IN CASE OF GOETZ INDIA LTD. VS. CIT 284 ITR 323. AGAIN ST THE ORDER OF LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3. LD. DR STATED THAT THE ASSESSEE HAS INCURRED LOSSES IN THE F & O BUSINESS AND ASSESSEE AS WELL AS AO HAS NOT BROUG HT ANY FACT ON RECORD HOW THE TRANSACTIONS ARE ENTERED INT O ON RECOGNISED STOCK EXCHANGE. THE CASE LAW RELIED UPON BY THE LD. CIT(A) DEALS WITH THE NATIONAL STOCK EXCHANGE AND B OMBAY 4 1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY STOCK EXCHANGE, WHICH ARE BOTH RECOGNISED U/S 43(5) OF INCOME TAX ACT. HOWEVER, IT IS NOT CLEAR THAT ON WHICH EXC HANGE THE ASSESSEE HAS INCURRED SUCH LOSS AND WHETHER THE SAM E IS INCURRED IN SECURITIES , COMMODITIES OR FOREIGN EX CHANGE DERIVATIVES. IF IT IS A RECOGNISED STOCK EXCHANGE FOR THE RESPECTIVE SECURITIES THEN THE ISSUE FALLS WITHIN T HE INTERPRETATION OF DECISION RELIED UPON BY THE ASSE SSEE OTHERWISE NOT. 4. LD. AR RELIED UPON THE ORDERS OF THE LD. CIT(A) AS WELL AS DECISION CITED BY THE LD. CIT(A). 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE WITHOUT ASCE RTAINING THE FACTS THAT THE SPECULATIVE TRANSACTIONS OF RS. 65,6 6,127/- SHOWN IN THE ORIGINAL RETURN AS WELL AS IN THE REVI SED RETURN HAS LOSS FROM SPECULATIVE BUSINESS. HOWEVER IT IS N OT KNOWN THAT THESE TRANSACTIONS HAVE BEEN CARRIED ON THE RE COGNISED STOCK EXCHANGE OR NOT AND FURTHER FOR RECOGNISED TR ANSACTIONS 5 1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY OF SECURITIES, COMMODITIES OR FOREIGN EXCHANGE DERI VATIVES. THESE FACTS ARE NOT COMING OUT FROM THE ORDER OF T HE LD. CIT(A) AS WELL AS FROM THE ORDER OF THE AO. EVEN BEFORE U S LD. AR COULD NOT SUBMIT THAT THE LOSSES INCURRED IN F & O WERE ON TRANSACTIONS ENTERED INTO AT RECOGNISED STOCK EXCHA NGE OR NOT. IF THE SAME WAS CARRIED OUT ON RECOGNISED STOCK EXC HANGE AS PROVIDED U/S 43(5) OF THE INCOME TAX ACT THEN THE ISSUE STANDS COVERED BY THE DECISION OF CIT VS. NASA FINL EASE PVT. LTD. (2013) 358 ITR 305 AND IF THE TRANSACTIONS AR E ON UNRECOGNISED STOCK EXCHANGE THEN THEY REMAIN SPECUL ATIVE IN NATURE AND SET OFF SHALL BE ALLOWED OF SHORT-TERM C APITAL GAIN. AS THESE FACTS ARE NOT COMING OUT FROM THE MATERIAL ON RECORD WE SET ASIDE THE ISSUE BACK TO THE FILE OF AO TO AS CERTAIN WHETHER THE LOSS INCURRED OF RS. 65.66 LACS ON F& O TRANSACTIONS IS CARRIED ON RECOGNISED STOCK EXCHANG E FOR RESPECTIVE SECURITIES, COMMODITIES OR FOREIGN EXCH ANGE DERIVATIVES OR NOT. IF IT IS CARRIED ON RECOGNISED STOCK EXCHANGE THEN THE SHORT TERM CAPITAL GAIN OF RS. 20,94,678/- SHALL BE ADJUSTED AGAINST THE BUSINESS LOSS OF RS. 65,66,127 /- . IN CASE IT IS OTHERWISE , THEN SHORT-TERM CAPITAL GAIN CAN NOT BE 6 1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY ADJUSTED. NEEDLESS TO SAY, THE AO SHALL GRANT PROPE R OPPORTUNITY OF HEARING TO THE ASSESSEE TO ADDUCE EV IDENCE REGARDING RECOGNITION OF STOCK EXCHANGE. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 13/06/2016 . SD/- SD/- (H.S. SIDDHU) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13/06/2016 VEENA VEENA VEENA VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR