Shri Jagdish R.Acharya, Ahmedabad V. The ACIT.,Circle-10, Ahmedabad

ITA 160/AHD/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9697 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 16-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: R T SHAH
• Keywords: Reopening of assessment; Business income; Transactions in derivatives; Speculation loss; Difference of opinion; Change of opinion
• Section: 43(5)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.160/AHD/2013 ( / ASSESSMENT YEAR : 2005-06) JAGDISH R.ACHARYA 289/B,MANEKBAUG SOCIETY NR.MANEKBAUG HALL AMBAWADI AHMEDABAD-380 015 / VS. THE ACIT CIRCLE-10 NARAYAN CHAMBERS AHMEDABAD ' ./ ./ PAN/GIR NO. : AAQPA 0437 R ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( / APPELLANT BY : SHRI R.T. SHAH, AR &''% ) ( / RESPONDENT BY : SHRI ROOP CHAND, SR.DR * ) / DATE OF HEARING 23/06/2015 +,-. ) / DATE OF PRONOUNCEMENT 17/07/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XVI, AHMEDAB AD (CIT(A) IN SHORT) DATED 06/12/2012 PERTAINING TO ASSESSMEN T YEAR (AY) 2005-06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- (1) IN THE FACTS OF THE CASE AND IN LAW REOPENING OF AS SESSMENT U/S.148 BEING BASED ON WRONG PREMISES THAT BUSINESS IN GUAR SEEDS IS OF ITA NO.160 /AHD /2013 JAGDISH R.ACHARYA VS. ACIT ASST.YEAR 2005-06 - 2 - SPECULATIVE NATURE DONE THROUGH MULTI COMMODITY EXC HANGE (MCX) IS BAD IN LAW AND BE SET ASIDE. THE APPELLANT SUBM ITS THAT BUSINESS IS IN GUAR SEEDS IS NOT DONE THROUGH MCX BUT IT IS A TRADING BUSINESS OF PURCHASE AND SALE OF GUAR SEEDS FROM DI FFERENT PARTIES AS EXAMINED BY ACIT CIR.10, AHMEDABAD AS PER HIS RE MAND REPORT DT.05.01.2012 SENT TO CIT(A)XVI, AHMEDABAD. (2) THE A.O./CIT(A) HAVE NOT CONSIDERED THE FACT THAT C OMPLETE DETAILS OF PURCHASES/SALES OF GUAR SEEDS WERE FILED AT PAGE NO.31 AND 37 OUT OF 151 PAGES FILED IN ORIGINAL ASSESSMENT PROCE EDINGS U/S.143(3) AND DULY ACCEPTED THAT IT IS A TRADING B USINESS. REOPENING OF ASSESSMENT THUS BASED ON WRONG PREMISE S THAT THE SAID BUSINESS IS DONE THROUGH MCX IS BAD IN LAW AND BE C ANCELLED. (3) WITHOUT PREJUDICE TO THE ABOVE EVEN OTHERWISE BUSIN ESS IN GUAR SEEDS IS ADMITTED A TRADING BUSINESS AS PER REMAND REPORT DT.05.01.2012 AND 22.06.2012 SENT BY A.O. TO CIT(A) AND THEREFORE ALSO DISALLOWANCE OF TRADING LOSS TREATING IT AS SP ECULATION LOSS RS.1670258/- BE DELETED AND CONSEQUENTIAL RELIEF BE GRANTED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS REOPENED FOR ASSESSMENT AND THE ASSESSMENT U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 16/12/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT). IN THE ORIGINAL ASSESSMENT FRAMED U/S.143(3) OF THE AC T DATED 31/12/2007, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.11,78,170/-. HOWEVER, IN THE REASSESSMENT, THE INCOME WAS ASSESS ED AT RS.26,06,831/-. WHILE MAKING THE ASSESSMENT, THE A O TREATED THE TRANSACTION OF GAUR SEEDS AND SALES OF SHARES AS SP ECULATION LOSS AMOUNTING TO RS.16,70,258/- AND DISALLOWED THE SAME . AGAINST THIS, THE ITA NO.160 /AHD /2013 JAGDISH R.ACHARYA VS. ACIT ASST.YEAR 2005-06 - 3 - ASSESSEE FILED BEFORE THE LD.CIT(A), WHO AFTER CONS IDERING THE SUBMISSIONS DISMISSED THE APPEAL. 3. GROUND NOS.1 & 2 ARE AGAINST THE VALIDITY OF RE- OPENING THE ASSESSMENT U/S.148 OF THE ACT. THE LD.COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LD.CIT(A) A ND ALSO THE SYNOPSIS FILED BEFORE THIS TRIBUNAL. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN REOPENING THE ASSESSMEN T. HE SUBMITTED THAT THE REASONS FOR REOPENING THE ASSESSMENT ARE CONTRA RY TO THE RECORDS. THE LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TOWA RDS REASONS RECORDED BY THE AO FOR RE-OPENING THE ASSESSMENT. HE SUBMIT TED THAT THE AO TREATED THE TRANSACTION OF GUAR SEEDS AS TRANSACTIO N IN FUTURE AND OPTION (F&O). THE CONTENTION OF THE AO WAS THAT THE LOSS INCURRED IN THE TRADING OF COMMODITIES F& O, CRUDE OIL F&O, GOLD F &O, SILVER F&O AND GUAR FUTURES ARE SPECULATIVE IN NATURE, THE LOS S ARISING THEREFROM IS ALSO SPECULATIVE LOSS IN TERMS OF PROVISIONS OF S ECTION 43(5) OF THE ACT, WHICH SHALL NOT BE ALLOWED AGAINST THE NORMAL BUSIN ESS INCOME EARNED IN SHARE TRADING ACTIVITY. THE LD.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE ASSESSEE HAS NEVER CLAIMED THE TRANSACTION IN GUAR SEED AS F&O. HE SUBMITTED THAT A DETAILED REPLY WAS MADE TO THE NOT ICE ISSUED U/S.148 OF THE ACT. HE POINTED OUT THAT IT WAS CATEGORICALLY BROUGHT TO THE NOTICE OF THE AO THAT AS PER SCHEDULE-9 AND SCHEDULE 13 O F AUDITED ACCOUNTS, IT WAS SUBMITTED BEFORE HE AO THAT GUAR SEEDS ARE N OT F&O BUT IT WAS ON ITA NO.160 /AHD /2013 JAGDISH R.ACHARYA VS. ACIT ASST.YEAR 2005-06 - 4 - DELIVERY BASIS. THEREFORE, LOSS AGAINST SUCH TRA NSACTION IS RIGHTLY SET OFF AGAINST THE NORMAL BUSINESS INCOME. HE FURTHER SUB MITTED THAT ALL THE INFORMATION WAS AVAILABLE WITH THE AO AND THE AO OU GHT TO HAVE ACCEPTED THE SUBMISSIONS OF THE ASSESSEE. HE SUBMI TTED THAT IN THE ORIGINAL ASSESSMENT, THE AO HAS RIGHTLY ACCEPTED TH E CLAIM OF THE ASSESSEE. HE SUBMITTED THAT THE REOPENING IS MEREL Y ON THE BASIS OF CHANGE OF OPINION. HE FURTHER SUBMITTED THAT ALL D ETAILS WERE PLACED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS. THE LD.COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING CASE-LAWS:- (I) DEBASHIS MOULIK VS. ACIT (2015) 370 ITR 660 (CAL.) (II) TECHMAN BUILDWELL P.LTD. (2015) 370 ITR 771(DEL.) (III) CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) (IV) GUJARAT POWER CORPN. VS. ACIT 350 ITR 266 (GUJ.) 3.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO INFIRMITY IN T HE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT IT IS CORRECT THAT IN THE ACCOUNTS THE ASSESSEE HAS NOT SHOWN THE TRANSACTION IN GAUR SEED S AS F&O. FURTHER, THE ASSESSEE FAILED TO FURNISH THE EVIDENCE WITH RE GARD TO THE TRANSPORTATION OF THE GAUR SEEDS AND STORAGE OF THE SAME. UNDER THESE FACTS, THE AO WAS JUSTIFIED IN REOPENING THE ASSESS MENT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.160 /AHD /2013 JAGDISH R.ACHARYA VS. ACIT ASST.YEAR 2005-06 - 5 - WE FIND THAT THE AO HAS REOPENED THE ASSESSMENT ON THE GROUND THAT ON VERIFICATION OF THE AUDITED PROFIT & LOSS ACCOUNT I N RESPECT OF BUSINESS OF SHARES, SECURITIES AND COMMODITIES TRADING, IT IS S EEN THAT ASSESSEE HAS CARRIED OUT THE TRADING IN COMMODITIES F&O, CRUDE O IL F&O, GOLD F&O, SILVER F&O & GUAR SEEDS FUTURES AND ALSO SHARE TRADING ACTIVITY. ON VERIFICATION OF THE DETAILS AVAILABLE ON RECORD, IT IS NOTICED THAT THE ASSESSEE HAS SET OFF THE LOSSES ARISING IN FUTURE & OPTION BUSINESS AGAINST THE PROFIT EARNED IN SHARE TRADING ACTIVITY. THE C ONTENTION OF THE ASSESSEE IS THAT HE HAD NOT TRANSACTED GAUR SEEDS F&O WHICH IS WRONGLY MENTIONED BY THE AO. IT IS FURTHER CONTENTED THAT IT WAS POINTED OUT TO THE AO THAT THERE WAS ALSO MISTAKE IN MENTIONED THE FIGURE OF RS.66,72,252/- UNDER THE HEADS SALES OF SHARES AN D IT SHOULD HAVE BEEN OF RS.6,67,52,252/-. HOWEVER, THE FINAL FIGURE WAS TAKEN IN SHARES AS RS.35,72,694/-. THE LD.COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE AO IN REMAND REPORT, PLACED AT PAGE NOS.48 TO 50 OF THE P APER-BOOK, HAS CONFIRMED THE FACT THAT GAUR SEEDS WERE PURCHASED A ND DELIVERY IS STATED TO HAVE BEEN TAKEN. UNDER THESE FACTS, AT THIS STA GE, WE NEED TO EXAMINE WHETHER THE AO HAD APPLIED HIS MIND DURING THE ORIG INAL ASSESSMENT PROCEEDINGS ON THE DETAILS SO FURNISHED AND ALSO WH AT WERE THE DETAILS AVAILABLE WITH THE AO AT THAT POINT OF TIME. AS PE R ANNEXURE-C TO THE TAX AUDIT REPORT OF FORM 3CD PLACED AT PAGE 36 OF THE P APER-BOOK STATED GAUR FUTURE. THE SAID ANNEXURE-C IS REPRODUCED HEREINBE LOW:- ANNEXURE-C: QUANTITATIVE DETAILS: ITA NO.160 /AHD /2013 JAGDISH R.ACHARYA VS. ACIT ASST.YEAR 2005-06 - 6 - QUANTITATIVE DETAILS OF PRINCIPAL ITEMS OF GOODS TR ADED ITEM OPENING STOCK PURCHASES SALES CLOSING STOCK CRUDE FUTURE 0 600 600 0 FUTURE & OPTION SHARES 0 98700 98700 0 GUAR GUNI 0 1700 1100 600 GOLD FUTURE 0 237100 237100 0 GUAR FUTURE 0 13100 13100 0 EQUITY SHARES FOR LONG TERM GAIN 3102 112 0 3214 EQUITY SHRES FOR SHORT TERM GAIN 170 143856 141912 2114 SILVER FUTURE 0 28770 28770 0 TOTAL 3272 523938 521282 5928 4.1. THERE IS NO WHISPER IN THE ASSESSMENT ORDER PA SSED U/S.143(3) (ORIGINAL ASSESSMENT PROCEEDINGS) OF THE ABOVE REFE RRED ANNEXURE.. THIS GOES TO DEMONSTRATE THAT THE AO HAD NOT EXAMINED TH IS ASPECT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO INFIRMITY INTO RE-OPENING OF THE ASSESSMENT WHEN THE ASSESSEE HIMS ELF HAS SHOWN TO HAVE TRANSACTED IN GUAR FUTURE. MOREOVER, THERE IS NO MATERIAL PLACED ON RECORD SUGGESTING THAT THE AUDITOR CLARIFIED IT TO BE TYPOGRAPHICAL ERROR, COUPLED WITH THE FACT THAT LD.CIT(A) HAD GIVEN A FI NDING ON FACT THAT NO EVIDENCE IS FURNISHED IN SUPPORT OF THE TRANSPORTA TION AND STORAGE OF THE GUAR SEEDS. THE ASSESSEE HAS STATED THAT THE DEL IVERY OF GUAR SEEDS WERE TAKEN, HOWEVER, NO EVIDENCE IS FURNISHED TO RE BUT THE FINDING OF ITA NO.160 /AHD /2013 JAGDISH R.ACHARYA VS. ACIT ASST.YEAR 2005-06 - 7 - LD.CIT(A). IN THE LIGHT OF ABOVE DISCUSSION GROUND NOS.1 & 2 OF THE ASSESSEES APPEAL ARE DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 17 TH DAY OF JULY, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 17/ 07 /2015 2.., .../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-XVI, AHMEDABAD 5. 7 8 &45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 8:; <* / GUARD FILE. / BY ORDER, '7 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 9.7.15 (DICTATION-PAD 10+ P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10/14.7.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.17.7.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.7.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER