Sunil Kumar Agrawal, Kolkata V. DCIT, Circle - 4(2), Kolkata , Kolkata

ITA 1729/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5864 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 26-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: SANTOSH KUMAR AGARWAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC, KOLKATA [BEFORE SHRI P.M. JAGTAP, AM] I.T.A. NO. 1729/KOL/2017 ASSESSMENT YEAR: 2005-06 SUNIL KUMAR AGARWAL.....................................................APPELLANT 391, S.N. ROY ROAD, KOLKATA 700 038. [PAN: ACSPA 0118 R] DCIT CIRCLE 4(2) KOLKATA....................................RESPONDENT P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. APPEARANCES BY: SHRI SANTOSH KUMAR AGARWAL, FCA APPEARING ON BEHALF OF THE ASSESSEE. SHRI ROBIN CHOWDHURY, ADDL. CIT APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : MAY 31, 2018 DATE OF PRONOUNCING THE ORDER : JULY 20, 2018 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS) 2, KOLKATA DATED 11.04.2017. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 29.07.2005 DECLARING A TOTAL INCOME OF RS. 2,70,000/-. THE ASSESSEE HAD CLAIMED TO HAVE CARRIED ON THE BUSINESS OF PURCHASE AND SALE OF SHARES DURING THE YEAR UNDER CONSIDERATION AND THE LOSS OF RS. 3,03,206/- FROM THE SAID BUSINESS WAS CLAIMED BY HIM IN THE RETURN OF INCOME. ACCORDING TO THE A.O., THERE WERE NO ENOUGH TRANSACTIONS OF PURCHASE AND SHARES OF SALE BY THE ASSESSEE TO ACCEPT THE CLAIM OF THE ASSESSEE OF HAVING CARRIED ON THE SHARE TRADING BUSINESS. HE ALSO NOTED THAT THERE WAS NO CLOSING STOCK OF SHARES. THE ASSESSEE HAD CLAIMED INTEREST EXPENDITURE OF RS. 9,40,188/- UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. IN THIS REGARD, THE A.O. FOUND THAT THE ENTIRE BORROWED FUNDS WERE UTILISED BY THE ASSESSEE FOR PERSONAL PURPOSE. 2 I.T.A. NO. 1729/KOL/2017 ASSESSMENT YEAR: 2005-06 SUNIL KUMAR AGARWAL HE ACCORDINGLY DISALLOWED THE ENTIRE CLAIM OF THE ASSESSEE FOR INTEREST EXPENDITURE. ACCORDINGLY, THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS DETERMINED BY THE A.O. AT RS. 9,04,621/- IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 27.11.2007. ON APPEAL, THE LD. CIT(A) UPHELD THE ORDER OF THE A.O. SUBSTANTIALLY. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT APPEAL ERRED IN NOT HOLDING THAT THERE WAS ENOUGH SALE/PURCHASE OF SHARES TO JUSTIFY THAT THE ASSESSEE WAS IN SHARE TRADING BUSINESS AND NOT ALLOWING BUSINESS LOSS ON THAT GROUND. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT APPEAL ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST TO THE EXTENT OF RS. 8,86,278/- (9,40,188 53,910). 3. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT APPEAL ERRED IN NOT ADJUDICATING THE FOLLOWING ADDITIONAL GROUND FILED ON 13.01.2010. THAT THE LEARNED A.O. ERRED IN NOT SETTING OF BROUGHT FORWARD BUSINESS LOSS AGAINST THE INCOME FROM BUSINESS OF RS. 6,36,982/- FOR THE YEAR UNDER APPEAL. 3. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED MY ATTENTION TO THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION PLACED AT PAGE NO 7 OF THE PAPER BOOK TO POINT OUT THAT THERE WAS OPENING STOCK OF SHARES OF RS. 1,24,804/- WHILE PURCHASES AND SALE OF SHARES WERE TO THE TUNE OF RS. 20,78,054/- AND RS. 27,58,412/- RESPECTIVELY. HE HAS CONTENDED THAT THESE FACTS AND FIGURES ARE SUFFICIENT TO SHOW THAT THE ASSESSEE HAD CARRIED ON THE BUSINESS OF TRADING IN SHARES DURING THE YEAR UNDER CONSIDERATION AND THE A.O. WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE OF HAVING CARRIED ON SUCH BUSINESS MERELY ON THE GROUND 3 I.T.A. NO. 1729/KOL/2017 ASSESSMENT YEAR: 2005-06 SUNIL KUMAR AGARWAL THAT THE QUANTUM OF TRANSACTION WAS NOT SUFFICIENT. HE HAS ALSO CONTENDED THAT THE ASSESSEE HAD CARRIED ON THE SIMILAR BUSINESS EVEN IN THE EARLIER YEARS AND THE SAME WAS ACCEPTED BY THE A.O. A PERUSAL OF THE ORDER PASSED BY THE A.O. ALSO SHOWS THAT THE INCOME OF THE ASSESSEE WAS COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION BY THE A.O. HIMSELF WHICH FULLY SUPPORTS THE CLAIM OF THE ASSESSEE THAT THE BUSINESS OF TRADING IN SHARES WAS CARRIED ON BY HIM DURING THE YEAR UNDER CONSIDERATION. I, THEREFORE, ACCEPT THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE BUSINESS OF TRADING IN SHARES WAS CARRIED ON BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND ALLOW GROUND NO 1 OF THE ASSESSEES APPEAL. 4. AS REGARDS THE ISSUE RELATING TO DISALLOWANCE OF INTEREST RAISED IN GROUND NO 2, A PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE AS ON 31 ST MARCH, 2005 PLACED AT PAGE NO 5 OF THE PAPER BOOK SHOWS THAT THE ENTIRE BORROWED FUNDS WERE UTILISED BY THE ASSESSEE FOR PERSONAL PURPOSES AND THERE IS NOTHING TO SHOW THAT SUCH BORROWED FUNDS WERE UTILISED EVEN PARTLY FOR THE PURPOSE OF BUSINESS OF TRADING IN SHARES. EVEN THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT RAISED ANY MATERIAL CONTENTION IN SUPPORT OF THE ASSESSEES CASE ON THIS ISSUE AND HAS ONLY CONTENDED THAT DISALLOWANCE OF RS. 53,910/- WAS MADE BY THE ASSESSEE SUO MOTO IN THE COMPUTATION OF INCOME ON ACCOUNT OF INTEREST. IN THIS REGARD, IT IS OBSERVED THAT THE LD. CIT(A) HAS ALREADY ALLOWED A RELIEF TO THE ASSESSEE ON THIS ISSUE TO THE EXTENT OF RS. 53,910/- BY OBSERVING THAT THERE WAS A DOUBLE DISALLOWANCE TO THAT EXTENT. WE, THEREFORE, FIND NO MERIT IN THE CASE OF THE ASSESSEE ON THIS ISSUE. GROUND NO 2 IS ACCORDINGLY DISMISSED. 4 I.T.A. NO. 1729/KOL/2017 ASSESSMENT YEAR: 2005-06 SUNIL KUMAR AGARWAL 5. AS REGARDS THE ISSUE INVOLVED IN GROUND NO 3 RELATING TO THE ASSESSEES CLAIM FOR SET OF OFF BROUGHT FORWARD BUSINESS LOSS, IT IS OBSERVED THAT THIS ISSUE RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) BY WAY OF AN ADDITIONAL GROUND HAS NOT BEEN DECIDED BY THE LD. CIT(A) VIDE HIS IMPUGNED ORDER. SINCE THE CLAIM OF THE ASSESSEE RELATING TO THE SET OF OFF BROUGHT FORWARD BUSINESS LOSS REQUIRES VERIFICATION FROM THE RELEVANT RECORD, I DIRECT THE A.O. TO CONSIDER AND DECIDE THE SAME AFTER NECESSARY VERIFICATION IN ACCORDANCE WITH LAW. GROUND NO 3 OF THE ASSESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER DATED: 20/07/2018 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. SUNIL KUMAR AGARWAL, 391, S.N. ROY ROAD, KOLKATA 700 038. 2. DCIT, CIRCLE 4(2), P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. 3. THE CIT(A) [SENT THROUGH MAIL] 4. THE CIT 5. DR [SENT THROUGH MAIL] TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA