M/s. Rishabh Heights Pvt. Ltd., Meerut V. ITO, Meerut

ITA 1854/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5110 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 29-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Opportunity of being heard; Transactions in derivatives

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC: NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.1854/DEL./2017 ASSESSMENT YEARS 2012-2013 M/S. RISHABH HEIGHTS P. LTD., A-5, RAJ KAMAL ENCLAVE, DELHI ROAD, MEEERUT. PAN AAECR1165J VS. THE INCOME TAX OFFICER, WARD-2(2), MEERUT. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI ROHIT AGARWAL, C.A. FOR REVENUE : SHRI T. VASANTHAN, SR. D.R. DATE OF HEARING : 08.08.2017 DATE OF PRONOUNCEMENT : 08.08.2017 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A), MEERUT DATED 27 TH JANUARY, 2017 FOR A.Y. 2012- 2013, CHALLENGING THE ADDITION OF RS.7,24,999. 2. BRIEFLY STATED, THE A.O. CONSIDERED THE ISSUE OF LO SS INCURRED BY THE ASSESSEE IN COMMODITY DERIVATIVES TRAD ING BUSINESS. THESE DEALINGS WERE MADE THROUGH SHRI SANJIV MITTAL, DIRECTOR OF COMPANY. THE A.O. ASKED THE ASSESSEE TO EXPLAIN, WHEN SHRI SANJEEV MITTAL IS ONE OUT OF THE KEY CONTROLLING PERSONS, THEREFO RE, AS TO WHY THE COMMODITY LOSS BE NOT TREATED AS CAPITAL LOSS AND N OT OF REVENUE. THE ASSESSEE SUBMITTED THAT THIS BUSINESS WAS STARTED WI TH THE COMPANYS FUNDS, THEREFORE, IT SHOULD BE TREATED AS CO MPANYS BUSINESS ONLY. ACCORDING TO THE ASSESSEE, THE COMPANY AS WELL AS ABOVE DIRECTORS WERE AUTHORISED TO DEAL IN COMMODITY B USINESS VIDE RESOLUTION OF THE COMPANY TO DEAL AND TO TAKE DECISION FOR PURCHASE/SALE OF DERIVATIVES ON BEHALF OF THE COMPAN Y. THE A.O. 2 ITA.NO.1854/DEL./2017 M/S. RISHABH HEIGHTS P. LTD., MEERUT. HOWEVER, DO NOT ACCEPT THE CONTENTION OF THE ASSESSEE AN D DISALLOWED THE SAME AND MADE THE ADDITION OF RS.7,24,999 ON ACCOU NT OF COMMODITY LOSS. THE LD. CIT(A) CONFIRMED THE ADDITION BECAUSE ASSESSEE HAS NOT FILED MEMORANDUM OF ASSOCIATION OF TH E ASSESSEE COMPANY WHICH COULD JUSTIFY AND AUTHORISE WHETHER THE ASSESSEE COMPANY CAN INDULGE IN SPECULATIVE TRANSACTION IN THE F IRST PLACE OR NOT. WHETHER IN THE FIRST PLACE DO THE OBJECTS OF THE COMP ANY PERMIT SUCH TRANSACTION. THE LD. CIT(A) IN THE ABSENCE OF S UFFICIENT MATERIAL ON RECORD, CONFIRMED THE ADDITION AND DISMISSED THE AP PEAL OF ASSESSEE. 3. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM OF THE VIEW THAT THE MATTER REQUIRE RECONSIDERATION AT THE LEVEL OF TH E LD. CIT(A). LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. CIT (A) WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD TO ASSESSEE A ND WITHOUT ASKING FOR THE ABOVE DOCUMENTS, DISMISSED THE APPEAL O F ASSESSEE. HE HAS SUBMITTED THAT ASSESSEE IS WILLING TO PRODUCE MEMORA NDUM OF ASSOCIATION AND OTHER DOCUMENTS AS REQUIRED BY LD. CI T(A) BEFORE HIM FOR DISPOSAL OF THE APPEAL. 4. THE LD. D.R. HOWEVER, RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. ACCORDING TO LD. CIT(A), MEMORANDUM OF A SSOCIATION OF THE ASSESSEE COMPANY IS NECESSARY TO DECIDE THE ISSUE OF SPECULATIVE TRANSACTION DEALING IN COMMODITY TRANSACTIONS AND ASSE SSEE IS WILLING TO PRODUCE THE SAME BEFORE THE LD. CIT(A). THEREFORE, ONE MORE OPPORTUNITY COULD BE GIVEN TO THE ASSESSEE TO PRODUCE S UCH DOCUMENTS BEFORE THE LD. CIT(A) FOR PROPER DISPOSAL OF THE MATTE R IN ISSUE. THE A.O. NOTED THAT THESE DEALINGS WERE MADE THROUGH SHRI SA NJEEV MITTAL, DIRECTOR OF THE COMPANY. THESE TRANSACTIONS ARE ON REGU LAR BASIS AND ARE NOT OF CASUAL NATURE. SINCE THE DOCUMENTS REQUIRED BY THE LD. CIT(A) ARE NECESSARY FOR DISPOSAL OF THE APPEAL AND ASSESSEE IS WILLING 3 ITA.NO.1854/DEL./2017 M/S. RISHABH HEIGHTS P. LTD., MEERUT. TO PRODUCE THE SAME BEFORE THE LD. CIT(A), THEREFORE, I SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE APPEAL OF THE A SSESSEE TO HIS FILE WITH A DIRECTION TO RE-DECIDE THE APPEAL OF ASSESSEE IN ACCORDANCE WITH LAW. ASSESSEE IS DIRECTED TO FILE COPY OF THE MEMORAN DUM OF ASSOCIATION OF THE ASSESSEE COMPANY AND OTHER DOCUMENTS BEFORE THE LD. CIT(A) TO HIS SATISFACTION FOR THE DISPOSAL OF APP EAL. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 08 TH AUGUST, 2017 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH 6. GUARD FILE // BY ORDER // ASST. REGISTRAR ITAT : DELHI BENCHES DELHI.