Shri Krushnalal Bhagwands Patel, Surat V. Income Tax Officer, Ward -1(3)(7), Surat

ITA 202/SRT/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8127 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 29-02-2024
• Assessment Year: 2009-2010
• Appeal Filed On: 22-03-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Depreciation; Transactions in derivatives; Additional evidence; Speculation loss; Revised return; Unabsorbed depreciation
• Section: 147; 68; 148; 143(3); 43(5); 192; 73

Judgement Text

आयकर अपीलीय अिधकरण, सुरत Ɋायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER आ.अ.सं./ITA No.202/SRT/2023 (AY 2009-10) (Hearing in Physical Court) Krushnalal Bhagwandas Patel 3/36, Amba Krishna Bhavan, Ambaji Chowk, Rander, Surat-395005 PAN No. ADPPP 8611 A Vs Income Tax Officer, Ward- 1(3)(7), Aaykar Bhavan, Majura Gate, Surat-395001 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri P.M.Jagasheth, C.A राजˢ की ओर से /Revenue by Shri Vinod Kumar, Sr-DR सुनवाई की तारीख/Date of hearing 01.03.2024 उद्घोषणा की तारीख/Date of pronouncement 26.03.2024 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [ for short to as “NFAC)/Ld. CIT(A)”] dated 21.02.2023 for the assessment year 2009-10, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) r.w.s 254 of Income Tax Act, 1961 (‘the Act’) on 14.12.2018. The assessee has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in re-opening the assessment u/s 147 of the Act and notice u/s 148 of the Act was issued. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer ITA No.202/SRT/2023 (A.Y 09-10) Krushnalal Bhagwandas Patel 2 has erred in making addition of Rs.13,30,000/- on account of cash deposits in ICICI bank account of Rs.17,05,000/- after given effect of withdrawals to the turn of Rs.3,75,000/- remaining cash deposits treated as alleged unexplained cash credit u/s 68 of the Income Tax Act, 1961. 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer has erred in making addition of Rs.20,01,705/- on account of credits entries reflecting in bank account treated as alleged unexplained credit u/s 68 of the I.T. Act, 1961. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Office has erred in making addition of Rs.10,83,000/- on account of alleged unexplained credit including cash deposit of Rs.1,83,000/- treated as alleged unexplained cash and credits u/s 68 of the Income Tax Act,1961 and the same was treated as income derived from alleged undisclosed sources. 5. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer has erred in disallowing claimed of F & O loss of Rs.33,55,167/- against additions made on the basis of alleged undisclosed bank account and alleged unexplained deposits. 6.It is therefore prayed that the above addition may please be deleted as learned Members of the Tribunal may deem it proper. 7. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 2. Brief facts are that assessee is engaged in retail trading of fireworks, filed his return of income for assessment year 2009-10 on 05.11.2009 declaring income of Rs. 71,210/-. The case was selected for scrutiny. The Assessing Officer while passing the assessment order made three ITA No.202/SRT/2023 (A.Y 09-10) Krushnalal Bhagwandas Patel 3 additions of Rs.13.30 lakh on account of cash deposit in ICICI Bank; Rs.20,01,705/- on account of credit in bank account entries and Rs.10.83 lakhs cash deposit in another bank account with ICICI Bank. The assessee also claimed set off loss of Rs. 33,55,167/-on Forward and Options (F & O for short) trading. The loss of Rs. 33,55,167/-was also disallowed by assessing officer. On appeal before Ld. CIT(A) the action of Assessing Office was upheld vide order dated 24.01.2014. On further appeal before Tribunal, the matter was restored back to the file of assessing officer in ITA No.1510/AHD/2014 dated 14.07.2017. the Tribunal while restoring back the case / all the issues held that the Ld. CIT(A) has not considered the additional evidence by holding that such evidences were not produced before the Assessing Officer. Further, it was noted that the bank account was incorrectly shown in the show cause notice and that assessee was not allowed sufficient opportunity to explain the source of cash deposits as well as credit entries in ICICI Bank Account No.01930100100. In an order giving effect to the direction by Tribunal, the Assessing Officer passed fresh assessment order dated 14.12.2018 under section 143(3) r.w.s. 254 of the Act. The Assessing Officer while passing fresh assessment order reinstated all the additions including disallowance of loss of Rs.33,55,167/-. 3. On appeal further before Ld. CIT(A), the Ld.CIT(A) confirmed the addition as well as disallowance of loss of Rs. 33,55,167/-. The Ld. CIT(A) while confirming the disallowance of loss referred and relied upon the decision of Hon’ble jurisdictional High Court in the case of ITA No.202/SRT/2023 (A.Y 09-10) Krushnalal Bhagwandas Patel 4 Truptiben Bakulbhai Patel Vs. ITO in Tax Appeal No.480 of 2017 dated 04.09.2017. It was also held that the special adventure of the assessee cannot be adjusted with the unexplained income of assessee which is claimed to be arisen partly under agricultural income. Further aggrieved, the assessee has filed present appeal before the Tribunal. 4. We have heard the submissions of the Ld. Authorized Representative (Ld.AR) for the assessee and Ld. Senior Departmental Representative (Ld. Sr-DR) for the Revenue. The Ld. AR for the assessee submits that the assessee in the business of retail trading of fireworks and such fact is accepted by Assessing Office in column-9 of title of assessment order. Besides that, the assessee has also having agricultural income. The assessee has already placed on record, record of agricultural holding and such fact brought in the notice of lower authorities also. The Assessing Office made addition on account of cash credit in the account, on the ground that such account was not disclosed in the return of income by the assessee. The Ld. AR for the assessee submits that now he has a limited prayer for allowing the set off of claim of F&O loss of Rs.33,55,167/-only, against the additions made on the basis of alleged undisclosed bank account and unexplained deposits therein. If such loss is allowed to set off, he will not pray for any other grounds of appeal. The Ld. AR for the assessee submits that Hon’ble Calcutta High Court in the case of Asian Financial Services Ltd. Vs CIT [2016] 70 taxmann.com 9 (Cal)/[2016] 240 Taxman 192 (Cal)/[2017] 293 CTR 240 (Cal)[09-03-2016], wherein it was held that ITA No.202/SRT/2023 (A.Y 09-10) Krushnalal Bhagwandas Patel 5 loss incurred on account of derivatives would be deemed business loss under the proviso to section 43(5) and not speculation loss and hence, explanation to Section 73 cannot be applied and such loss can be set off against the business income. The Special Leave Petition (SLP) filed by the Department against the decision of Hon’ble Calcutta High Court in the case of CIT Vs Asian Financial Services Ltd. [2016] 75 taxmann.com 68 (SC)/[2016]243 Taxman 147 (SC)[19-10-2016] has been dismissed by Hon’ble Apex Court. The Ld.AR of the assessee submits that though the assessee has not claimed such loss in the return of income filed initially, however, such plea was raised during the assessment by way of submission and initially such plea of assesse was not accepted. However, before First Appellate Authority, in first round of appeal, the assessee furnished details of such loss and transaction of F&O in the undisclosed bank account. Once the addition in respect of credit in the undisclosed amount is accepted and made addition then assessee is eligible for set off such loss in F&O. The Ld. AR for the assessee submits that he has a similar plea before First Appellate Authority as well as before the Tribunal. 5. The Ld. AR for the assessee fairly submits that though the assessee was not entitled to raise additional claim before Assessing Officer, however, such claim could be raised before the First Appellate Authority or before the Tribunal as has been held by jurisdictional High Court in the case of CIT Vs Mitesh Impex reported in [2014] 46 taxmann.com 30 (Guj). The assessee raised such claim before ld. CIT(A) in first round, and also hesitated before Tribunal, despite the ITA No.202/SRT/2023 (A.Y 09-10) Krushnalal Bhagwandas Patel 6 fact that case of assessee was restored back to the file of Assessing Officer yet the claim of assessee was not considered and allowed. The Ld. AR for the assessee further submits that facts in the case of Truptiben Bakulbhai Patel (supra) referred and relied by ld CIT(A), is differ from the facts of the present case. In the said case, assessee has raised additional grounds of appeal, however, the assessee in the present case is raising his plea before ld CIT(A), before Tribunal in first rounds and in restoration proceedings before the Assessing Officer. 6. To support his plea, Ld. AR for the assessee further submits that case of assessee is fully covered by the decision of Hon’ble jurisdictional High Court in the case of CIT Vs Shilpa Dyeing & Printing Mills Pvt. Ltd. (2013) 39 taxmannn.com 3 (Guj), wherein it was held by High Court that current year loss can be set off against undisclosed income. To support his various other contention, the Ld. AR for the assessee also relied upon the following case law;  Asian Financial Limited Vs CIT (2016) 70 taxmann.com 9(Cal),  CIT Vs Asian Financial Limited (2016) 75 taxmann.com 68 (SC),  CIT Vs Shree Raghupati Fibers Pvt. Ltd. Tax Appeal No.190 of 2015 dated 10.04.2015,  Shri Rajeshkumar Popatbhai Gabani Vs. ITO in ITA No.1535- 1537/AHD/2017 dated 14.02.2020,  ITO Vs Smt Anisha Nailesh Natali in ITA No.2895/AHD/2011 dated 10.05.2013,  Rajender Kumar Anand Vs ITO [2022] 140 taxmann.com 340 (Del.- Trib.) [25.05.2022],  Copy of record of agriculture holding showing the name of assessee,  CBDT Circular No.11/2019 dated 19 th June 2019. 7. On the other hand, the ld Sr-DR for the revenue supported the order of lower authorities. The Ld. Sr-DR for the Revenue submits that all ITA No.202/SRT/2023 (A.Y 09-10) Krushnalal Bhagwandas Patel 7 the contentions of assessee was considered by lower authorities while passing assessment order as well as while confirming the addition by First Appellate Order/ Ld CIT(A). The ld Sr DR for the revenue submits that the ratio of decision in Truptiben Bakulbhai Patel (supra) is absolutely applicable on the facts of the present case. 8. We have considered the rival contentions of both the parties and gone through the order of lower authorities carefully. We have also deliberated on various case laws relied by the ld AR for the assessee. Before us, the ld AR for the assessee while making his submissions prayed that he is only pressing the allowance of set off of loss suffered in F&O loss. The ld AR for the assessee submits that such claim was raised in first round of appeal before ld CIT(A) and hesitated before Tribunal and fairly accepts that there is no express admission of additional ground of appeal, however fact remain is same that appeal of assessee was remanded on all issues to the Assessing Officer including claim of set off, on the other hand, admittedly that there is no express rejection of additional ground of appeal. We find merit in the submissions that all the issues/ grounds of appeal raised by the assessee were restored to the file of assessing officer by Tribunal and there was no rejection of additional ground of appeal raised by the assessee. It is admitted position under income tax assessment that the assessing officer is not entitled to admit additional claim in absence of revised return of income filed by the assessee, however, there is no such restriction on the power of appellate authority to entertain and admits such claim, provided facts related to the ITA No.202/SRT/2023 (A.Y 09-10) Krushnalal Bhagwandas Patel 8 adjudication of such claim or issue is available on record. We find that the assessee has already brought such additional claim/ issue of set of loss in the first round of appeal before ld CIT(A). Thus, in view of the aforesaid position of facts and the decisions of Jurisdictional High Court in Mitesh Impex (2014) 46 taxmann.com 30 (Gujarat), we expressly admit the claim of setting of loss. 9. From the material available on record, we find that the assessee is doing agriculture activities, selling of fire and dealing in F&O. In F&O transactions the assessee suffered loss of Rs. 33,55,167/-. We find that Hon’ble Jurisdictional High Curt in CIT Vs Shilpa Dyeing & Printing Mills Pvt. Ltd. (supra) held that current year loss can be set off against undisclosed income. The Hon’ble Calcutta High Court in Asian Financial Services Ltd Vs CIT (2016) 70 taxmann.com 9 (Cal) held that loss incurred on account of derivatives would be deemed business loss under proviso to section 43(5) and not speculative loss and hence, Explanation to section 73 could not be applied; as such loss would be setoff against the income from business. We further find that Jurisdictional High Court in CIT Vs Shree Raghupati Fibre Pvt Ltd (supra) on the basis of decision of Apex Court in CIT Vs D P Sandu Bros Chembur (P) Ltd (2005) 273 1(SC) also held that brought forward unabsorbed depreciation can be set off against the income which is assessable under the head ‘income from other sources’. Further CBDT in its Circular No. 11/2019 also clarify that section 115BBE was inserted w.e.f. 01.04.2017 and the assessee is entitled for ‘set off of any loss’ against the additions of section(s) 68/69/69A/69B/ ITA No.202/SRT/2023 (A.Y 09-10) Krushnalal Bhagwandas Patel 9 69C/69D till AY 2016-17. Thus, in view of the aforesaid factual and legal discussions the assessee is entitled for to set off his losses suffered in F & O transaction against the additions made in the assessment or income declared by the assessee. 10. So far as reliance on the case law by ld Sr DR for the revenue in Truptiben Bakulbhai Patel Vs ITO (supra) is concerned, with utmost regard to the decision of High Court, we find that the fact of assessee in that is at variance, in the said case the additional claim of assessee was not admitted, nor that assessee has filed return of income. However, in the present case the assessee has filed return of income and raised additional claim/ plea before first appellate authority in first round of appeal for seeking set off of losses. So the facts of Truptiben Bakulbhai Patel (supra) is peculiar. In the result, the ground No. 5 of the appeal is allowed. 11. Considering the facts that the ld AR for the assessee has not argued/ pressed any other grounds of appeal, therefore all other grounds of appeal are dismissed as not pressed. 12. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 26/03/2024. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) [लेखा सद˟/ACCOUNTANT MEMBER] [Ɋाियक सद˟ JUDICIAL MEMBER] Surat, Dated: 26/03/2024 Dkp. Out Sourcing Sr.P.S ITA No.202/SRT/2023 (A.Y 09-10) Krushnalal Bhagwandas Patel 10 Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Sr. Private Secretary /Private Secretary /Assistant Registrar, ITAT, Surat True copy/