Deepali Kothari, Raipur V. Assistant Commissioner of Income tax, Central Circle-II, Raipur

ITA 212/RPR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1442 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 19-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT M JAIN
• Keywords: Unexplained cash credit; Search and seizure; Bonafide belief; Deemed to accrue or arise in india; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Borrowed satisfaction
• Section: 68; 132; 143(3); 153A; 139(1)

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 212/RPR/2019 Ǔनधा[रण वष[ / Assessment Year : 2011-12 Smt. Deepali Kothari, 27/28, Wallfort Enclave, Pachpedi Naka, Raipur (C.G.)-492 001 PAN : BFDPK8567D .......अपीलाथȸ / Appellant बनाम / V/s. The Assistant Commissioner of Income Tax, Central Circle-II, Raipur (C.G.) ......Ĥ×यथȸ / Respondent आयकर अपील सं. / ITA No.215/RPR/2019 Ǔनधा[रण वष[ / Assessment Year : 2011-12 Smt. Ritu Kothari, 103, Amaltas, DM Vatika, Shankar Nagar, Raipur (C.G.)-492 001 PAN : AKIPK5337N .......अपीलाथȸ / Appellant 2 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 बनाम / V/s. The Assistant Commissioner of Income Tax, Central Circle-II, Raipur (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : Shri Amit M Jain, Advocate Revenue by : Shri P. K Mishra, CIT-DR स ु नवाई कȧ तारȣख / Date of Hearing : 27.07.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 29.08.2022 आदेश/ ORDER PER RAVISH SOOD, JM: The captioned appeals filed by the aforementioned assessees are directed against the respective orders passed by the CIT(Appeals)-3, Bhopal, dated 20.09.2019, which in turn arises from the orders passed by the A.O in their cases under Sec.143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short ‘the Act’) dated 30.12.2018 for assessment year 2011-12. As common issues are involved in the aforementioned appeals, therefore, the same are being taken up and disposed off together by way of a consolidated order. 3 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 2. We shall take up the appeal in ITA No.212/RPR/2019 for the assessment year 2011-12 in the case of the appellant, viz. Smt. Deepali Kothari as the lead matter and the order therein passed shall mutatis-mutandis apply for the purpose of disposal of the other appeal in ITA No.215/RPR/2019 for A.Y.2011-12. Before us the assessee has assailed the impugned order on the following grounds of appeal: 1. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in change in his opinion which was already formed during 153A assessment proceeding is not permissible for reopening of case u/s.147/148. Thus, the order passed by the A.O. and sustained the same by the CIT-A is invalid. 2. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in forming reason mechanically based on the report received from Investigation wing without analyse the fact properly. Thus, the order passed by the A.O. and sustained the same by the CIT-A is unjustified, unwarranted and uncalled for. 3. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in reopening of the case u/s 148 even after the case of the assessee was already assessed u/s 153A r.w.s 143(3) and the assessee has disclosed all material fact during the course of 153A proceeding and no failure on the part of the assessee. Thus the order passed by the A.O. and sustained the same by the CIT-A is against the 1st proviso to section 147 and is invalid and void ab-initio. 4. On facts and circumstances of the case, the CIT(A) has erred in making addition, without providing the information to the assessee on which relying upon before reopening of the case which is against the principle of natural justice Thus the order passed by the A.O. and sustained the same by the CIT-A is violation of principle justice is bad in law and void ab-initio. 4 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 5. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in making addition Rs.16,70,927/- on account of Income from NMCE as unexplained credit u/s 68 irrespective of the fact that the same income was duly offered by the assessee in original return and taxes were also duly paid. Thus, the order passed by the A.O. and sustained the same by CIT-A is unjustified, unwarranted and uncalled for. 6. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O has erred in disallowing the setoff of loss of Rs.8,56,575/-against income from NMCE without mentioning any reason. Thus the disallowances of setoff of loss without mentioning any reason by the A.O. and sustained the same by the CIT-A, is unjustified, unwarranted and uncalled for. 7. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O has erred in making addition of Rs.33,420/- as commission paid for obtaining accommodation entry u/s 69C. Thus, the addition made by the A.O. and sustained the same by the CIT-A is unjustified, unwarranted and uncalled for. 8. The assessee reserves the right to add, amend or alter any grounds of appeal at any time of hearing.” 3. Succinctly stated, the assessee had filed her return of income for the assessment year 2011-12 on 21.10.2011, declaring an income of Rs.7,30,160/-. Search and seizure operations u/s.132 of the Act were conducted at the residential premises of the assessee on 11.03.2016. Assessment was thereafter framed under Sec. 153A r.w.s.143(3) dated 28.12.2017 determining the income of the assessee at Rs.7,30,160/- i.e. as originally returned by her. 5 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 4. Subsequently, on the basis of information received by the A.O from the office of Dy. Director of Income Tax (Investigation), Kolkata, that the information as was shared by the Ahmedabad Directorate, regarding systematic evasion of taxes by clients /members of M/s. National Multi-Commodity Exchange (NMCE) by misusing its platform, revealed that the assessee had booked fictitious profit of Rs.2,16,570/- by creating artificial volumes and suspected evasion of tax through a broker, viz. M/s Shine Future, the AO reopened the case of the assessee under Sec. 147 of the Act. In compliance, the assessee filed her return of income on 10.04.2018 declaring an income of Rs.7,30,160/- i.e. as originally returned. Copy of the “reasons to believe” on the request of the assessee were made available to her by the A.O. Objections filed by the assessee vide her letter dated 11.05.2018 assailing the reasons for reopening of her case u/s.147 of the Act were disposed off by the A.O vide his order dated 19.09.2018. 6 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 5. During the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed to have derived a speculative income from commodity trading of Rs.8,23,352/- i.e after adjustment of a loss of Rs.13,79,879/- that was suffered by her by trading on the platform of MCX exchange. It was gathered by the A.O that the assessee had in her return of income claimed to have earned profit from NMCE platform of Rs.16,70,927/-, which after adjustment against certain losses suffered by her on commodity trading on MCX platform was scaled down to an amount of Rs.8,23,352/-. On a perusal of the information that was received from NMCE, Ahmedabad, it was gathered by the A.O that its member/broker, viz. M/s. Shine Future, Ahmedabad through whom the assessee had booked fictitious profit was one of the 11 tainted members/brokers of NMCE who were penalized for misconduct, disobedience and involvement in suspected non-genuine trading. It was further observed by the A.O that M/s. Shine Future (supra) on the basis of issuing fraudulent/bogus contract notes had 7 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 surrendered its membership of NMCE on 08.05.2012. Observing that the assessee had booked pre-arranged gain through M/s. Shine Future, an entry operator transacting on NMCE platform, which thereafter was adjusted against the loss from commodity trading on MCX exchange, the A.O called upon it to put forth an explanation that as to why adverse inferences be not drawn in its case for carrying out pre-arranged trading on the NMCE platform. As the reply filed by the assessee did not find favour with the A.O, therefore, he held the entire amount of Rs.16,70,972/- that was claimed by her to have been received as profit from commodity trading on NMCE platform as an unexplained cash credit u/s. 68 of the Act. Resultantly, the loss of (Rs.8,56,575/-) that the assesee had claimed to have suffered on MCX platform was declined to be adjusted against the aforesaid amount of profit that was recharacterized as an unexplained cash credit u/s.68 of the Act. Also, the A.O made an addition of Rs.33,420/- u/s.69C of the Act towards cash commission which the assessee company would have paid for availing services of the aforesaid entry 8 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 operator i.e @ 2% of Rs. 16,70,972/-. Accordingly, the A.O vide his order passed u/s. 143(3) r.w.s 147, dated 30.12.2018 recharacterized the income of Rs.16,14,350/- that was claimed by the assessee as speculation profit, as her deemed income under Sec. 68 of the Act. As regards the loss of (Rs. 8,56,575/-) which the assesee had claimed to have suffered from by commodity trading on MCX platform, the AO directed that the same be carried forward for a period allowed under law. 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without any success. 7. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 8. We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR to drive home his contentions. 9 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 9. As observed by us hereinabove, the assessee had in her return of income declared speculative income from commodity trading of Rs.8,23,352/- i.e. after adjustment of loss of Rs.13,79,879/- suffered on MCX platform, as under: Particulars Profit Loss Total Shine Future ( NMCE) 16,70,927/- 0 16,70,927/- Parthvi Broking Pvt. Ltd. (MCX) 5,32,304/- (13,79,879/-) (8,56,575) Net Profit 8,23,352/- On the basis of information that the assessee had booked pre- arranged gains through a member/broker of NMCE, viz. M/s. Shine Future, the AO had on the basis of his exhaustive observations recorded in the assessment order, rejected the explanation of the assessee and had held the impugned income from commodity trading of Rs.16,70,927/- that was claimed by the assessee to have been garnered by trading on the NMCE platform, as an unexplained cash credit u/s.68 of the Act. Also, the A.O had made an addition of Rs.33,420/- u/s.69C of the Act towards cash commission which the assessee company would 10 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 have paid for availing the services of the aforesaid entry operator for facilitating laundering of her money i.e @ 2% of Rs.16,70,927/-. Accordingly, the A.O after recharacterizing the impugned NMCE profit of Rs.16,70,927/- (supra) as an unexplained cash credit u/s.68 of the Act, had declined the assessee’s claim for set-off of loss from commodity trading on MCX platform of (Rs.8,56,575/-) against the same, and resultantly, assessed her income at Rs.16,14,350/- under Sec. 68 of the Act a/w a direction to c/forward the loss on commodity trading on MCX platform of (Rs. 8,56,575/-) for a period allowed under law. 10. The Ld. Authorized Representative (for short ‘AR’) for the assessee had assailed the orders of the lower authorities on the basis of multi-facet contentions before us, viz. (i) that the A.O had grossly erred in law and the facts of the case in assuming jurisdiction u/s.147 of the Act on the basis of a mere “change of opinion”; (ii) that the A.O had grossly erred in law and facts of the case in reopening the concluded assessment of the assessee which 11 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 was earlier framed vide order u/ss. 153A/143(3) dated 28.12.2017 beyond a period of four years from the end of the assessment year, despite the fact that there was no failure on her part in fully and truly disclosing all facts necessary for the assessment; (iii) that the A.O had reopened the concluded assessment of the assessee not on the basis of any independent application of mind but on the basis of a report received from the Investigation Wing, which, therein did tantamount to reopening of the case of the assessee on the basis of a borrowed satisfaction; (iv) that the A.O had drawn adverse inferences against the assessee without making available the impugned information forming the very basis for so doing; (v) that there was no evidence brought on record by the A.O which would justify the dubbing of the transaction in question as bogus; and (vi) that even otherwise the A.O had grossly erred in law in acting in defiance of the CBDT Circular No.11 of 2019, dated 19.06.2019, as per which setting-off of losses against additions made by the A.O, inter alia, u/s.68 of the Act was to be allowed till 12 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 A.Y.2016-17 while computing the tax liability of the assessee u/s.115BBE of the Act. 11. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 12. After having given a thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both the parties, we are unable to persuade ourselves to subscribe to the claim of the Ld. AR that the A.O had erroneously assumed jurisdiction and reopened the case of the assessee u/s.147 of the Act. One of the contention of the Ld. AR was that as the assessment in the case of the assessee was earlier framed u/s.153A r.w.s. 143(3), dated 28.12.2017, wherein the A.O after deliberating at length on the duly disclosed facts as regards the profit earned by the assessee on NMCE platform had after raising specific queries accepted the same, therefore, in the absence of any fresh material coming to his notice after culmination of the aforesaid assessment, the reopening of the assessee’s case under Section 147 of the Act was merely based on a “change of opinion” 13 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 of the successor A.O which not being as per the mandate of law was liable to be vacated. In support of his aforesaid contention the Ld. AR had relied on the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) as well as host of other judicial pronouncements. Also, it was the claim of the Ld. AR that as the report of the Investigation Wing, Ahmedabad was earlier available with the AO while framing of the assessment under Sec. 153A r.w.s. 143(3), dated 28.12.2017, therefore, it was established beyond doubt that the assessee’s case was reopened merely on the basis of a change of opinion on the same set of facts as were earlier there before him. Apart from that, it was submitted by the Ld. AR that as the assessee had disclosed fully and truly material facts necessary for her assessment, therefore, as per the “1 st proviso” of Section 147, now when the assessment for the year under consideration had earlier been framed u/ss. 153A/143(3) of the Act, dated 28.12.2017, her case could not have been reopened 14 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 beyond a period of four years from the end of the relevant assessment year. 13. We have given a thoughtful consideration to the aforesaid claim of the Ld. AR and are unable to persuade ourselves to subscribe to either of his aforesaid contentions. Case of the assessee as per the records was reopened by the A.O u/s.147 of the Act for the following reasons : “WHERE REGULAR ASSESSMENT WAS MADE U/S.143(3)/147 AND PERIOD OF 4 YEARS HAVE EXPIRED FROM END OF ASSESSMENT YEAR Name of the Assessee Deepali Kothari Address of the Assessee 27/28, Wallfort Enclave, Beside Ramkrishna hospital, Panchpedi Naka, Raipur (C.G.) PAN of the assessee AFDPK8567D Assessment Year 2011-12 Details of the Assessing Officer having jurisdiction over the assessee Asst. Commissioner of Income Tax, (Central)-2, Raipur Reasons for reopening of the assessment u/s.147:- The assessee is an Individual and during the year under consideration, he has derived income from business and profession and income from other sources being interest income from bank savings A/c. She had filed return of income for the A.Y. 2011-12 u/s 139(1) of the Income Tax Act, 1961 on 21.10.2011 showing his income at Rs.7,30,160/-. A search and seizure operation u/s 132 of the Act,was conducted on the residential and business premises of the assessee on 11.03.2016. Consequently, notices u/s 153A of the Act was issued to the assessee for the A.Ys 2010-11 to 2015-16 on 27.12.2016. In response to the statutory notices issued, the assessee filed returns for the abovementioned A.Ys. She has filed return of income for the A.Y. 2011-12 u/s 153A of Act on 04.03.2017 showing his income at Rs.7,30,160/-. The assessment order u/s 153A r.w.s. 143(3) for the A.Y.2011-12 was passed on 28.12.2017 determining income of the assessee at Rs.7,30,160. An information was received from Dy. Director of Income tax(Inv.), Kolkata that systematic evasion of taxes by clients/members of the NMCE(M/s. National Multi-Commodity Exchange) 15 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 during the different Financial Years by misuse of NMCE platform was shared by Ahmedabad Directorate. Based ILI4 on the information, enquiry was carried out by Kolkata Directorate and it was found that the assessee has traded through the broker Shine Futures, clients/members of NMCE and booked fictitious profit of Rs. 2,16,570/-during the F.Y.2010- 11 by creating artificial volume and suspected evasion of tax by misuse of NMCE platform at Kolkata. On verification to the record available, the assessee has shown total profit from the above of Rs. 16,70,293/-. However, as per profit and loss account, after set-up of loss the assessee has shown profit of Rs.8,20,387/-. Thereby the assessee has suppressed his income byRs.8,49,906/-. This aspect was never brought to the notice of the AO during assessment proceedings. In this case a return of income was filed for the year under consideration and assessment u/s 153A r.w.s. 143(3) was made on 28.12.2017. Since, 4 year from the end of the relevant year has expired in this case, the requirement to initiate proceeding u/s 147 of the Act are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reason to believe that income has escaped assessment for the year under consideration has been recorded above. I have carefully considered the assessment records containing the submission made by the assessee in response to various notice issued during the assessment/re-assessment proceeding and have noted that the assessee has not fully and truly disclosed the above material facts necessary for his assessment for the year under consideration: It is true that assessee has filled a copy of P/L A/c and balance sheet along with return of income where various information/ material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even through the assessee has produce books of accounts, P&L A/c and balance sheet or other evidence as mentioned above, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO and could have been discovered with due diligence, accordingly attracting provision of Explanation I section 147 of the Act. It is important to highlight here that material facts relevant for the assessment proceeding and the same may be embedded in P&L A/c, balance sheet and books of accounts in such a manner that it would require due diligence by the AO to extract these information for afore stated reason, it is not a case of change of option by the AO. Considering the above facts and circumstances of the case, I have reason to believe that the above income of the assessee chargeable to tax has escaped assessment for failure on the part of the assessee to disclose fully and truly all the material facts in the return of income necessary for assessment and the case is required to be reopened u/s 147 of the Act. Sd/- (Madhulika V Satpute) Asst. Commissioner of Income Tax (Central)-2, Raipur (C.G.)” 16 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 On a perusal of the aforesaid reasons which had formed the very basis for reopening of the assessee’s case, we find that the A.O after culmination of the earlier assessment proceedings vide an order passed u/s.153A r.w.s. 143(3), dated 28.12.2017 was in receipt of information from the DDIT (Inv.), Kolkata about the systematic evasion of taxes by clients/members of NMCE. On the basis of the aforesaid information, it was gathered by the A.O that the assessee had traded through a tainted member/broker of NMCE, viz. M/s. Shine Future and in the garb of trading on the said platform had booked fictitious profit of Rs.16,70,293/-. As the aforesaid information was not there before the A.O in the course of earlier assessment proceedings, therefore, there is no substance in the claim of the Ld. AR that the reassessment proceedings were initiated by the A.O on the basis of a mere change of opinion. 14. Also, we are unable to concur with the claim of the Ld. AR that as the assessee had in her return of income disclosed fully and truly all material facts necessary for her assessment, 17 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 therefore, having been assessed earlier u/s. 153A r.w.s. 143(3), dated 28.12.2017 her case as per the “1 st proviso” of section 147 of the Act could not have been reopened beyond a period of four years from the end of the relevant assessment year. Although, we are principally in agreement with the aforesaid proposition of law canvassed by the ld. AR before us, but do not find that the case of the assessee fits within the same. As observed by the A.O in the “reasons to believe”, although the assessee had a/w. her return of income filed the copy of Profit & Loss account, balance sheet etc. where various information/material was disclosed, however, the requisite material facts were embedded in such a manner that the material evidence could not be discovered by the A.O with due diligence. Considering the aforesaid facts, we are of the considered view that the “1 st proviso” to section 147 of the Act as had been pressed into service by the Ld. AR would by any means assist the case of the assessee before us. Thus, the Ground of appeal No.3 raised by the assessee is dismissed in terms of our aforesaid observations. 18 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 15. Apropos the claim of the Ld. AR that the case of the assessee had been reopened by the A.O on the basis of a borrowed satisfaction of the Investigation Wing i.e. in a mechanical manner and without application of any independent mind on his part, we are afraid that the said contention of his being devoid and bereft of any merit cannot be accepted. On a bare perusal of the “reasons to believe”, it transpires that the A.O had after referring to the information about systematic evasion of taxes by clients/members of the NMCE that was shared with him by the DDIT (Inv.), Kolkata, had after culling out the facts involved in the case of the assessee arrived at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment. We, thus, finding no merit in the claim of the Ld. AR that reopening of the assessee’s case was merely based on a “change of opinion” by the A.O, reject the same. Thus, the Ground of appeal No.1 raised by the assessee is dismissed in terms of our aforesaid observations. 19 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 16. As regards the claim of the Ld. AR that the A.O despite specific requests by the assessee had failed to provide a copy of the information on the basis of which adverse inferences as regards the NMCE profit earned by the assessee during the year was sought to be drawn, we are afraid that the same too does not find favor with us. Nothing has been brought to our notice by the Ld. AR which would reveal that the assessee had in the course of the proceedings before the lower authorities requested for a copy of the information that was received by the A.O from the Investigation Wing. On the contrary, we find that a careful perusal of the “reasons to believe” reveals beyond doubt the details on the basis of which the A.O had reopened the case of the assessee and thereafter proceeded with and framed the assessment in her case. Accordingly, finding no merit in the aforesaid claim of the assessee, we herein reject the same. Thus, the Ground of appeal No.4 raised by the assessee is dismissed in terms of our aforesaid observations. 20 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 17. As regards the claim of the Ld. AR that now when the profit from commodity trading on NMCE of Rs.16,70,927/- had already been offered by the assessee for tax in the return of income after setting-off of loss of (Rs.8,56,575/-), therefore, there could have been no reason for the AO to infer any escapement of income on her part, we are afraid that the said misconceived view had been arrived at on the basis of half baked facts. Admittedly, the impugned profit from commodity trading on the NMCE platform of Rs.16,70,927/-, which after setting-off against the loss suffered by trading on the platform of MCX exchange of (Rs.8,56,575/-) was scaled down to an amount of Rs.8,23,352/- was disclosed by the assesee in her return of income. As the A.O had reopened the case of the assessee for the reason that she had booked pre-arranged gain in the garb of commodity trading on NMCE platform, which, thus, was not entitled for set-off against the loss suffered on the platform of MCX exchange, therefore, there was clear material before the A.O for forming a view that the income of the assessee chargeable to tax for the year under 21 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 consideration had escaped assessment within the meaning of section 147 of the Act. Accordingly, finding no merit in the aforesaid claim of the assessee, we reject the same. 18. Adverting to the alternative claim of the assessee that even if the profit from commodity trading on NMCE was to be held as unexplained cash credit u/s.68 of the Act, there was no justification on the part of the A.O to have declined the assessee’s claim for set-off of the MCX loss (Rs.8,56,575/-) against the same, in our considered view carries substance. Admittedly, there is no escape from the fact that the impugned profit from commodity trading on the NMCE platform had been held by the A.O as an unexplained cash credit u/s.68 of the Act, pursuant whereto the tax liability qua the said amount was to be determined as per the mandate of section 115BBE of the Act. Although sub-section (2) of Section 115BBE contemplates that no setting-off of any loss shall be allowed to the assessee under any provision of the Act in computing its income under clause (a) to sub-section (1) of Section 115BBE of the Act, however, the said 22 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 embargo as regards setting-off of any loss had been made available in section 115BBE only vide the Finance Act, 2016 w.e.f. 01.04.2017 i.e. A.Y.2017-18 onwards. Accordingly, we are of the considered view that as despite the dubbing of the impugned profit earned by the assessee from commodity trading on NMCE platform as an unexplained cash credit u/s.68 of the Act, there was no restriction on setting-off of any loss against such deemed income during the year under consideration before us i.e. A.Y.2011-12, therefore, the A.O was obligated to have allowed the claim of the assessee for set-off of the loss in question against the income deemed by him as an unexplained cash credit under Sec. 68 of the Act . At this stage, we may herein observe that the A.O vide his order passed u/s. 143(3) r.w.s.147 dated 30.12.2018 had not drawn any adverse inferences as regards the assessee’s claim of loss (Rs.8,56,575/-), but on the contrary had specifically directed that the same be carried forward for the period allowed under the Act. Our aforesaid view that the assessee’s claim for setting-off of MCX loss against the impugned 23 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 profit earned by her from commodity trading on NMCE platform, which though had been dubbed by the A.O as an unexplained cash credit u/s.68 of the Act, is in order, is fortified by the CBDT Circular No.11/2019 dated 19.06.2019, wherein it is observed that the term “or set of any loss” was specifically inserted only vide the Finance Act, 2016 w.e.f. 01.04.2017, and the assessee would be entitled to claim set-off of loss against income determined under section 115BBE of the Act till the assessment year 2016-17. For the sake of clarity the CBDT Circular No.11/2019 dated 19.06.2019 is culled out as under: “Circular No. 11 /2019 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North-Block, New Delhi, dated the 19th of June, 2019 Subject: Clarification regarding non-allowability of set-off of losses against the deemed income under section 115BBE of the Income-tax Act, 1961 prior to assessment-year 2017-18-reg. With effect from 01.04.2017, sub-section (2) of section 115BBE of the Income-tax Act, 1961 (Act) provides that where total income of an assessee includes any income referred to in section(s) 68/69/69A/69B/69C/69D of the Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provisions of the Act in computing the income referred to in section 115BBE(1) of the Act. 2. In this regard, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that in assessments prior to assessment year 2017-18, while some of the Assessing Officers have 24 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 allowed set off of losses against the additions made by them under Section(s) 68/69/69A/69B/69C/69D, in some cases, set off of losses against the additions made under Section 115BBE(1) of the Act have not been allowed. As the amendment inserting the words 'or set off of any loss' is applicable with effect from 1st of April, 2017 and applies from assessment year 2017-18 onwards, conflicting views have been taken by the Assessing Officers in assessments for years prior to assessment year 2017-18. The matter has been referred to the Board so that a consistent approach is adopted by the Assessing Officers while applying provision of section 115BBE in assessments for period prior to the assessment year 2017-18. 3. The Board has examined the matter. The Circular No. 3/2017 of the Board dated 20th January, 2017 which contains Explanatory notes to the provisions of the Finance Act, 2016, at para 46.2, regarding amendment made in section 115BBE(2) of the Act mentions that currently there is uncertainty on the issue of set-off of losses against income referred to in section 115BBE. It also further mentions that the pre-amended provision of section 115BBE of the Act did not convey the intention that losses shall not be allowed to be set-off against income referred to in section 115BBE of the Act and hence, the amendment was made vide the Finance Act, 2016. 4. Thus keeping the legislative intent behind amendment in section 115BBE(2) vide the Finance Act, 2016 to remove any ambiguity of interpretation, the Board is of the view that since the term 'or set off of any loss' was specifically inserted only vide the Finance Act 2016, w.e.f. 01.04.2017, an assessee is entitled to claim set-off of loss against income determined under section 115BBE of the Act till the assessment year 2016-17. 5. The contents of this Circular may be circulated widely for information of all stakeholders and departmental officers. The pending assessments and litigations on this issue may be handled accordingly. 6. Hindi version to follow. Sd/- (Rajarajeshwari R) Under secretary (ITA.II), CBDT ( F. No.225/45/2019-ITA.II) Copy to:- i. PS to FM/OSD to FM/PS to MoS(F)/OSD to MoS(F) ii. PS to Secretary (Revenue) iii. Chairman, CBDT & All Members, CBDT iv. All Pr.CCsIT/ Pr.Ds.GIT v. All Joint Secretaries/CsIT, CBDT vi. C&AG vii. CIT (M& TP), Official Spokesperson of CBDT viii. % Pro DGIT(Systems) for uploading on official website ix. Addl.CIT (Database Cell) for uploading on the departmental website 25 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 Sd/- (Rajarajeshwari R) Under secretary (ITA.II), CBDT” On the basis of our aforesaid observations, we are of the considered view that though no infirmity either emerges as regards the assumption of jurisdiction by the A.O for reopening the case of the assessee u/s.147 of the Act or recharacterizing of the amount of the impugned profit claimed by the assessee to have been earned from commodity trading on NMCE platform as an unexplained cash credit u/s.68 of the Act, but the same would duly be entitled for set-off against the assessee’s claim of loss of Rs.8,56,579/- from commodity trading on MCX platform. 19. We, thus, in terms of our aforesaid observations modify the order of the CIT(Appeals) and direct the A.O to allow the assessee’s claim for setting-off of loss of (Rs.8,56,575/-). Thus, the Grounds of appeal No. 5 & 6 raised by the assessee are allowed in terms of our aforesaid observations. 20. As we have principally concurred with the view taken by the lower authorities as regards the recharacterizing of NMCE profit 26 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 as an unexplained cash credit u/s.68 of the Act, therefore, the addition of Rs. 33,420/- made by the A.O u/s.69C of the Act towards commission which the assessee would have paid to the entry operator for obtaining accommodation entries is herein sustained. Thus, the Ground of appeal No.7 raised by the assessee is dismissed in terms of our aforesaid observations. 21. Ground of appeal No.8 being general in nature is dismissed as not pressed. 22. In the result, appeal of the assessee in ITA No.212/RPR/2019 for A.Y.2011-12 is partly allowed in terms of our aforesaid observations. ITA No.215/RPR/2019 (Smt.Ritu Kothari-assessee) A.Y.2011-12 23. As the facts and issue involved in the captioned appeal remains the same as were there before us in the aforesaid appeal, viz. ITA No.212/RPR/2019 for assessment year 2011-12, therefore, our order therein passed while disposing off the said appeal shall apply mutatis-mutandis for disposing off the 27 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 captioned appeal ,viz. ITA No.215/RPR/2019 for the assessment year 2011-12. Accordingly, on the basis of our aforesaid observations recorded while disposing off the appeal in ITA No.212/RPR/2019 for A.Y.2011-12, the appeal filed by the assessee in ITA No.215/RPR/2019 for A.Y.2011-12 is on the same terms partly allowed. 24. In the result, appeal of the assessee in ITA No.215/RPR/2019 for the assessment year 2011-12 is partly allowed in terms of our aforesaid observations. 25. In the combined result, both the appeals of the captioned assessee’s are partly allowed in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 29 th August, 2022 **SB 28 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-3, Bhopal 4. The Pr. CIT (Central), Bhopal 5.ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 29 ITA Nos. 212 & 215/RPR/2019 A.Y.2011-12 Date 1 Draft dictated on 11.08.2022 Sr.PS/PS 2 Draft placed before author 12.08.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order