M/s. CVM Jewels Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(3), Ahmedabad

ITA 2438/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8167 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 02-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAMIR S JANI
• Keywords: Business income; Rectification of order; Principle of natural justice; Speculation loss; Assessment record
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.2438/AHD/2014 ( / ASSESSMENT YEAR : 2009-10) M/S. CVM JEWELS PVT. LTD. B-2, ASHOKA APARTMENT, BESIDES ORIENT CLUB, NR.GUJARAT COLLEGE, ELLIS BRIDGE, AHMEDABAD -380009 # VS. INCOME TAX OFFICER, WARD 1(3), AHMEDABAD - 380015 $ # % & # PAN/GIR NO. : AABCC 7454 Q ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI SAMIR S. JANI, A.R. ($'*) / RESPONDENT BY : SHRI PRASOON KABRA, SR.D.R. + ,*-. / DATE OF HEARING 13/10/2017 /012*-. / DATE OF PRONOUNCEMENT 13/11/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, AHMEDABAD, DATED 14/07/2014 FOR THE ASSESSMENT YEAR (AY) 2009-10, ON THE FOLLOWING GROUNDS: I. THE LD. CIT(A)-II, AHMEDABAD HAS ERRED IN LAW AND O N FACTS IN REJECTING THE CLAIM OF THE APPELLANT FOR BROUGHT FO RWARD OF LOSSES. THE SAME IS PRAYED FOR ALLOWANCE. II. THE LD. CIT(A)-II, AHMEDABAD HAS ERRED IN STATING T HAT APPROPRIATE REMEDY FOR THE APPELLANT IS TO FILE AN APPLICATION U/S.154 AND IN THE ISSUE OF BROUGHT FORWARD LOSS CA NNOT BE DECIDED FOR THE YEAR UNDER CONSIDERATION. ITA NO. 2438/AH D/2014 M/S. CVM JEWELS PVT. LTD VS. ITO ASST.YEAR 2009-10 - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, THE ASSESSEE COMPANY IS ENGAGED IN T HE BUSINESS OF TRADING IN GOLD & SILVER. DURING THE YEAR, THE ASSE SSEE HAS SHOWN NET PROFIT BEFORE TAX OF RS.1,81,97,293/- ON TURNOVER R S.17,49,64,444/-. 2.2 A PERUSAL OF THE COMPUTATION OF TOTAL INCOME IT WAS NOTICED THE ASSESSEE HAS SHOW BUSINESS INCOME OF RS.29,62,964/- AND SPECULATION INCOME OF RS. 1,52,23,410/- AND SET OFF THE SAME AG AINST BROUGHT FORWARD SPECULATION LOSS OF RS.1,35,17,336/- AND BUSINESS L OSS OF RS.46,69,038/- (TO THE EXTENT OF BUSINESS INCOME OF RS.29,62,964/- AND REMAINING SPECULATION INCOME OF RS.17,06,074/-). HOWEVER, A P ERUSAL OF THE PAST ASSESSMENT RECORDS, IT WAS NOTICE THAT THERE WAS NO BROUGHT FORWARD LOSSES (EXCEPT SPECULATION LOSSES) AS CLAIMED BY TH E ASSESSEE COMPANY. IN VIEW OF THE ABOVE FACTS, NOTICE WAS SENT TO THE ASS ESSEE. 2.3 IN RESPONSE TO THE SAID NOTICE ASSESSEE STATED AS UNDER: WE HAD FILED THE RETURN OF INCOME FOR A.Y.2008-09 WHER EIN WE HAD CLAIMED A LOSS AT DETAILED BELOW: SPECULATION LOSS (-) 13517336 BUSINESS LOSS (-) 0586304 9 ON PERUSAL OF THE RETURN OF INCOME FOR A.Y.2008-09 WILL SHOW THAT THE ASSESSEE HAS CLAIMED BROUGHT FORWARD LOSS OF RS.68,09,244/- (LAST ENTRY ON THE COMPUTATION PAGE. ). THE BROUGHT FORWARD BUSINESS LOSS AS CLAIMED IS ACCEPTE D BY THE DEPARTMENT IN THE PAST YEARS AND NOW THERE IS NO RE ASON TO DISTURB THE SAME. ASSESSMENT FOR A.Y.2008-09 IS MAD E UNDER SECTION 143(3) ON 01/02/2010 WHEREIN RETURNED INCOM E IS ACCEPTED AND THUS AFORESAID CLAIM OF CARRIED FORWAR D LOSS IS ITA NO. 2438/AH D/2014 M/S. CVM JEWELS PVT. LTD VS. ITO ASST.YEAR 2009-10 - 3 - ASSESSED. COPY OF COMPUTATION OF INCOME FOR A.Y. 20 08-09 AND ASSESSMENT ORDER FOR A.Y.2008-09 IS ENCLOSED HEREWI TH. THE SUBMISSION OF THE ASSESSEE VIS-A-VIS THE FACTS OF THE CASE ARE CONSIDERED. THE ASSESSEE'S SUBMISSION IS NOT BASED ON THE RELEVANT RECORDS AND FACTS. AS PER THE PAST ASSESSM ENT ORDERS, APPEAL EFFECT ORDERS AND RECTIFICATION ORDERS FOR R ELEVANT ASSESSMENT YEARS; THE POSITION OF BROUGHT FORWARD L OSSES ARE AS UNDER..... AS SUCH, THE ASSESSEE IS ENTITLED FOR SET OFF BROUG HT FORWARD BUSINESS LOSSES AND SPECULATION LOSSES AGAINST CURR ANT YEAR INCOME ARE AS UNDER: A.Y. BUSINESS LOSS SPECULATION LOSS 2005-06 - - 2006-07 - RS.1,01,09,123/- 2007 - 08 RS.23,15,637/ - - 2008 - 09 - RS.34,08,113/ - TOTAL RS.23,15,637/- RS.1,35,17,236/- THE AFORESAID BUSINESS LOSSES AND SPECULATION LOSSE S OF EARLIER YEARS ARE ALLOWED TO BE SET-OFF AGAINST RESPECTIVE INCOME AND REMAINING CLAIMS ARE DISALLOWED. 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIST S TATUTORY APPEAL BEFORE THE LD.CIT(A) AND LD. CIT(A) DISMISSED THE A PPEAL OBSERVING AS UNDER: I HAVE CONSIDERED THE APPELLANT'S SUBMISSIONS. THE CLAIM OF THE ASSESSEE THAT SINCE THE ORDER FOR A.Y.2008-09 WAS P ASSED U/S. 143(3) SO EVEN THE FIGURES OF BROUGHT FORWARDED LOSSES OF PRI OR YEARS AS ADOPTED IN THAT YEAR SHOULD CONTINUE TO BE ADOPTED, CANNOT BE ACCEPTED BECAUSE THE LOSSES OF EARLIER YEARS CAN ALWAYS UNDERGO CHAN GES BASED ON PROCEEDINGS IN THOSE YEARS. JUST BECAUSE THEY ARE A DOPTED AS PER THE APPELLANT'S CLAIM IN THE COMPUTATION IN LATER YEARS , THEY DO NOT BECOME SACROSANCT. THE FINAL DETERMINATION OF LOSS OF ANY YEAR IS TO BE MADE IN THE PROCEEDINGS OF THAT YEARS ONLY. THE PRESENT APP EAL HAS BEEN FILED FOR ASSESSMENT ORDER OF A.Y.2010-11. THE ISSUE OF SUCH LOSS OF EARLIER YEARS, WITH REGARD TO THEIR QUANTUM, CANNOT BE DECIDED IN THE PROCEEDINGS OF ITA NO. 2438/AH D/2014 M/S. CVM JEWELS PVT. LTD VS. ITO ASST.YEAR 2009-10 - 4 - CURRENT YEAR. IF THE APPELLANT HAS GOT ANY DISPUTE WITH REGARD TO QUANTUM OF ANY EARLIER YEAR, THE APPROPRIATE REMEDY FOR THE APPELLANT IS TO FILE AN APPLICATION U/S.154 BEFORE THE ASSESSING OFFICER OR EVEN FILE APPEALS AGAINST THE ORDER PASSED U/S.154 BY THE ASS ESSING OFFICER AS PER PREVISIONS OF THE ACT. NO RELIEF CAN PROVIDED IN TH E APPELLATE PROCEEDINGS OF THE CURRENT YEAR IN DETERMINING THE QUANTUM OF LOSSES OF THE EARLIER YEARS. IT IS NOT A CASE WHERE THE ASSES SING OFFICER HAS DISALLOWED THE CLAIM OF SET OFF OF LOSSES OF ANY EA RLIER YEAR. THE DISPUTE IS ONLY WITH REGARD TO QUANTUM OF LOSSES TO BE DETE RMINED IN THE EARLIER YEARS. THE SAME CAN BE DECIDED IN THE PROCEEDINGS O F THOSE YEARS AND APPEAL WAS DISMISSED. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. LD. CIT(A) DECIDED THE MATTER WITHOUT CALLING. IN T HIS CASE, LD. AO HAS REASSESSED BUSINESS LOSS OF ASST. YEAR 2008-09 ALSO . FURTHER ON PAGE 3 OF THE REMAND REPORT, THE AO MENTIONS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERA TION ASSESSEE HAS FURNISHED THE COPIES OF COMPUTATION OF TOTAL INCOME AND ASSESSMENT ORDER FOR A.Y.2007-08 TO 2008-09 AND COPIES OF RECTIFICAT ION ORDERS FOR A.Y.2005-06 AND 2006-07. THESE ARE COMPLETELY ERRO NEOUS FACTS PRODUCED BY THE LD. AO AS THE RECTIFICATION ORDERS FOR 2005-06 AND 2006- 07 WERE NEVER SERVED UPON THE APPELLANT AND AS SUCH THE APPELLANT COULD NEVER FURNISH THE SAME AS ALLEGED BY THE LD. AO. WE STRONGLY BELIEVE THAT THE LD. AO HAD NEVER FRAMED ANY RECTIFICATION ORDER S FOR 2005-06 AND 2006-07 BECAUSE ON SPECIFIC REQUEST DATED 09/11/201 3 BY THE APPELLANT FOR A COPY OF THE RECTIFICATION ORDERS FOR AY 2005- 06 TO 2008-09, COPY FOR A.Y. 2008-09 ONLY WAS SERVED. IN ABSENCE OF THE VALID EVIDENCE AND PROOFS THE CLAIM PUT IN BY THE APPELLANT SHOULD BE ACCEPTED. THE EFFECT OF RECTIFICATION ORDER WAS TO INCREASE THE LIABILITY OF THE APPELLANT AND THE ORDERS WERE THUS PREJUDICIAL TO T HE APPELLANT. THE LD. ITA NO. 2438/AH D/2014 M/S. CVM JEWELS PVT. LTD VS. ITO ASST.YEAR 2009-10 - 5 - AO SHOULD HAVE GIVEN A NOTICE AS LAID U/S.154(3). L D. AO SHOULD HAVE APPRECIATED THE FACTS OF THE CASE BEFORE PASSING UN ILATERAL RECTIFICATION ORDER AND SHOULD HAVE OPPORTUNITY TO THE ASSESSEE O F BEING HEARD IN THE MATTER. BY NOT DOING SO, LD. AO HAS VIOLATED THE PR INCIPLE OF NATURAL JUSTICE AND PROVISIONS OF SECTION 154(3). IN VIEW O F THE ABOVE FACTS, THE ORDERS ALLEGED TO HAVE BEEN PASSED BY THE AO U/S.15 4 FOR A.Y.2005-06 TO A.Y.2008-09 ARE VOID, BAD & ILLEGAL. 5. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE, WE SENT THIS MATTER BACK TO THE FILE OF THE LD. AO WHO DECIDE AF RESH APPLICATION U/S.154 WITHIN THE PERIOD OF THREE MONTHS AFTER THE RECEIPT OF THIS ORDER. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 13 / 11 /201 7 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/11/2017 ITA NO. 2438/AH D/2014 M/S. CVM JEWELS PVT. LTD VS. ITO ASST.YEAR 2009-10 - 6 - !'#$ %$' # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-II, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. & / BY ORDER, (9-- //TRUE COPY// '/ () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 01/11/2017 (DICTATION-PAD 5 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03/11/2017 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. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 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