Sh. Ravinder Pal Singh, New Delhi V. ITO, New Delhi

ITA 2626/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3892 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 11-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Keywords: Business income; Revision of order; Salary income
• Section: 143(3); 263

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2626/DEL/2014 (ASSESSMENT YEAR: 2009 - 10 ) RAVINDER PAL SINGH, 2/12, ANSARI ROAD, DARYA GANJ, NEW DELHI PAN:AACPA9328D VS ITO, WARD - 30(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RS SINGHVI, CA REVENUE BY: SMT PARAMITA TRIPATHY, CIT DR DATE OF HEARING 01/11/ 2017 DATE OF PRONOUNCEMENT 1 7 / 01 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT - X, NEW DELHI DATED 25.02.2014 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID CIT(A) HAS LEGALLY ERRED IN ASSUMING JURISDICTION U/S 263 OF THE IT ACT, 1961 AND THE ORDER PASSED BY HIM IS BAD IN LAW, ILLEGAL, VIDE AND WITHOUT JURISDICTION. 2. WITHOUT PREJUDICE TO GROUND (1) ABOVE, AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT HAS LEGALLY ERRED IN SETTING ASIDE THE ORDER PASSED UNDER S. 143(3) BY THE AO WITHOUT JUDICIOUSLY CONSIDERING THE SUBMISSIONS AND DETAILS FILED BY THE APPELLANT. 3. WITHOUT PREJUDICE TO GROUND (1) AND (2) ABOVE, AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT HAS LEGALLY ERRED IN HOLDING THAT THE AO DID NOT APPLY HIS MIND IN VERIFYING THE SOURCE FOR CASH DEPOSIT S TOTALING RS.25, 50,200/ - MADE BY THE APPELLANT IN THE SB A/C IN INDIAN OVERSEAS BANK, DELHI ON DIFFERENT DATES. 4. WITHOUT PREJUDICE TO GROUND (1) AND (2) ABOVE, AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT HAS LEGAL LY ERRED IN HOLDING THAT THE AO DID NOT APPLY HIS MIND IN VERIFYING THE CLAIM OF THE ASSESSEE OF BUSINESS LOSS OF RS.5, RAVINDER PAL SINGH VS ITO, ITA NO. 2626/DEL/2014 (ASSESSMENT YEAR: 2009 - 10) PAGE | 2 90,130/ - SUFFERED IN TRADING OF SHARES AND SET OFF AGAINST OTHER BUSINESS INCOME. 5. WITHOUT PREJUDICE TO GROUND (1) AND (2) ABOVE, AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT HAS LEGALLY ERRED IN HOLDING THAT THE AO DID NOT APPLY HIS MIND IN VERIFYING THE GENUINENESS OF THE SUNDRY DEBTORS AND WRONGLY SET ASIDE THE ORDER PASSED U/S 143(3) BY THE AO. 6. WITHOUT PREJUDICE TO GROUND (1) AND (2) ABOVE, AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT HAS LEGALLY ERRED IN HOLDING THAT THE AO DID NOT APPLY HIS MIND IN VERIFYING THE JUSTIFICATION FOR WITHDRAWAL FOR HOUSEHOLD EXPENSES BY T HE ASSESSEE. 3. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME ON 30.09.2009 FOR RS. 288340/ - . THE ASSESSEE IS DERIVING INCOME FROM SALARY, BUSINESS OF TRADING IN FABRICS AND INTEREST INCOME. THE AS SESSMENT U/S 143(3) OF THE ACT WAS PASSED ON 02.12.2011 AT THE RETURN ED INCOME. THE LD CIT(A) ON EXAMINATION OF THE RECORDS ISSUED NOTICE U/S 263 OF THE ACT ON 17.10.2013 WHEREIN, IT WAS MENTIONED THAT CASH DEPOSIT IN SAVING BANK ACCOUNT OF RS. 2550200/ - , LOSS OF RS. 590130/ - ON SHARES AND VERIFICATION OF SUNDRY DEBTORS WAS NOT DONE AND THEREFORE, THE ORDER PASSED BY THE LD ASSESSING OFFICER IS ERRONEOUS AND PREJUD I CIAL TO THE INTEREST OF REVENUE. 4. THE ASSESSEE FURNISHED A REPLY ON 08.11.2013 STATING THAT T HE LD ASSESSING OFFICER HAS EXAMINED THE DETAILS ABOUT THE TOTAL DEPOSIT IN CASH IN HAND VIDE LETTER DATED 10.10.2011 WHEREIN, COMPLETE CASH FLOW STATEMENT WAS FURNISHED ALONG WITH COPY OF THE BANK ACCOUNT AS WELL AS STATEMENT OF CASH DEPOSIT AND WITHDRAWA L. WITH RESPECT TO THE LOSS IN TRADING OF SHARES IT WAS STATED THAT THE LD ASSESSING OFFICER HAS EXAMINED THE DETAILS OF PURCHASE AND SALE OF SHARES BY PRODUCTION OF DETAILED STATEMENT ON ACCOUNT OF PURCHASE AND SALE OF SHARES WHEREIN, THE LOSS OF RS. 5901 29/ - WAS SHOWN. WITH RESPECT TO THE SUNDRY DEBTORS IT WAS SUBMITTED THAT THE ABOVE DETAILS VIDE LETTER DATED 14.09.2011 WHERE THE NAME AND ADDRESS OF SUNDRY DEBTORS WERE PROVIDED AND THE LD ASSESSING OFFICER INQUIRED ABOUT THEM. IN VIEW OF THIS IT WAS STAT ED THAT DURING THE RAVINDER PAL SINGH VS ITO, ITA NO. 2626/DEL/2014 (ASSESSMENT YEAR: 2009 - 10) PAGE | 3 COURSE OF ASSESSMENT PROCEEDING COMPLETE INQUIRY WAS MADE BY THE LD ASSESSING OFFICER. THE ASSESSEE SUBMITTED ANOTHER REPLY ON 08.11.2013 WHICH EXPLAINED THE DETAILS SUBMITTED BEFORE THE LD AO. IT WAS FURTHER STATED THAT SHARE TRANSACTIO NS ARE CARRIED OUT THROUGH INDIA INFOLINE LTD AND SUCH STATEMENT WAS PRODUCED DURING THE ASSESSMENT PROCEEDINGS. HE SUBMITTED BY LETTER DATED 19.02.2014 ABOUT THE LOSS IN OTHER BUSINESS, INCREASE IN CAPITAL ACCOUNT AND WITHDRAWAL MADE BY THE ASSESSEE WHICH WAS EXPLAINED BEFORE THE LD AO . 5. THE LD CIT WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND HELD THAT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS AO HAS NOT INVESTIGATED THE AMOUNT OF RS. 255020/ - DEPOSITED IN THE BANK AS WELL AS LOSS SHOWN ON SHARE TRANSACTION AND LOSS OF RS. 39632/ - FROM BUSINESS. THEREFORE, HE SET ASIDE THE ASSESSMENT TO THE FILE OF LD AO AND REFRAME THE ASSESSMENT DE NOVO. THEREFORE, AGAINST THE ORDER OF THE LD CIT ASSESSEE IS IN APPEAL. 6. THE LD AUTHORISED RE PRESENTATIVE SUBMITTED THAT IN ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 263 OF THE ACT DATED 19.03.2015 SHOWS THAT WITH RESPECT TO THE CASH DEPOSIT NO ADDITION HAS BEEN MADE. FURTHER, HE SUBMITTED THAT ONLY ADDITION IS WITH RESPECT TO LOSS ON S ALE OF SHARES OF RS. 590130/ - ARE CASH DIFFERENCE. HE FURTHER SUBMITTED THAT THERE IS NO ERROR IN THE ORDER OF THE LD AO EARLIER BUT IN SUBSEQUENT ORDER THE ADDITION HAS BEEN MADE ONLY FOR THE REASON THAT TRANSACTION OF THE PURCHASE AND SALE HAVE NOT BEEN ROUTED THROUGH PROFIT AND LOSS ACCOUNT AND IT IS NOT A BUSINESS LOSS. HE SUBMITTED THAT THIS CANNOT BE A REASON FOR MAKING THE ADDITION AND AT LEAST NO REVISION ON THIS ACCOUNT CAN BE MADE. HE RELIED ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN CIT VS. NIRAV MODI 390 ITR 292 . HE STATE THAT IN ABSENCE OF MAKING A FURTHER INQUIRY BY THE LD CIT IT COULD NOT HAVE BEEN HELD THAT ORDER OF THE AO IS ERRONEOUS. 7. THE LD DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE HAS FILED THE BALANCE SHEET OF GLOBAL TRA DEX AS AT RS. 31.03.2009 WHEREIN, THE SUNDRY DEBTORS HAVE BEEN SHOWN AND THEREFORE, THE REVISION U/S 263 HAS BEEN RAVINDER PAL SINGH VS ITO, ITA NO. 2626/DEL/2014 (ASSESSMENT YEAR: 2009 - 10) PAGE | 4 CORRECTLY MADE. HE FURTHER SUBMITTED THAT LD CIT HAS SHOWN THAT NO INQUIRY HAS BEEN MADE BY THE AO ON SHARE TRANSACTIONS. IN THE END HE SUBMIT TED THAT JURISDICTION ASSUMED BY THE LD CIT IS IN ACCORDANCE WITH THE LAW. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. IN THE ASSESSMENT ORDER PURSUANT TO IMPUGNED ORDER U/S 263 OF THE ACT THE LD ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 59013 0/ - ON ACCOUNT OF LOSS OF SALE OF SHARES. THE ORIGINAL ASSESSMENT PROCEEDINGS SHOWS THAT ASSESSEE HAS SUBMITTED A CHART EXTRACTED FROM INDIA INFOLINE LTD WHEREIN, THE ASSESSEE HAS TRADED IN MORE THAN 30 SCRIPTS AND HAS INCURRED LOSS OF RS. 590130/ - . THE NU MBER OF SHARES TRADED IN QUANTITY IS ALSO RANGING FROM 200 SHARES TO 27000 SHARES IN EACH SCRIPT. BASED ON THIS INFORMATION THE LD ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF THE ASSESSEE THAT ASSESSEE IS A TRADER IN SHARES. FURTHER, IN THE COMPUTATION OF THE TOTAL INCOME THE ASSESSEE HAS SPECIFICALLY SHOWN THE ABOVE LOSS UNDER THE HEAD PROFITS AND GAINS OF THE BUSINESS. IT WAS STA TED THAT THE ASSESSEE HAS ALSO SUBMITTED THE COMPLETE BANK PASS BOOK BEFORE THE LD ASSESSING OFFICER WHEREIN DETAILS OF VARIOUS PAYMENTS TO THE SHARE BROKERS ARE ALSO AVAILABLE , THOUGH ASSESSING OFFICER HAS NOT MENTIONED SUCH FACTS IN THE ASSES SMENT ORDER WHICH IS IN FACT VERY CRYPTIC AND BEREFT OF FACTS IN THE ASSESSMENT ORDER. HOWEVER, THIS FACT ALONE CANNOT BE USED AGAINST THE ASSESSEE FOR INVOKING SECTION 263 OF THE ACT. IT IS NOT IN THE HANDS OF THE ASSESSEE THAT WHAT SHOULD BE WRITTEN IN THE ASSESSMEN T ORDER AS IT IS SOLE PREROGATIVE OF THE ASSESSING OFFICER. FURTHER, THE VIEW TAKEN BY THE ASSESSING OFFICER IN ACCEPTING THE BUSINESS LOSS IS ALSO ONE OF THE POSSIBLE VIEW AND IS ALSO SUPPORTED BY THE CIRCULAR OF THE CBDT SPECIFYING WHEN THE TRANSACTIONS OF THE SHARES SHOULD BE TREATED AS BUSINESS INCOME OR CAPITAL GAIN. AO HAS ACCEPTED ONE OF THE POSSIBLE VIEW. THEREFORE, ON THIS COUNT THE ORDER OF THE LD CIT IS NOT SUSTAINABLE. 9. ON THE SECOND ISSUE WHERE THE ADDITION OF RS. 764806/ - HAS BEEN MADE BY THE L D ASSESSING OFFICER, IT AROSE FROM THE DIFFERENCE IN THE CASH BALANCE SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME AS WELL AS CASH RAVINDER PAL SINGH VS ITO, ITA NO. 2626/DEL/2014 (ASSESSMENT YEAR: 2009 - 10) PAGE | 5 BALANCE SHOWN BY THE ASSESSEE WHILE FILING THE CASH FLOW STATEMENT. THE LD ASSESSING OFFICER HAS MADE THE ADDITION OF THE DI FFERENCE. IT IS IMPORTANT TO NOTE THAT THE ISSUE HAS ARISEN BECAUSE OF THE OPENING CASH BALANCE OF RS. 7.92 LACS SHOWN AS AVAILABLE TO THE ASSESSEE AS PER CASH FLOW STATEMENT. THE STATEMENT OF CASH DEPOSIT FURNISHED BEFORE THE ASSESSING OFFICER FOR AY 200 8 - 09 THE ASSESSEE HAS GIVEN THAT RS. 2.51 LACS WAS THE OPENING BALANCE AS ON 01.04.2008. THE ASSESSEE HAS WITHDRAWN RS. 37.78 LACS DURING THE YEAR AND DEPOSITED CASH OF RS. 25.50 LACS IN THE BANK ACCOUNT AND OUT OF THAT A SUM OF RS. 3 LACS HAVE BEEN SPEN T ON PERSONAL EXPENSES AND RS. 1.35 LACS ARE TRANSFERRED TO GLOBAL TRADEX LEAVING THE CLOSING BALANCE OF RS. 7.92 LACS IN THE HANDS OF THE ASSESSEE. THIS SUM WAS DISBELIEVED BY THE LD CIT AND SUBSEQUENTLY, THE AO USED IT TO MAKE AN ADDITION. IT IS APPARENT T HAT VIDE LETTER DATED 10.10.2011 ALL THESE FACTS WERE COMPLETELY AVAILABLE BEFORE THE LD ASSESSING OFFICER AND HE INQUIRED ABOUT THE SAME. THEREFORE, IT CANNOT BE A CASE OF LACK OF INQUIRY. THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. SUNBEAM AUTO LTD 3 32 ITR 167 SUPPORTS THE CASE OF THE ASSESSEE. THEREFORE, ON THIS COUNT ALSO THE ORDER OF THE LD CIT IS NOT SUSTAINABLE. FURTHER, HON'BLE DELHI HIGH COURT IN THE CASE OF DIT VS. JYOTI FOUNDATION 357 ITR 388 HAS HELD THAT WHEN THE INQUIRIES WERE CERTAINLY CO NDUCTED HOWEVER, THE LD CIT FEELS THAT INQUIRIES WERE NOT SUFFICIENT AND FURTHER INQUIRIES OR DETAILS SHOULD HAVE BEEN CALLED FOR, IT SHOULD HAVE BEEN CARRIED OUT BY THE REVISIONARY AUTHORITY HIMSELF TO RECORD THE FACT THAT THE ASSESSMENT ORDER WAS ERRONEO US. THE REVISIONARY AUTHORITY SHOULD NOT HAVE SET ASIDE THE ORDER AND DIRECTED THE LD ASSESSING OFFICER TO CARRY OUT THE NECESSARY INQUIRY. IN THE PRESENT CASE THE LD CIT HAS HELD THAT CERTAIN ISSUES ARE NOT INVESTIGATED BY THE LD AO HOWEVER, NO REFERENCE WAS MADE OF ANY INVESTIGATION MADE BY THE LD CIT. THEREFORE, ON THIS COUNT ALSO THE ORDER PASSED BY THE LD CIT U/S 263 OF THE ACT DATED 25.02.2014 IS NOT SUSTAINABLE. 10. THOUGH THE ASSESSEE HAS RAISED 7 GROUNDS OF APPEAL, BUT ALL REVOLVES ON SUSTAINABILITY O N THE ORDER PASSED BY THE LD CIT, AS WE HAVE ALREADY HELD RAVINDER PAL SINGH VS ITO, ITA NO. 2626/DEL/2014 (ASSESSMENT YEAR: 2009 - 10) PAGE | 6 THAT THE IMPUGNED ORDER PASSED U/S 263 OF THE ACT IS NOT SUSTAINABLE WE DO NOT ADJUDICATE ON INDIVIDUAL GROUNDS. IN THE RESULT THE APPEAL OF THE ASSESSEE SUCCEEDS ON THE GROUND THAT ORDER OF THE LD CIT IS NOT SUSTAINABLE. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 / 01 / 2018 . - S D / - - S D / - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 7 / 01 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI