PAWAN RAJKUMAR DROLIA, MUMBAI V. ACIT 16(1) (FORMERLY ACIT CIR. 11(1)), MUMBAI

ITA 2941/MUM/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5744 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Speculation loss; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI M. BALAGANESH , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 2941 /MUM/20 1 6 ( / ASSESSMENT YEAR: 2009 - 10 ) SHRI PAWAN RAJKUMAR DROLIA 2 - A, 183, WIND EREMERE CHS OSHIWARA, ANDHERI WEST, MUMBAI - 400053 . / VS. ITO 25(3)(3) ROOM NO.701, 7 TH FLOOR, PIRAMAL CHAMBERS LA L BAUG , MUMBAI - 400012. ./ ./ PAN/GIR NO. : AEDPD6516R ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 01 / 0 8 / 201 9 / DATE OF PRONOUNCEMENT : 07 / 0 8 / 2019 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 30 . 12 .201 5 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 45 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2009 - 10 IN WHICH THE PENALTY LEVIED BY THE AO HAS BEEN ORDE R ED TO BE CONFIRM . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN TREATING RS.25,66,301/ - SPECULATION LOSS AS C ONCEALMENT OF INCOME AND AS SUCH MAY BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN TREATING BUSINESS CREDITOR OF RS.62,64,440/ - AS CONCEALMENT OF INCOME AND AS SUCH MAY BE DELETED. ASSESSEE BY : SHRI KHUSHAL SHAH (AR) REVENUE BY: SHRI ABI RAMA KARTIKIYEN (DR) ITA. NO . 2941 /M/201 6 A.Y. 2009 - 10 2 3. ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN TREATING LOAN CREDITOR OF RS.14 0,13.680/ - AS CONCEALMENT OF IN COME AND AS SUCH MAY BE DELETED. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASI DE. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND. ' 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S 143(3) OF THE I.T. ACT, 1961 ON 16.12.2010 ASSESSING THE TOTAL INCOME TO THE TUNE OF RS.2,31,02,130/ - AS AGAINST THE RETURNED INCOME IN SUM OF RS.79,590/ - . THE FOLLOWING ADDITION WAS MADE: (I) SPECULATION LOSS RS.25,66,301/ - (II) BUSINESS CREDITORS RS. 62,64,440/ - (III) LOAN CREDITORS RS.1,40,13,680/ - AT THE TIME OF ASSESSMENT, IT WAS FOUND THAT THE SHARE TRADING LOSS WAS CAMOUFLAGED IN THE TOTAL PROFIT OF THE BUSINESS IE SPECULATION LOSS OF RS. 25,66,301/ - WAS SET - OFF AGAINST THE BUSINESS. THE SAID SPECULATION LOSS WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE WA S HAVING THE CREDIT BALANCE OF RS.62,64,440/ - BUT THE ASSESSEE FAILED TO PROVE THE PURCHASE FROM M/S. RADHE ENTERPRISES, HENCE, ENTIRE PURCHASE OF RS.62,64,440/ - WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE . S O FAR AS THE LOAN CREDITORS OF RS. 1,4 0,13,680/ - WAS CONCERNED, T HE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF THE LENDER, THEREFORE, THE LOAN OF RS.1,40,13,680/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. THEREAFTER , THE PENALTY PROCEEDING U/S 271(C) OF THE ACT WAS INITIATED ON THE SAID D ISALLOWANCE . N OTICE WAS ISSUED AND AFTER THE REPLY OF THE ASSESSEE , ITA. NO . 2941 /M/201 6 A.Y. 2009 - 10 3 T HE PENALTY TO THE TUNE OF RS. 69,61,366/ - WAS LEVIED. FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE PENALTY, THEREFORE , THE ASSESSEE HAS FILED THE PRE SENT APPEAL BEFORE US. ISSUE NOS. 1 TO 3 4 . ALL THE ISSUES ARE IN CONNECTION WITH THE CONFIRMATION OF THE PENALTY UPON THE ADDITION OF SPECULATION LOSS , BUSINESS CREDIT IN CONNECTION WITH THE PURCHASE OF RS. 62,64,440/ - F ROM M/S. RADHE ENTERPRISES AND LOAN CREDIT IN SUM OF RS.1,40,13,680/ - . AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE HONBLE ITAT HAS RESTORED THE QUANTUM BEFORE THE AO IN ITA. NO. 4850/M/2012 DATED 16.05.2019 , THEREFORE, IN THE SAID CIRCUMSTANCES, NO PENALTY IS LIABLE TO BE LEVIABLE IN ACCORDANCE WITH LAW. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. THE COPY OF ORDER DATED 16.05.2019 IS ON THE FILE IN WHICH THE RELEVANT FINDING HAS BEEN GIVEN IN PARA N O. 6 WHICH IS REPRODUCED AS UNDER: - 6. WE FIND THAT MR. KHUSHAL SHAH, LD. COUNSEL OF THE ASSESSEE HAS FILED AN APPLICATION BEFORE THE ITAT ON 20.07.2018 REGARDING NONAPPEARANCE AND NON - RECEIPT OF NOTICES. THEREIN, HE HAS STATED THAT : THE APPELLANT DU E TO HIS FAMILY ISSUES AND DEPRESSION COULD NOT PROVIDE THE CONSULTANTS WITH ANY INFORMATION NEEDED FOR COMPLETING THE ASSESSMENT AND LD. ASSESSING OFFICER PASSED THE ASSESSMENT ORDER ACCORDINGLY. THE LD. CIT(A) HAS PASSED A NON - SPEAKING ORDER. THE DOCUMEN TS AND SUBMISSIONS WERE NOT CONSIDERED BY THE LD. CIT(A). THE APPELLANT WAS NOT GIVING AN OPPORTUNITY OF BEING HEARD EVEN AFTER SUBMISSION OF DOCUMENTS. ITA. NO . 2941 /M/201 6 A.Y. 2009 - 10 4 A PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE AO CLEARLY INDICATES THAT THE APPELLANT COULD NOT FIL E COMPLETE DETAILS BEFORE HIM. IN ORDER TO ARRIVE AT A PROPER FINDING, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ORDER AFTER GIVING THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO A .' 5. ON APPRAISAL OF THE ABOVE MENTIONED ORDER, WE NOTICED THAT THE QUANTUM HAS BEEN RESTORED BY HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO. 4850/M/2012 DATED 16.05.2019 BEFORE THE AO, THEREFORE, THE PENALTY HAS NO LEG TO STAND. AT THIS STAGE THE QUANTUM IS NOT IN EXISTENCE. AT THE TIME OF ARGUMENT, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF HONBLE ITAT IN CASE OF TITLED AS ANILKUMAR G. DARJI IN ITA. NO.3042 & 3043/AHD/2016 DATED 10.05.2018. THIS ORDER ALSO SPEAKS ABOUT THIS FACT THAT IF THE QUANTUM DOES NOT EXIST, THE N , THE PENALTY IS LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. IN THE INSTANT CASE ALSO THE QUANTUM HAS BEEN RESTORED BY THE HONB LE ITAT IN ITA. NO.4850/M/2012 DATED 16.05.2019 , THEREFORE, THE PENALTY HAS NO LEG TO STAND. ACCORDINGLY, WE DELETE THE PENALTY. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 07 /0 8 / 2019 . SD/ - SD/ - ( M. BALAGANESH ) (AMARJIT SINGH) / ACCOUNTANT MEMBE R /JUDICIAL MEMBER MUMBAI; DATED : 07 /08 /2019 V IJAY / SR. PS ITA. NO . 2941 /M/201 6 A.Y. 2009 - 10 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / TH E CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGIST RAR) , / ITAT, MUMBAI