SIRAJ BADRUDDIN HIRANI, Yavatmal V. ACIT, WARDHA CIRCLE, Wardha

ITA 42/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1728 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 28-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: V K LUKKA
• Keywords: Opportunity of being heard; Speculation loss
• Section: 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 42/NAG./2014 ( ASSESSMENT YEAR : 2007-08 ) SIRAJ BADRUDDIN HIRANI C/O HIRANI BANDHU, MAIN ROAD YAVATMAL 445 204 PAN AAEPH5891G APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX WARDHA CIRCUEL, WARDHA .... RESPONDENT ASSESSEE BY : SHRI V.K. LUKKA REVENUE BY : SHRI NARENDRA KANE DATE OF HEARING 16.07.2015 DATE OF ORDER 21.08.20 15 O R D E R PER SHAMIM YAHYA, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE IMPUGNED ORDER DATED 25 TH FEBRUARY 2013, PASSED BY THE LEARNED COMMISSIONER (APPEALS)-II, NAGPUR, FOR THE ASSESSMENT YEAR 2007-08, O N THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED CIT(A) ERRED IN TREATING LOSS FROM INVESTMENT IN SHARES AS SPECULATIVE LOSS . SIRAJ BADRUDDIN HIRANI 2 2. THE LEARNED CIT(A) ERRED IN CONFIRMING AN ARBITRARY ADDITION OF ` 77,000, ON AGRICULTURAL INCOME WITHOUT ASSIGNING ANY REASON. 2. APROPOS GROUND NO.1, IN THIS CASE, RETURN OF INCOME DECL ARING TOTAL INCOME OF ` 15,17,650, WAS FILED BY THE APPELLANT ON 2 ND NOVEMBER 2007. THE SAID INCOME INCLUDED SHORT TERM CAPITAL GA IN AMOUNTING TO ` 9,95,052. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , IT WAS NOTED BY THE ASSESSING OFFICER THAT THE SAID SHORT TERM CAPI TAL GAIN ALSO INCLUDED SPECULATIVE LOSS AMOUNTING TO ` 1,94,330. THE ASSESSING OFFICER, THEREFORE, TREATED THE SAID LOSS SEPARATELY AND CONSEQUENTLY THE SHORT TERM CAPITAL GAIN OF THE APPELLANT WAS ENHANCE D FROM ` 9,95,052 TO ` 11,89,382. 3. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER HOLDING THAT IN THE APPE LLATE PROCEEDINGS THE ASSESSEE COULD NOT ESTABLISH THAT THE LOSS OF ` 1,94,330, IS NOT ON ACCOUNT OF SPECULATION TRANSACTION. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSING OFFICER HAS IDENTIFIED EIGHT SCRIPS AND TREATED IT AS SPECULATION TRANSACTION. HE SUBMITTED THAT OUT OF EIGHT STRIPS, PR OFIT OR LOSS OF SEVEN STRIPS IS MEAGER AND, THEREFORE, THE SAME IS NOT PRES SED. THE LEARNED COUNSEL FURTHER SUBMITTED THAT IN RESPECT OF ALCHEMIST, WHEREIN LOSS IS SIRAJ BADRUDDIN HIRANI 3 AT ` 1,82,713, AS MENTIONED AT SR. NO.2, OF THE ASSESSMENT OR DER, IT IS SUBMITTED THAT THE ASSESSING OFFICER HAS MISTAKENLY CO NSIDERED IT AS SPECULATION LOSS EVEN THOUGH IT IS A DELIVERY BASED TRANSACTION AS CAN BE SEEN FROM THE CONTRACT NOTES. SINCE THE TRANSACTION OF ALCHEMIST SHARES IS SETTLED BY ACTUAL DELIVERY, THE SAME CANNO T BE TREATED AS SPECULATIVE TRANSACTION AS PER PROVISIONS OF SECTION 43(5) OF THE ACT. 5. UPON CAREFUL CONSIDERATION OF THE SUBMISSIONS, WE NOTE THAT IT IS THE PLEA OF THE ASSESSEE THAT IN CASE OF SCRIPS OF ALCH EMIST, THE SAME TRANSACTION IS A DELIVERY BASED TRANSACTION. FOR THI S PURPOSE, CONTRACT NOTES AND CHART HAS ALSO BEEN SUBMITTED. WE FIND THA T THIS NEEDS EXAMINATION OF THE FACTUAL ASPECT AT THE LEVEL OF THE ASSESSING OFFICER. ACCORDINGLY, WE REMIT THIS ISSUE FOR EXAMINATION, AS T O WHETHER OR NOT THE LOSS OF ` 1,82,713, IN CASE OF SCRIPS OF ALCHEMIST IS SPECULATION LOSS, TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING O FFICER SHALL EXAMINE THE SAME AND DECIDE AS PER LAW AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. 6. APROPOS GROUND NO.2, ON THIS ISSUE, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF ` 5,57,591, HOWEVER, THE EXPENDITURE SHOWN ARE ONLY ` 62,540. THE ASSESSING OFFICER HELD THAT USUALLY THE EXPENDITURE IS @ 25% TO 30% OF TOTAL RECEIPT. HENCE, HE ADDED ` 77,000 TO THE INCOME OF THE ASSESSEE. SIRAJ BADRUDDIN HIRANI 4 7. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) NOTED THAT N O FURTHER EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO ESTABLISH THAT THE ACTION OF THE ASSESSING OFFICER IS ERRONEOUS, HENCE, THE LEARNED CIT(A) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER . AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 8. THE LEARNED COUNSEL FOR THE ASSESSEE IN THIS REGARD S UBMITTED AS UNDER:- DISALLOWANCE OF EXPENSES NOT CLAIMED BY THE APPELLANT AND ADDING IT TO THE TOTAL INCOME IS ILLEGAL. MOREOVER THE ASSESSING OFFICER HAS NOT EVEN MENTIONED PROVISIONS UNDER WHICH THE SAID ADDITION IS DONE. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT OUT OF THE TOTAL RECEIPTS OF AGRICULTURAL AT ` 5,57,591, RECEIPTS ON ACCOUNT OF SALE OF MANGOES IS AT ` 3,05,628. ONCE THE MANGO TREE STARTS GIVING FRUITS, NO EXPENSES ARE REQUIRED TO BE DONE. THUS, IF THE RECEIPTS ON ACCOUNT OF SALE OF MANGOES IS DEDUCTED FROM GROSS RECEIPTS OF ` 5,57,591, BALANCE OF ` 2,51,963, ARE ON ACCOUNT OF OTHER AGRICULTURE RECEIPTS. IF ACCORDING TO THE ASSESSING OFFICER, 25% EXPENSE IS CONSIDERED ON BALANCE RECEIPTS OF ` 2,51,963 THE SAME WORKS OUT AT ` 62,990, WHICH IS ALMOST THE SAME AS CLAIMED BY THE APPELLANT AT ` 62,540. 9. AFTER HEARING BOTH HE PARTIES, WE FIND THAT THE ASSESSIN G OFFICER HAS MADE DISALLOWANCE BY HOLDING THAT 25% TO 30% OF TH E AGRICULTURAL RECEIPT SHOULD BE THE EXPENDITURE. NO BASIS FOR THE SAME HAS BEEN SIRAJ BADRUDDIN HIRANI 5 MENTIONED BY THE ASSESSING OFFICER. AS AGAINST THE AB OVE, THE SUBMISSIONS OF THE ASSESSEE ARE CONVINCING. ACCORDIN GLY, WE HOLD THAT THE ADDITION / DISALLOWANCE MADE BY THE ASSESSING OFFI CER IS BASED UPON THE SURMISE AND CONJECTURE. WE SET ASIDE THE ORDERS O F THE AUTHORITIES BELOW AND DELETE THE ADDITION. THE GROUND NO.2, RAISED BY THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.08.2015 SD/ - MUKUL K. SHRAWAT JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR, DATED: 21.08.2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY A SSISTANT REGISTRAR ITAT, NAGPUR