Shri Dr. Sunil Jain, Indore V. The Assistant Commissioner of Income Tax 1(2), Indore

ITA 429/IND/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53902 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: L L CHOUBEY
• Keywords: Business income
• Section: 143(3); 133A; 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI R.C. SHARMA, AM ITA NO. 429 /IND/2010 AY 200 7 - 0 8 DR. SUNIL JAIN, INDOR E PAN ABJPJ 0262 B APPELLANT VS. ACIT - 1(2), IN DORE RESPONDENT A PPELLANT BY : SHRI SUBHASH JAIN, CA RESPONDENT BY : SHRI L.L. CHOUBEY, SR. DR DATE OF HEARING : 26.07.2011 DATE OF PRONOUNCEMENT : 16.09.2011 ORDER PER R.C. SHARMA, ACCOUNTANT MEMBER TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - I, INDORE, DATED 16 . 3 .2010 FOR THE AY 200 7 - 0 8 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE I.T. ACT, 1961, ON THE FOLLOWING GROUNDS: 1. ON THE BASIS OF FACT & RECORDS, L D. CIT(A) - I , I NDORE HAS ERRED IN CONFIRMING THE ACTION OF AO REGARDING DENYING TO SET OFF THE SHARE DERIVATIVE BUSINESS LOSS FROM OTHER BUSINESS INCOME WITHOUT ALLOWING 2 2 PROPER OPPORTUNITY. THUS WHOLE ACTION OF THE AO IS ILLEGAL AND AGAINST PRINCIPAL OF NATURE OF JUSTICE . 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE L D. CIT(A) - I, INDORE HAS ERRED IN CONFIRMING TO THE ACTION OF AO IN REJECTING THE SCREEN BASE GENUINE SHARE LOSS AS WELL AS DISALLOWING THE CLAIM REGARDING SET OFF OF LOSSES FORM OTHER BUSINES S INCOME, WHICH IS ILLEGAL. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE L D. CIT(A) - I, INDORE HAS ERRED IN CONFIRMING TO THE ACTION OF AO OF CONSIDERING SHARE SALE PURCHASE BUSINESS AS SPECULATIVE TRANSACTION AS PER OLD RULE. WHILE ALL SUC H TRANSACTION CLEARLY COVERED U/S 43 ( 5 ) OF THE ACT. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE L D. CIT(A) - I, INDORE HAS ERRED IN CONFIRMING ACTION OF AO REGARDING RELIANCE OF A LETTER OF BROKER WHO SENT TO OTHER REGULATORY AUTHORITY REGA RDING STOP OF THE ASSESSEE SHARE TRADING ACTIVITIES INSTEAD OF DENYING FOR NON - DOING EARLIER ASSESSEE REPORTED SHARE TRANSACTIONS. FURTHER SAID LETTER OF SHARE BROKER WAS CONSIDERED BY AO AT THE BACK 3 3 OF THE ASSESSEE. 5. THAT ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE THE L D. CIT(A) - I, INDORE HAS ERRED IN CONFIRMING THE ACTION OF AO WHO WAS INFLUENCED BY THE DECLARATION MADE BY THE ASSESSEE DURING SURVEY PROCEEDINGS. WHICH WAS CONDUCTED JUST WITHIN THREE MONTHS OF THE BEGINNING OF RELEVANT ACCOUNT YEA R AND FULL ADVANCED TAX FOR DECLARED AMOUNT WAS DULY DEPOSITED. HOWEVER THE SHARE LOSS WAS OCCURRED JUST END OF THE ACCOUNTING YEAR DUE TO TOOK THE INTEREST BY THE ASSESSEE IN SHARE MARKET. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE L D. CIT(A) - I, INDORE HAS ERRED IN CONFIRMING THE ACTION OF AO DUE TO ALLEGING BY THE AO REGARDING SHARE TRANSACTION MADE ONLY IN FEW DAYS AS WELL AS SQUARED UP WITHIN FEW MINUTES. HENCE IT IS ARRANGED OF SHARE LOSSES . 2. WE HAVE HEARD LD. REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN MEDICAL PROFESSION. A SURVEY U/S 4 4 133A WAS CARRIED OUT ON THE BUSINESS PREMISES OF THE ASSESSEE ON. IN THE COURSE OF SURVEY PROCEEDINGS ON THE BASIS OF DISCREPANCIES THE ASSESSEE AGREED TO PAY TAX ON RS. 17,00,000/ - IN ADDITION TO THE REGULAR INCOME. THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS. 6,67,040/ - ON 18.10.2007. ON THE PERUSAL OF COMPUTATION OF INCOME IT IS NOTICED THAT THE ASSESSEE HAS SET OFF OF LOSSES OF SHARE BUSINESS FOR RS. 9,80,071/ - AND SET OFF THE SAME FROM HIS BUSINESS INCOME. THE CLAIM OF THE ASSESSEE WAS NOT FOUND CORRECT AS IT WAS NOTICED THAT THE ASSESSEE MADE TWO TYPES OF TRANSACTIONS SQUAR E UP PURCHASES AND SALES AND SQUARED UP F & O. THE LOSS FROM SQUARED UP SHARE TRANSACTIONS WERE CLEARLY OF THE NATURE OF SPECULATION AS SUCH THE SAME CANNOT BE SET OFF FROM THE BUSINESS INCOME. AS SUCH LOSS OF RS. 4,34,240/ - RELATED TO SQUARED UP SHARE TRA NSACTION WAS NOT ALLOWED TO BE SET OFF FROM THE OTHER BUSINESS INCOME. IT WAS FOUND BY THE ASSESSING OFFICER THAT TRANSACTIONS ARE NOT GENUINE AND MADE FOR THE PURPOSE OF TAKING LOSS TO REDUCE TAX LIABILITY RAISED DUE TO THE SURVEY. 5 5 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO . AGAINST THIS ORDER OF CIT(A) , THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE ORDER OF LOWER AUTHORI TIES AND THE FINDING RECORDED THEREIN, WE FOUND THAT THE ASSESSEE HAS NOT DONE ANY SHARE OR F & O BUSINESS BEFORE 19.03.2007 AND AFTER 30.03.2007. HIS REPLIES TO THE QUERIES CLEARLY PROVE THAT HE HAS NO EXPERIENCE IN THE SHARE BUSINESS. IF ANY NEW PERSON I S ENTERED IN SHARE BUSINESS HE MAKES TRANSACTION IN SMALL LOTS AND FURTHER MAKE PATIENT FOR SOME DAYS OR EVEN SOME HOURS. BUT IN THE CASE OF ASSESSEE IT IS CLEAR THAT THERE WAS WAITING AS TO HOW THE LOSS OCCURRED. THE TRANSACTION ENTERED BY THE ASSESSEE WE RE OF UNSCRUPULOUS NATURE , THIS FACT IS ALSO PROVED FROM THE FACTS THAT REGARDING THE TRANSACTION MADE BY THE ASSESSEE THE BROKER WAS CALLED FOR EXPLANATION BY THE INVESTIGATION DEPARTMENT AND THE BROKER HAS REPLIED THAT THEY HAVE STOPPED THE ACTIVITIES OF THE ASSESSEE AND INTEND TO SEEK EXPLANATION ABOUT HIS INTENTION FOR THE TRANSACTION . 6 6 6. EVEN THE CIT(A) AFTER SCRUTINIZING THE TRANSACTIONS SO ENTERED FOUND THAT THE ASSESSEE HAS NOT CARRIED OUT F & O BUSINESS OF SHARES, NO DETAILS ALONGWITH EVIDENCE WAS BR OUGHT ON RECORD TO SUPPORT THE CLAIM THAT TRANSACTIONS WERE CARRIED OUT TO GUARD AGAINST LOSSES IN HOLDING OF STOCK AND SHARES THROUGH PRICE FLUCTUATION . WE ALSO FOUND THAT TH E RE WAS NO HOLDING OF SHARES/STOCK, SINCE SHARES WERE PURCHASED AND SOLD ON THE S AME DAY WITHIN A SHORT PERIOD. THE ASSESSEE WAS ALSO UNABLE TO SUBSTANTIATE ITS CLAIM THAT LOSS INCURRED IN F & O BUSINESS OF SHARES WERE A BUSINESS LOSS AS PER SECTION 43(5) AND HENCE ALLOWABLE TO BE SET OFF FROM BUSINESS INCOME DECLARED BY HIM. SINCE THE ASSESSEE WAS A DOCTOR BEING ENGAGED IN LEGAL PROFESSION, EVEN IF IT IS ASSUMED THAT LOSS WAS INCURRED IN MONEY INVESTED IN SHARES, THE SAME CAN AT MOST BE TREATED AS SHORT TERM CAPITAL LOSS, WHICH CANNOT BE ADJUSTED AGAINST OTHER HEAD OF INCOME AS PER PRO VISIONS OF SECTION 71(3). THE DETAILED FINDING RECORDED BY LOWER AUTHORITIES WITH REGARD TO THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN CONTROVERTED BY LD. AUTHORIZED REPRESENTATIVE BY BRINGING 7 7 ANY POSITIVE MATERIAL ON RECORD. WE, THEREFORE, DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LOWER AUTHORITIES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2011. SD/ - SD/ - (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 TH SEPTEMBER, 2011. CPU* 1316