SHRI GAGANDEEP SINGH BHASIN LEGAL HEIR OF LATE SHRI JAGMOHAN KARTAR SINGH , MUMBAI V. INCOME TAX OFFICER 24(2)(2), MUMBAI

ITA 4290/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0737 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 22-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAITNYA ANJARIA
• Assessee Lawyers: JITENDRA C LALA
• Keywords: Transactions in derivatives
• Section: 143(3); 142(1); 133(6); 143(2); 68; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL SMC BENCH MU MBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 4290/MUM/2018 (ASSESSMENT YEAR 2010-11 ) SHRI GAGANDEEP SINGH BHASIN, LEGAL HEIR OF LATE SHRI JAGMOHAN KARTAR SINGH, SHER-E-PUNJAB COLONY, ANDHERI EAST, MUMBAI-400093. PAN: AMSPB1808P VS. ITO 24(2)(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012. APPELLANT RESPONDE NT APPELLANT BY : SHRI JITENDRA C. LALA (AR) RESPONDENT BY : SHRI CHAITNYA ANJARIA (DR) DATE OF HEARING : 06.08.2019 DATE OF PRONOUNCEMEN T : 06.08.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER (APPEALS)-36, MUMBAI FOR ASSESSMENT YEAR 2010-11. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ISSUE OF NOTICE UNDER SEC.148 IS NOT LEGAL AS NO REASON FOR REOPENI NG THE ASSESSMENT FOR ASSESSMENT YEAR 2010-11 IS RECORDED 2. IN THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER ERRED IN PASSING THE ASSESSMENT ORDER UNDER SEC. 143(3) WITHOUT ISSUING ANY NOTICE UNDER SEC. 143(2) 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED ASSESSING OFFICER DID NOT CONSIDER THE DATA AVAILABLE WITH HIM SUCH AS TH E MTM SUMMARY OBTAINED BY HIM FROM THE NSE ITA NO. 4290 MUM 2018-SHRI GAGANDEEP SINGH 2 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED AO FAILED TO APPRECIATE THAT THE INCOME/LOSS OF F&O TRANSACTIONS IN SHARES AND COMMODITIES ARE SPECULATIVE IN NATURE AND OUGHT TO HAVE ADJUSTED LO SS OF F&O TRANSACTIONS IN COMMODITIES AGAINST THE ALLEGED PROFIT IN F&O IN EQ UITIES. ASSESSMENT ORDER WHERE LOSS IN F&O COMMODITIES IS DETERMINED AT (-) RS.16,54,890/- AND GAINS IN F&O EQUITIES IS DETERMINED AT RS.12,99,664/- LEA VING A NET LOSS FROM SPECULATION AT RS.3,55,226/-. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS INDIVI DUAL AND IS IN THE BUSINESS OF SHARE TRADING. NO RETURN OF INCOME WAS FILED BY ASSESSEE FOR ASSESSMENT YEAR 2010-11. THE CASE WAS REOPENED BY A SSESSING OFFICER AFTER RECEIVING INFORMATION FROM VARIOUS SOURCES ON THE FINANCIAL ACTIVITY OF ASSESSEE. THE ASSESSING OFFICER SERVED NOTICE U/ S 148 TO THE ASSESSEE ON 07.03.2014. NO RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148 WAS FILED BY ASSESSEE. THE ASSESSING OFFICER RECORDED T HAT THE NOTICE U/S 142(1) ON 04.08.2014, 02.09.2014 & 08.01.2015 WAS S ERVED ON THE ASSESSEE AND THAT A FINAL OPPORTUNITY VIDE NOTICE D ATED 16.03.3015 WAS GIVEN. THE ASSESSING OFFICER FURTHER RECORDED THAT NEITHER THE ASSESSEE APPEARED NOR FILED ANY REQUISITE REPLY. THE ASSESSI NG OFFICER ISSUED NOTICE TO MULTI COMMODITY EXCHANGE AND NATIONAL STO CK EXCHANGE. IN RESPONSE TO THE NOTICE OF ASSESSING OFFICER UNDER S ECTION 133(6), MULTI COMMODITY EXCHANGE AND NATIONAL COMMODITY EXCHANGE FILED THEIR REPLY. AS PER THE REPLY OF MULTI COMMODITY EXCHANGE , THE ASSESSEE REPORTED THE FOLLOWING DETAILS WERE RECEIVED : MULTI COMMODITY EXCHANGE : - ITA NO. 4290 MUM 2018-SHRI GAGANDEEP SINGH 3 TOTAL SALE VALUE TRADED RS. 10,25,52,980/- TOTAL PURCHASE VALUE TRADED RS. 10,42,07,870/- LOSS (-) RS. 16,54,890/- 3. FURTHER AS PER REPLY OF THE NATIONAL STOCK EXCHANGE THE FOLLOWING DETAILS WERE REPORTED: NATIONAL STOCK EXCHANGE: - SALE VALUE RS. 18,97,048/- BUY VALUE RS. 5,97,384/- PROFIT RS. 12,99,664/- 4. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAS DEPOSITED CASH OF RS. 1,00,000/- IN PMC BANK. SINCE NO DOCUMENTARY EV IDENCES OR EXPLANATION WAS FURNISHED THE SAME WAS TREATED AS U NEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE ASSESSING O FFICER ALSO ADDED SALE VALUE/GAIN EARNED WITH THE TRANSACTION IN NATIONAL STOCK EXCHANGE OF RS. 12,99,664/- AND ASSESSED A TOTAL INCOME AT RS. 13,9 9,664/-. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSING OFFI CER IN REASSESSMENT AS WELL AS ON ADDITIONS WAS CONFIRMED. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER BY PROCEEDING EX-PARTE AGAINST THE ASSESSEE. THUS, FURTHER AGGRIEVED, THE ASSESSEE HAS FILED THE PRESE NT APPEAL BEFORE US. 5. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (D R) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. AR OF THE ASSESSEE ITA NO. 4290 MUM 2018-SHRI GAGANDEEP SINGH 4 SUBMITS THAT THOUGH THE ASSESSEE HAS RAISED GROUNDS OF APPEAL AGAINST THE VALIDITY OF RE-OPENING AS WELL AS NON-ISSUANCE OF N OTICE UNDER SECTION 143(2). HOWEVER, OTHERWISE THE ASSESSEE HAS GOOD CA SE ON MERIT. ON MERIT, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER WHILE COMPUTING THE INCOME OF THE ASSESSEE HAS NOT ADJUST ED THE LOSS SUFFERED BY ASSESSEE ON ACCOUNT OF F&O TRANSACTION IN SHARE AND COMMODITIES AGAINST THE GAIN/LOSS IN F&O COMMODITIES. THE ASSES SING OFFICER PASSED THE ORDER ADDED THE PROFIT AND THE DEPOSITS IN THE BANK, WITHOUT GIVING SETOFF OF THE LOSS. THE LD. AR FURTHER SUBMITS THAT NO PROPER NOTICE OF HEARING WAS SERVED BY LD. CIT(A). 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE NOTED THAT TH E ASSESSMENT WAS RE- OPENED BY ASSESSING OFFICER BY ISSUING NOTICE UNDER SECTION 148. THE ASSESSING OFFICER FURTHER ISSUED NOTICE UNDER SECTI ON 142(1) ON SEVERAL OCCASION. THE ASSESSING OFFICER ALSO ISSUED NOTICE UNDER SECTION 133(6) TO NATIONAL STOCK EXCHANGE AND MULTI COMMODITY EXCH ANGE. THE AO RECORDED THAT HE HAS RECEIVED REPLY FROM MULTI COMM ODITY EXCHANGE AND NATIONAL STOCK EXCHANGE, WHEREIN MULTI COMMODITY EX CHANGE REPORTED THE LOSS OF RS. 16,54,980/-, WHEREAS NATIONAL STOCK EXCHANGE REPORTED THE PROFIT/GAIN OF RS. 12,99,664/-. THE ASSESSING O FFICER DETERMINED THE ITA NO. 4290 MUM 2018-SHRI GAGANDEEP SINGH 5 INCOME BY TAKING INTO CONSIDERATION THE PROFIT REPO RTED IN THE TRANSACTION WITH NATIONAL STOCK EXCHANGE, HOWEVER, NO SET OFF O F LOSS REPORTED IN THE REPLY OF MULTI COMMODITY EXCHANGE WAS SET OFF OF AG AINST THE GAIN/POSITIVE INCOME OF THE ASSESSEE. WE HAVE NOTED THAT LD. CIT(A) HAS NOT DISCUSSED THE MERIT OF THE CASE. THEREFORE, CON SIDERING THE SUBMISSION OF LD. AR OF THE ASSESSEE, WE DEEM IT APPROPRIATE T O RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH THE DIRE CTION TO SET OFF OF THE LOSS AGAINST THE PROFIT/GAIN EARNED AND EARNED BY T HE ASSESSEE AS REPORTED IN THE REPLY OF NATIONAL STOCK EXCHANGE. NEEDLESS T O SAY THAT BEFORE GIVING EFFECT TO THE ORDER OF OUR DIRECTION, THE AS SESSING OFFICER SHALL GRANT OPPORTUNITY TO THE ASSESSEE OF HEARING. 8. CONSIDERING THE FACT THAT LD. AR OF THE ASSESSEE HA S NOT SERIOUSLY PRESSED THE GROUND NO. 1 & 2, THEREFORE, THE SAME WAS TREAT ED AS NOT PRESSED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/08/2019. SD/- SD/- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 06.08.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR TAT, MUMBAI