SHRI SATISH MAYEKAR, MUMBAI V. DCIT-28(3), MUMBAI, MUMBAI

ITA 4787/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8657 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 16-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Assessee Lawyers: SANDIP KEJARIWAL
• Keywords: Business income; Principle of natural justice; Transactions in derivatives; Revised return
• Section: 143(3); 142(1); 139(5); 143(1); 250; 143(2)

Judgement Text

INTHEINCOMETAX APPELLATETRIBUNAL MUMBAI BENCHEMUMBAI BEFORE SHRI SHAMIMYAHYA(ACCOUNTANTMEMBER)AND SHRI PAVANKUMARGADALE (JUDICIAL MEMBER) ITANO.4787/MUM/2019 ASSESSMENT YEAR:2011-12 SHRI SATISH MAYEKAR, 404, GEETANJALI, RANADE ROAD, DADAR, MUMBAI-400028. VS. DCIT-28(3), ERSTWHILEDCIT-22(3), NAVI MUMBAI-400703. PANNO. AGAPM2915J APPELLANT RESPONDENT ASSESSEEBY : MR. SANDIPKEJARIWAL, AR REVENUE BY : MR. VI J AYKUMAR MENON , DR DATE OF HEARING : 13/07/2021 DATE OF PRONOUNCEMENT : 15/07/2021 ORDER PER PAVANKUMARGADALE, J.M. THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-26, MUMBAI PASSED U/S 143(3) AND 250 OF THE INCOME TAXACT,1961.THE ASSESSEE HASRAISEDFOLLOWINGGROUNDSOFAPPEAL ASUNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE ANDIN L AW, THE TEAMED COMMISSIONER OF INCOME TAX APPEALS-26 (CIT(A)) ERRED IN NOT ALLOWING THE SET OFF OF F&O LOSS OF RS.22,88,642/- AGAINST BUSINESS INCOME STATING THAT THE APPELLANT HAD NOT FURNISHED REVISED RETURN OF INCOME UNDER SECTION 139(5) OF THE ACT, WITHOUT SHRI SATISHMAYEKAR ITA NO. 4787/M/2019 2 CONSIDERING THE FACTS THAT THE APPELLANT HAD FILED REVISED COMPUTATION OF INCOME DURING THE COURSE OF SCRUTINY ASSESSMENT SINCE DUE DATE OF FILING REVISED RETURNOF INCOMEWAS OVER. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE ANDIN LAW, THE LD. CIT(A) ERRED IN NOT ALLOWING CARRY FORWARD OF SHORT TERM CAPITAL LOSS OF RS.30,99,430/- TO SHE SUBSEQUENT YEARS, STATING THAT THE APPELLANT HAD NOT FURNISHED REVISED RETURN OF INCOME UNDER SECTION 139(5) OF THE ACT, WITHOUT CONSIDERING THE FACTS THAT THE APPELLANT HAD FILEDREVISED COMPUTATION OFINCOMEDURINGTHE COURSE OF SCRUTINY ASSESSMENTSINCEDUE DATEOF FILINGREVISEDRETURNOF INCOMEWAS OVER. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE ANDIN LAW, THE LD. CIT(A) ERRED IN NOT ALLOWING THE SET OFF OF F&O TOSS OF RS.22,88,642 AGAINST BUSINESS INCOME AND CARRY FORWARD OF SHORT TERM CAPITAL LOSS OF RS.30.99,430 LO THE SUBSEQUENT YEARS, RELYING ON DECISION OF APEX COURT IN CASE OF GOETZE INDIA LID (SC) 2006 284 ITR 323 WITHOUT CONSIDERING THE FACTS THAT !HE SAID DECISION RESTRICT THE ASSESSING OFFICER TO ALLOW THE CLAIM MADE DURING THE COURSE OF SCRUTINY ASSESSMENTAND NOT THE APPELLATE AUTHORITIES. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGEDIN THE BUSINESS OF IOC PETROL &DIESEL RETAIL OUTLET ANDFILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 23.09.2011 DECLARING A TOTAL INCOME OF RS.66,19,717/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) AND U/S 142(1) OF THE ACT ALONG WITH THE QUESTIONNAIRE WAS ISSUED. IN COMPLIANCE, THE LD.AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND SUBMIT THE DETAILS. THE ASSESSING OFFICER HAS CALLED FOR THE INFORMATION IN RESPECT OF INDIVIDUAL TRANSACTION STATEMENT OF INVESTMENTS AND THE INCOME OFFERED FOR TAXATION AND THE SOURCES OF INVESTMENTS. THE ASSESSEE HAS FILED A LETTER DATED 02.12.2013 EXPLAINING THE NATURE OF BUSINESS AND THE PERSONAL INCOME DETAILS, INVESTMENTACTIVITIES, INTEREST INCOME ANDOTHERINFORMATION. SHRI SATISHMAYEKAR ITA NO. 4787/M/2019 3 2.1 THE ASSESSEE HAS FILED A REVISED COMPUTATION OF INCOME EXCLUDING AN AMOUNT OF RS.22,88,642/- BEING LOSS FROM THE BUSINESS INCOME OF PROPRIETARY CONCERN AND THE REVISED INCOME WAS OFFERED AT RS.43,39,824/-. BUT THE ASSESSING OFFICER OBSERVED THAT THE REVISED STATEMENT FILED BY THE ASSESSEE CANNOT BE ACCEPTED AS THE ASSESSEE HAS TO FILE REVISED RETURN OF INCOME U/S 139(5) OF THE ACT. THE CONTENTIONS OF THE ASSESSEE ARE THAT THE LOSS OF RS.22,88,642/- WAS INCURRED AND SHOULD BE REDUCED FROM BUSINESS INCOME OF RS.66,28,466/- AND THE SAME WAS NOT ACCEPTED. FURTHER THE ASSESSEE CLAIMED IN THE REVISED COMPUTATION OF INCOME CARRIED FORWARD OF SHORT TERM CAPITAL LOSS OF RS.30,99,430/- FOR SET OFF FOR FUTURE YEARS. SIMILARLY, THE ASSESSING OFFICER CALLED FOR BANK ACCOUNTS OF THE ASSESSEE AND IDENTIFIED THE CREDIT OF RS.21,61,200/- AND CALLED FOR THE EXPLANATIONS. SINCE, THE ASSESSEE COULD NOT GIVE PROPER EXPLANATIONS AND HAS OFFERED THE INCOME FOR TAXATION IN THE REVISED COMPUTATION STATEMENT. HENCE ADDITION OF RS.21,61,200/- WAS TREATED AS UNDISCLOSED INCOME AND FINALLY THE A.O. DETERMINED THE TOTAL INCOME OF RS.89,07,020/- AND PASSED ORDER U/S 143(3) OF THE ACT DATED 28.01.2014. 3. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A) ON THE DISPUTED ISSUE OF SETOFF OF LOSS AND CARRY FORWARD OF SHORT TERM CAPITAL LOSS. BUT THE CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER ANDDISMISSEDTHEASSESSEESAPPEAL. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THAT CIT(A) AND ASSESSING OFFICER HAS ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSEE IS ENTITLED TO SET OFF LOSS AGAINST THE BUSINESS INCOME AND SHRI SATISHMAYEKAR ITA NO. 4787/M/2019 4 THE ASSESSING OFFICER HAS DENIED THE CLAIM IN THE REVISED COMPUTATION OF INCOME AND THE TIME LIMIT TO FILE THE REVISED RETURN OF INCOME HAS LAPSED. FURTHER THE ASSESSING OFFICER HAS NOT ALLOWED THE CARRIED FORWARD OF SHORT TERM CAPITAL CLAIMED IN THE REVISED COMPUTATION OF INCOME AND PRAYEDFORALLOWINGTHE APPEAL. 5. CONTRA, THE LD. DR SUPPORTED THE LOWER AUTHORITIES ORDERS AND SUBMITTED THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM SET OFF OF LOSS IN THE REVISED COMPUTATION OF INCOME AND CARRY FORWARD OF SHORT TERM CAPITAL LOSS FILED IN THE SCRUTINYPROCEEDINGS. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE CRUX OF THE ISSUE ENVISAGED BY THE LD.AR IS WITH RESPECT TO SET OFF OF LOSS AGAINST THE BUSINESS INCOME AS IT WAS NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME AND BUT IN SCRUTINY PROCEEDINGS REVISED COMPUTATION OF INCOME WAS FILED. SIMILARLY, THE ASSESSEE HAS A CARRIED FORWARD SHORT TERM CAPITAL LOSS AND WAS DISCLOSED IN THE STATEMENT OF REVISED TOTAL INCOME BEFORE THE ASSESSING OFFICER BUT THE SAME CLAIM WAS REJECTED BY THE ASSESSING OFFICER AND CIT(A). WE FIND THAT THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME HAS NOT CLAIMED THE SET OFF AND CARRIED FORWARD OF SHORT TERM CAPITAL LOSS FOR VARIOUS REASONS AND IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED REVISED COMPUTATION OF INCOME WITH THE CLAIMS. THE ASSESSING OFFICER HAS REJECTED THE CLAIM AND OBSERVEDTHATTHE ASSESSEE SHOULDFILE REVISED RETURN OFINCOME . 6.1.THE LD.AR SUBMITTED THAT THE TIME LIMIT FOR FILLING THE REVISED RETURN OF INCOME WAS OVER. WE FIND THE SUBMISSIONS OF THE LD.AR ARE REALISTIC AND THE A.O. HAS NOT DOUBTED THE CLAIM BUT REJECTED ONLY ON THE GROUND OF NON FILLING OF REVISED RETURN OF INCOME. WE CONSIDERING THE OVERALL FACTS, SHRI SATISHMAYEKAR ITA NO. 4787/M/2019 5 CIRCUMSTANCES AND JUDICIAL DECISIONS ARE OF THE OPINION THAT THE ASSESSEE SHOULD NOT BE DEPRIVED HIS LEGITIMATE RIGHT TO CLAIM SET OFF OF LOSS WHICH IS GENUINE AND CARRY FORWARD OF SHORT TERM CAPITAL LOSS WHICH IS NOT FICTITIOUS. WE CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE AND THE JUDICIAL DECISIONS ADMIT THE CLAIMS OF THE ASSESSEE AND RESTORE THE DISPUTED ISSUES TO THE FILE OF ASSESSING OFFICER FOR LIMITED PURPOSE TO EXAMINE AND VERIFY THE CLAIMS AND ADJUDICATE ON MERITS. THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING AND SHALL COOPERATE IN SUBMITTING THE INFORMATION AND ALLOW THE GROUNDSOFAPPEAL FORSTATISTICALPURPOSE. IN THE RESULT,THE ASSESSEESAPPEAL ISALLOWEDFORSTATISTICAL PURPOSES. ORDER PRONOUNCEDINTHE OPENCOURT ON15/07/2021. SD/- SD/- ( SHAMIM YAHYA ) (PAVAN KUMARGADALE) ACCOUNTANTMEMBER JUDICIALMEMBER MUMBAI; DATED: 15/07/2021 RAHUL SHARMA,SR. P.S. COPYOFTHEORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT,MUMBAI 6. GUARDFILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT,MUMBAI