Vivek Kedia, Mumbai V. ACIT, Kolkata

ITA 518/KOL/2023

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The case involves an appeal by Vivek Kedia against the order of the National Faceless Appeal Centre, Delhi, which confirmed the disallowance of a loss of Rs.6,71,122 incurred in derivative transactions for the Assessment Year 2012-13. The primary legal issue was whether the loss from derivative transactions could be set off against the salary income of the assessee, which is not permissible under section 71(2A) of the Income Tax Act, 1961. The Tribunal noted that the assessee did not cooperate in the proceedings and failed to provide necessary details to substantiate the claim of set off. The Tribunal, after hearing the Departmental Representative, decided to remand the matter back to the CIT(A) for a fresh decision, highlighting the need for a fair hearing.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132676 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 10-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 23-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJ KISHORE SINGH
• Keywords: Salary income; Opportunity of being heard; Reasonable cause
• Section: 250

Judgement Text

| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA BEFORE DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 518/Kol/2023 Assessment Year: 2015-16 Vivek Kedia 604, Dosti Olive Dosti Acres Antop Hill Wadala East Mumbai - 400037 [PAN : ALRPK4508R] Vs ACIT, Circle-57, Kolkata अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : None Revenue by : Shri Braj Kishore Singh, JCIT, CIT D/R सुनवाई कᳱ तारीख/Date of Hearing : 11/07/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 24/07/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The present appeal is directed at the instance of the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter the “ld. CIT(A)”) dated 03/02/2023, passed u/s 250 of the Income Tax Act, 1961 (“the Act’), for Assessment Year 2012-13. 2. None appeared on behalf of the assessee nor any application for adjournment been filed. Perusal of the assessment order and the order of the ld. CIT(A) reveals that both have been framed ex-parte and the assessee has not co-operated in the proceedings below and except filing the appeal has not made any efforts to pursue the same. We, therefore, deem it proper to adjudicate the appeal and decide it on merits ex-parte, qua the assessee, after hearing the ld. D/R. 3. The sole ground raised by the assessee is that the ld. CIT(A) erred in confirming the disallowance of loss of Rs.6,71,122/-. The ld. I.T.A. No. 518/Kol/2023 Assessment Year: 2015-16 Vivek Kedia 2 D/R stated that the assessee has not find any details before the lower authorities but as per the grounds filed before ld. CIT(A), it is stated that loss incurred in derivative transactions has been funded through salary income however, there is no detail about the nature of income earned during the year and whether the assessee has claimed set off of loss against the said head of income. Further, he submitted that since the assessee has not filed any details, it means that the assessee has nothing to state about the said disallowance and thus the same should be confirmed. 4. We have heard the ld. D/R and perused the material placed before us. We notice that the assessee has declared income of Rs.22,31,630/-in the return filed on 30/09/2015. After the case being selected for scrutiny on account of large value sale of futures, derivative and securities transactions, various notices issued by the Assessing Officer were not complied even though they were sent through speed post and email. The assessee has declared Nil income under the head business and profession and loss of Rs.6,71,122/- has been set off against the column for “Losses from current year set off against the gross total income”. There is no finding by the Assessing Officer that under which head, the assessee has declared the income from other than business of profession. However, the Assessing Officer made a disallowance of the said claim and assessed the income. Further we notice that in the appellate proceedings before the ld. CIT(A), it is observed that the assessee is a salaried employee. Now I.T.A. No. 518/Kol/2023 Assessment Year: 2015-16 Vivek Kedia 3 in case the assessee has income from salary but has claimed the set off of losses from derivative business against the salary income, the same is not allowable in terms of the provisions of section 71(2A) of the Act, which provides that if the net result of the computation under the head “Profits and gains of business or profession” is a loss and the assessee has income assessable under the head “Salaries”, the assessee shall not be entitled to have such loss set off against such income. Therefore, if any set off of derivative loss has been claimed against the salary income, the same is not allowable. 4.1. Also, we notice that in the grounds of appeal filed before the ld. CIT(A), assessee has stated that loss incurred in derivative has been funded through salary income. Though the specific details have not been filed but we presume that the assessee is contending that since the source of loss incurred on derivatives is from salary income, disallowance was uncalled for. If that be the case, the assessee is misconceived because source of incurring loss is one aspect and claiming of such loss from derivative transactions against salary income is another aspect. The ld. Assessing Officer has made disallowance of loss which means the assessee has claimed the set off of the loss from derivatives transactions against the salary income which we have already discussed above in terms of section 71(2A) of the Act. However, since the assessee has failed to appear for hearing before the ld. CIT(A) on multiple occasions and an ex-parte order was passed, we in the interest of justice and fair play, restore the issue to I.T.A. No. 518/Kol/2023 Assessment Year: 2015-16 Vivek Kedia 4 the file of the ld. CIT(A) to decide the issue in accordance with the observations made by us hereinabove. Needless to mention that the assessee be provided sufficient opportunity of being heard, however, if the assessee fails to appear on more than two occasions without providing any reasonable cause, then the ld. CIT(A), can decide the appeal in accordance with law by way of passing a speaking order. 5. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 24 th July, 2023 at Kolkata. Sd/- (DR. MANISH BORAD) ACCOUNTANT MEMBER Kolkata, Dated 24/07/2023 *SC SrPs आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata