USHA M. SHAH, MUMBAI V. ITO WD 17(2)(3), MUMBAI

ITA 5642/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100554 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI A.D. JAIN, JM AND SHRI N.K. BILLAIYA, A M .. , . . , ./ I.T.A. NO. 5642 /MUM/2013 ( / ASSESSMENT YEAR : 2008-09 MRS. USHA M. SHAH, 3 RD , FLOOR, JAGDISH KUNJ, 11 R.A. KIDWAI ROAD, WADALA, MUMBAI 400 031. / VS. THE INCOME TAX OFFICER - WARD 17(2)(3), 4 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400 012 ./ PAN : AMOPS5893H ( ! / APPELLANT ) .. ( '# ! / RESPONDENT ) A PPELLANT BY SHRI HARIDAS BHAT R E SPONDENT BY : SHRI PAWAN KUMAR BEERLA $ % & ' ( ) / DATE OF HEARING : 7-7-2015 *+,- ' ( ) / DATE OF PRONOUNCEMENT : 07-08-2015 [ 5 / O R D E R PER A.D. JAIN, J.M . : .. , THIS IS ASSESSEES APPEAL FOR A.Y. 2008-09 AGAINST THE ACTION OF THE LD. CIT(A) IN NOT ALLOWING BROUGHT FORWARD LOSSES. 2. DURING THE ASSESSMENT PROCEEDINGS, THE AR OF THE ASSESSEE IN THIS CASE HAD CLAIMED THE SET OFF OF THE BROUGHT FORWARD LOSS ES PERTAINING TO THE AY. 2001- 02, 2002-03, 2003-04, AND 2005-06 AND THIS IS SUE HAS BEEN DISCUSSED AT PAGE 5 OF THE ASSESSMENT ORDER. THE ASSESSEE DID NOT CLAIM BROUGHT FORWARD CAPITAL LOSS IN THE RETURN OF INCOME FOR TH E YEAR UNDER CONSIDERATION, I.E., AY. 2008-09. IN THE RETURN OF INCOME FILED FO R THE A Y. 2009-10, THE ITA 5642/M/13 2 ASSESSEE HAD SET OFF THE BROUGHT FORWARD LOSS OF A Y. 2008-09 AGAINST THE CAPITAL GAINS ARISING DURING THE AY. 2009-10. ACCOR DING TO THE AO, HAD THE ASSESSEE ANY BROUGHT FORWARD LOSSES OF THE EARLIER YEARS, SHE WOULD HAVE SET OFF THE LOSSES OF EARLIER YEARS AND NOT THE LOSS FO R THE AY. 2008-09. FURTHER, IN THE COPIES OF RETURNS FILED FOR THE ASSESSMENT YEAR S 2002-03, 2003-04, AND 2004-05, NO BROUGHT FORWARD LOSSES ON ACCOUNT OF CA PITAL GAINS WERE CLAIMED. ON THE BASIS OF THESE FACTS, THE AO HELD THAT THERE WERE NO BROUGHT FORWARD CAPITAL LOSSES FOR THE ASSESSMENT YEARS 2001-02, 20 02-03, 2003-04, 2004-05 AND 2005-06 AND THEREFORE, THEY CANNOT BE ALLOWED. 3. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSE SSEE FURTHER CONTENDED THAT THE BROUGHT FORWARD CAPITAL LOSSES WERE DULY M ENTIONED IN THE RETURNS OF INCOME FOR ALL THE ASSESSMENT YEARS, TILL 2006-07. THE ASSESSEE FURTHER CLAIMED THAT THE BROUGHT FORWARD LOSSES WERE NOT CL AIMED BY MISTAKE IN THE RETURNS OF INCOME FILED FOR THE AY. 2007 -08 AND 20 08-09. IN SUPPORT OF THE ABOVE CLAIM, THE AR SUBMITTED COPIES OF RETURNS AND COMPUTATION OF INCOME FOR THE AY. 2005-06 AND 2006-07. 4. IN VIEW OF THE ABOVE SUBMISSIONS MADE, THE AO WA S ASKED BY THE LD. CIT(A) TO VERIFY THE ABOVE CLAIM OF THE ASSESSEE FROM THE OFFICE RECORDS REGARDING THE BROUGHT FORWARD LOSSES OF EARLIER YEARS AND TO SEND A REPORT ON THE ISSUE. 5. IN RESPONSE TO THE ABOVE, THE AO, VIDE HIS REPOR T DATED 24/01/2013 ON THE ISSUE, REPORTED TO THE LD. CIT(A) IN THE MATTER AS UNDER:- ON PERUSAL OF THE ROI (FORM 2D) FOR THE AY 2002-03 , 2003-04, 2004-05, 2005-06, IT IS FOUND THAT THE COLUMNS FOR STCG AND LTCG WERE EITHER LEFT BLANK OR ENTERED AS 'NIL'. HENCE, IT IS CLEAR THAT THE ASSESSEE HAD NOT CLAIMED ANY SHORT TERM OR LONG TERM CAPITAL LOSSES IN THE A FORESAID ASSESSMENT YEARS. HOWEVER, IN THE FORM 20 FOR THE AY 2006-07, STCG O F RS.74,893/- WAS SHOWN AND THE SAME WAS SHOWN TO HAVE BEEN SET-OFF A GAINST LOSSES OF EARLIER YEARS. THE ASSESSEE OR HAS NOW SUBMITTED COPIES OF COMPUTATION OF INCOME FOR THE AY.2002-03, 2003-04'':2004-05, 2005-06 AND 2006-07 AND SHOWN CERTAIN FIGURES OF CAPITAL LOSSES OF THE RELEVANT P REVIOUS YEAR AND THE BROUGHT ITA 5642/M/13 3 FORWARD CAPITAL LOSSES OF EARLIER YEARS. HOWEVER, N O EVIDENCE HAS BEEN FURNISHED TO SUBSTANTIATE THE CLAIM OF BROUGHT FORW ARD LOSSES. IN ORDER TO VERIFY THE CONTENTION OF THE ASSESSEE, THE ASSESSEE'S RETURNS FOR THE AFORESAID ASSESSMENT YEARS WERE ALSO GENERA TED FROM THE SYSTEM AND IT IS FOUND THAT NO CAPITAL LOSSES WERE DECLARED IN TH E RETURNS FILED FOR THE. A. Y.2002-2003-04, 2004-05, 2005-06. IN VIEW OF THE AB OVE, THE ASSESSEE'S CLAIM THAT THE CAPITAL LOSSES WERE MENTIONED IN THE RETUR N OF INCOME FOR ALL THE ASSESSMENT YEARS TILL AY.2006-07 IS FOUND TO BE FAL SE. IT IS ALSO PERTINENT TO NOTE THAT THE FIGURES OF BR OUGHT FORWARD CAPITAL LOSSES OF EARLIER YEARS ARE NEITHER REFLECTED IN TH E RETURN OF INCOME NOR IN THE COMPUTATION OF INCOME FOR THE AY.2007-08 AND 2008-0 9. ON PERUSAL OF THE RETURN OF INCOME FOR THE AY.2008-09, IT IS ALSO SEE N THAT THE ASSESSEE HAD NOT SHOWN ANY BROUGHT FORWARD LOSSES IN THE SCHEDULE BF LA OR SCHEDULE CFL AND AMOUNTS IN THESE SCHEDULES WERE ENTERED AS NIL. THE ASSESSEE HAS ALSO PUT FORTH A CONTENTION THAT THE FIGURES OF BROUGHT FORW ARD LOSSES REMAINED TO BE ENTERED IN THE ROI DUE TO THE NEW PROCESS OF E-FILI NG OF ROI FOR THE AY.2007-08 AND 2008-09. HOWEVER, THIS CLAIM IS ALSO NOT TENABL E AS NO FIGURES OF BROUGHT FORWARD CAPITAL LOSSES OF EARLIER YEARS HAVE BEEN S HOWN EVEN IN THE COMPUTATION OF INCOME FOR THE AY.2007-08 AND 2008-0 9 . MOREOVER, IT EQUALLY PERTINENT TO NOTE THAT IN THE ROI FOR THE AY.2009- 10, THE ASSESSEE HAD EARNED LTCG OF RS. 10,48,899/- AND THE ASSESSEE HAD SET-OFF THE SAID GAINS AGAINST B/F LTC LOSS OF AY 2008-09 OF RS.14,22,944/- AND CLAIMED TO CARRY FORWARD THE BALANCE LTC LOSS O F RS.3,74,045/- PERTAINING TO AY.2008-09. NO OTHER LOSSES WERE DECLARED IN THE SAID ROL. IF THE ASSESSEE ACTUALLY HAD ANY B/F CAPITAL LOSSES PERTAINING TO A Y.2002-03, 2003-04, 2004- 05 OR 2005-06, THE ASSESSEE WOULD HAVE SET-OFF THE SAID GAINS AGAINST B/F LOSSES OF EARLIER YEARS AND NOT AGAINST THE B/F LOS S OF AY.2008-09.' 6. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O., OBSERVING AS FOLLOWS:- IT IS CLEAR FROM THE ABOVE VERIFICATION REPORTS OF THE AO THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE CLAIM OF BROUGHT FOR WARD LOSSES OF THE EARLIER YEARS FROM THE AY. 2001-02, 2002-03, 2003-04, 2004- 05 AND 2005-06 EVEN IN THE SECOND INNINGS DURING THE REMAND PROCEEDINGS. I T IS THE CATEGORICAL FINDING OF THE AO THAT THE APPELLANT IN THE RETURN OF INCOME FILED FOR THE AY. 2002-03, 2003-04, 2004-05 AND 2005-06 THE COLUMNS P ERTAINING TO STCG AND LTCG HAVE EITHER BEEN LEFT BLANK OR ENTERED AS NIL. THE AO HAS FURTHER REPORTED THAT THE FIGURES OF BROUGHT FORWARD CAPITA L LOSSES OF EARLIER YEARS ARE NEITHER REFLECTED IN THE RETURN OF INCOME NOR IN TH E COMPUTATION OF INCOME FOR THE AY. 2007-08 AND 2008-09. FROM THE FACTS MENTION ED ABOVE, THE AO HAS CONCLUDED THAT THE APPELLANT'S CLAIM THAT THE CAPIT AL LOSSES WERE MENTIONED IN THE RETURN OF INCOME FOR ALL THE EARLIER ASSESSMENT TILL THE AY. 2006-07 IS FOUND TO BE FALSE. ITA 5642/M/13 4 23. THE ABOVE EXHAUSTIVE REPORT OF THE AO ON THE IS SUE OF CLAIM OF BROUGHT FORWARD CAPITAL LOSSES OF EARLIER YEARS IS SELF EXP LANATORY. NEITHER DURING THE REMAND PROCEEDINGS NOR DURING THE APPELLATE PROCEED INGS, THE APPELLANT HAS PLACED ON RECORD ANY AUTHENTIC EVIDENCE TO PROVE TH AT THE CLAIM OF THE BROUGHT FORWARD LOSSES PERTAINING TO THE FOR THE AY. 2002-0 3, 2003-04, 2004-05 AND 2005-06 ARE GENUINE AND WERE CLAIMED IN THE RETURNS OF INCOME FILED WITH THE DEPARTMENT FOR THE SAID ASSESSMENT YEARS. IN VIEW O F THE ABOVE FACT FINDING REPORT OF THE AO AND THE INABILITY OF THE APPELLANT TO PROVE THE GENUINENESS OF THE CLAIM DURING THE APPELLATE PROCEEDINGS, THE CLA IM FOR THE BROUGHT FORWARD CAPITAL LOSSES OF THE APPELLANT IS NOT TENABLE AND THEREFORE THE SAME IS REJECTED. THIS GROUND OF APPEAL OF THE APPELLANT IS DISMISSED. 7. CHALLENGING THE IMPUGNED ORDER, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED VIDE GROUND NOS. 1 & 2, THAT THE LD. CIT( A) HAS ERRED IN NOT TAKING INTO CONSIDERATION THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM (ASSESSEES PAPER BOOK. PAGE 27), IN RESPONSE TO TH E REMAND REPORT FILED BY THE A.O.; THAT THE LD. CIT(A) ALSO FAILED TO TAKE I NTO CONSIDERATION THE FURTHER WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE TH E LD. CIT(A) ON 24-1-2013 (ASSESSEES PAPER BOOK, PAGES 28-32); AND THAT EVEN THE RETURNS OF INCOME AND BALANCE SHEET FOR ASSESSMENT YEARS 2003-04 TO 2 006-07 (ASSESSEES PAPER BOOK, PAGES 7 TO 24), RESPECTIVELY, WERE NOT TAKEN INTO CONSIDERATION BY THE LD. CIT(A), EVEN THOUGH THE POSITION OF BROUGHT FORWARD LOSSES WAS CLEARLY SHOWN THEREIN. 8. THE LD. D.R., ON THE OTHER HAND, HAS PLACED STRO NG RELIANCE ON THE IMPUGNED ORDER. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT THE LD. CIT(A) HAS PASSE D THE IMPUGNED ORDER WITHOUT CONSIDERING THE AFORESAID DOCUMENTARY EVIDE NCES FILED BY THE ASSESSEE. IN THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) (COPY AT PAGE 27), IN RESPONSE TO THE REMAND REPORT FURNISHED BY THE A.O., THE ASSESSEE HAS SUBMITTED AS FOLLOWS:- ITA 5642/M/13 5 THE AO HAS SUBMITTED THAT THE FORM 20 DOES NOT CON TAIN THE LOSS FIGURES. WE SUBMIT THAT THE FORM 20 DID NOT HAVE ANY SPACE F OR THE LOSSES OR EVEN FOR THE BROUGHT FORWARD LOSSES. HENCE ON THE F ACE OF THE FORM 20 THE LOSSES ARE NOT VISIBLE. THIS IS THE FACT ALREAD Y EXPLAINED BEFORE YOUR HONORS. THE AO DID NOT COMMENT ANYTHING ON THE STATEMENT OF INCOME WHEREIN THE LOSSES AND BROUGHT FORWARD LOSSES WERE MENTIONE D TILL A. Y. 2006- 07. HE HAS NOT MADE ANY ATTEMPT TO LOCATE THE PAPER S FILED BY THE ASSESSEE FOR ANY OF THE ASSESSMENT YEARS. HE HAS GE NERATED THE DATA FROM THE SYSTEM WHICH DO NOT HAVE THE LOSS DATA, SI NCE THE SAME IS KEYED IN ONLY FROM THE FORM2D WITHOUT CONSIDERING T HE SUPPORTING DOCUMENTS. FURTHER THE AO HAS RE-ITERATED THAT THE BROUGHT FOR WARD LOSSES ARE NOT MENTIONED IN ASST. YEAR 2007-08 AND 2008-09. THIS M ISTAKE WAS ADMITTED BY THE ASSESSEE, AND THE BASIC ISSUE IN TH E ASSESSMENT IS THIS MISTAKE BY ITSELF. WE SUBMIT THAT THE ERRORS IN GIVING ADDITIONAL DATA REGARDING THE B/F LOSSES IN THE ELECTRONIC RETURN FILING, WHERE THE M ETHOD AND SYSTEM WAS INTRODUCED FOR THE FIRST TIME, SHOULD NOT HE US ED AS A TOOL TO DISALLOW THE GENUINE LOSSES WHICH CAN BE ADJUSTED A GAINST THE CAPITAL GAIN. 10. IN THE FURTHER WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED, INTER ALIA, AS FOLL OWS:- THE RETURNS WERE FILED ELECTRONICALLY UPLOADED, AN D WHILE UPLOADING THE BROUGHT FORWARD LOSSES WERE NOT ENTERED SINCE AS PE R THE RETURN FILED THERE WAS NO TAXABLE GAIN. THE SOFTWARE FILLS THE B LANKS WITH NIL BY DEFAULT. FURTHER DURING THE NEXT ASST. YEAR 2009-10 , THERE WERE MINOR GAINS WHICH WERE SET OFF AGAINST THE LOSSES C/F OF 2008-09 WITHOUT GOING THROUGH THE PAST RECORDS. WE SUBMIT THAT THE CARRY FORWARD OF LOSSES ARE SUBJECT TO CHANGES DURING THE ASSESSMENT AND ARE THE SUBJECT MATTER OF RECTIFICATION. IT WAS HELD THAT D EPT CANNOT DENY ASSESSEE' RIGHT TO CARRY FORWARD AND SET OFF LOSS. CIT VS MAN MOHANDAS 59 ITR 699 (SC) WE SUBMIT THAT THE ERRORS IN GIVING ADDITIONAL DATA REGARDING THE B/F LOSSES IN THE ELECTRONIC RETURN FILING, WHERE THE M ETHOD AND SYSTEM WAS INTRODUCED FOR THE FIRST TIME, SHOULD NOT HE US ED AS A TOOL TO DISALLOW THE GENUINE LOSSES WHICH CAN BE ADJUSTED A GAINST THE CAPITAL GAIN. ITA 5642/M/13 6 THE APPELLANT HAS REQUESTED THE AO TO VERIFY THE RE TURNS FILED WITH THE AUTHORITIES IN CASE FELT NECESSARY. THE AO DID NOT VERIFY THE RETURNS FILED WITH THE AUTHORITIES BEFORE DISALLOWING THE S AME. THE APPELLANT THEREFORE' PRAYS THAT THE BROUGHT FOR WARD LOSSES MAY PLEASE BE ALLOWED TO BE SET OFF AGAINST THE LONG TE RM CAPITAL GAIN. 11. FURTHER, IN THE RETURNS OF INCOME AND BALANCE S HEET FOR ASSESSMENT YEARS 2003-04 TO 2005-06, THE POSITION OF LOSSES AN D BROUGHT FORWARD LOSSES HAVE BEEN SHOWN. IN THE COMPUTATION OF INCOME FOR A .Y. 2006-07 (ASSESSEES PAPER BOOK, PAGE NO. 10), THIS POSITION HAS BEEN DE PICTED. HOWEVER, NEITHER OF THE TAX AUTHORITIES HAVE CONSIDERED THE ABOVE DOCUM ENTARY EVIDENCES FILED BY THE ASSESSEE, THOUGH THESE EVIDENCES GO TO THE ROOT OF THE MATTER. THEREFORE, WE DEEM IT FIT AND PROPER THAT THIS MATTER BE REMAN DED TO THE A.O. TO BE DECIDED AFRESH, ON CONSIDERING ALL THESE EVIDENCES. ORDERED ACCORDINGLY. THE ASSESSEE SHALL BE GRANTED SUFFICIENT OPPORTUNITY OF HEARING AND THE ASSESSEE SHALL CO-OPERATE WITH THE A.O. IN THE ASSESSMENT PR OCEEDINGS. 12. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2015 5 ' *+,- $ 67 8 9 07-08-2015 + ' :& SD SD/- (N.K. BILLAIYA) (A.D. JAIN ) ACCOUNTANT MEMBER /J UDICIAL MEMBER 6 $ & MUMBAI ; 8 DATED 07-08-2015 [ %.../ R.K. R.K. R.K. R.K. , SR. PS ITA 5642/M/13 7 ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $ F( () / THE CIT(A)- 29, MUMBAI 4. $ F( / CIT - 17, MUMBAI 5. I%J : '(KL , ) KL- , 6 $ & / DR, ITAT, MUMBAI F BENCH 6. : M N & / GUARD FILE. ! ( / BY ORDER, # I( '( //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , 6 $ & / ITAT, MUMBAI