PRAM PRAKASH GUPTA, Alwar V. ITO, Alwar

ITA 599/JPR/2013

• Counselvise Citation: 59923114 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH JCIT DHK
• Keywords: Business income; Speculation loss
• Section: 143(3); 43(5)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 599/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI PREM PRAKASH GUPTA GB-13,NEW MANDI, ALWAR CUKE VS. ITO WARD- 2 (3), ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACQPP 9461 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 90/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI PREM PRAKASH GUPTA GB-13,NEW MANDI, ALWAR CUKE VS. ITO WARD- 2 (3), ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACQPP 9461 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL , CA JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 2/06/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11 /08/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THE ASSESSEE HAS FILED BOTH THE APPEALS AGAINST T WO DIFFERENT ORDERS OF THE LD. CIT(A), ALWAR DATED 22-03-2013 AN D 29-11-2012 FOR THE ASSESSMENT YEAR 2008-09 RESPECTIVELY. 2.1 FIRST OF ALL, WE TAKE UP THE APPEAL OF THE ASSE SSEE IN ITA NO. 599/JP/2013 WHEREIN THE ASSESSEE HAS RAISED FOLLOW ING GROUND. ITA NO. 599/JP/2013 SHRI PREM PRAKASH GUPTA VS. ITO, WARD- 2 (3), ALWAR . . 2 THAT THE LD. AO HAS ERRED IN LAW AS WELL AS ON TH E FACTS AND CIRCUMSTANCES OF THE CASE IN MAKING A DISALLOWANCE ORS 5,31,132/- BEING THE LOSS SUFFERED BY THE ASSESSEE IN NCDEX TR ANSACTION AND THE LD. CIT(A) HAS ERRED IN SUSTAINING THE SAME. 3.1 THE APPEAL OF THE ASSESSEE IS DELAYED BY ONE DA Y. THE LD. AR OF THE ASSESSEE HAS FILED AN APPLICATION DATED 15-06-2013 CITING THE MEDICAL REASON OF THE ASSESSEE FOR ONE DAY LATE IN FILING OF AN APPEAL. 3.2 AFTER HEARING THE LD. DR , WE ARE INCLINED TO C ONDONE THE DELAY OF ONE DAY IN FILING THE APPEAL BY THE ASSESSEE. 4.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE D ERIVES INCOME FROM TRADING OF AGRICULTURAL PRODUCE ON WHOLE SALE BASIS AND IS ALSO A COMMISSION AGENT. DURING THE YEAR HE HAS DEBITED LO SS OF RS.5,31,132/- ARISING FROM NCDEX TRANSACTIONS. IN COURSE OF ASSES SMENT PROCEEDINGS, ASSESSEE SUBMITTED THE LEDGER ACCOUNT OF NCDEX TRAN SACTIONS AND COPY OF THE ACCOUNT APPEARING IN HIS BOOKS OF ACCOUNTS A ND EXPLAINED THAT THE LOSS HAS ARISEN IN THE REGULAR BUSINESS TRANSACTION S. HOWEVER, AO DISALLOWED THE LOSS BY HOLDING THAT THE ASSESSEE FA ILED TO GET VERIFIED THE TRANSACTIONS MADE THROUGH NCDEX TERMINAL . 4.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHEREIN IT WAS CONTENDED THAT HE HAS ENTERED INTO NCDEX TRANSACTI ON THROUGH THE FIRM M/S ARJIT & COMPANY WHO IS RUNNING A NCDEX TERMINAL IN ALWAR. COPY OF ASSESSEES ACCOUNT IN THE BOOKS OF ACCOUNT OF AR JIT & CO. AND THE COPY ITA NO. 599/JP/2013 SHRI PREM PRAKASH GUPTA VS. ITO, WARD- 2 (3), ALWAR . . 3 OF TRADING ACCOUNT OF THE NCDEX TRANSACTION WHEREIN THE LOSS OF RS.5,31,132/- IS SUFFERED BY THE ASSESSEE IS SUBMIT TED. ASSESSEE FURTHER SUBMITTED THAT HE HAS ENTERED INTO DERIVATIVE TRANS ACTION WHICH CANNOT BE CONSIDERED AS SPECULATIVE TRANSACTION BECAUSE OF TH E INHERENT NATURE OF SUCH TRANSACTIONS. THE LD. CIT(A) CALLED FOR THE RE MAND REPORT FROM THE AO WHICH WAS FILED VIDE HIS REPORT DATED 13-12-2012 IN WHICH THE AO ACCEPTED THAT IMPUGNED TRANSACTION HAD BEEN MADE TH ROUGH NCDEX TERMINAL. HOWEVER, IT WAS NOT ASCERTAINABLE THAT NC DEX WAS A RECOGNIZED STOCK EXCHANGE AND NOTIFIED BY THE CENTR AL GOVT . THE CIT(A) CALLED FOR THE REMAND REPORT TO VERIFY THE ISSUE RE GARDING VERIFICATION OF TRANSACTIONS MADE THROUGH NCDEX TERMINAL AND WHETHE R THE NCDEX WAS A RECOGNIZED STOCK EXCHANGE UNDER SECTION 43(5) OF THE ACT OR NOT. THE AO IN HIS REPORT DATED 13.12.2012 ACCEPTED THA T THE TRANSACTIONS HAS BEEN MADE THROUGH NCDEX TERMINAL BUT STATED THAT IT IS NOT PROVED THAT THE NCDEX IS A RECOGNIZED STOCK EXCHANGE AND NOTIFI ED BY THE CENTRAL GOVERNMENT . 4.3 THE CIT(A) AFTER CONSIDERING THE REMAND REPORT OBSERVED THAT NCDEX TERMINAL IS NOT A RECOGNIZED STOCK EXCHANGE A S PER RULE 6DDB R.W.S. 43(5)(D) OF THE INCOME TAX ACT, 1961. HE THE REFORE, RELYING ON THE DECISION OF ITAT JAIPUR BENCH IN ITA NO. 91/JP/2013 DATED 20.02.2013 ITA NO. 599/JP/2013 SHRI PREM PRAKASH GUPTA VS. ITO, WARD- 2 (3), ALWAR . . 4 IN CASE OF PREM PRAKASH UMA SHANKAR DISALLOWED THE LOSS BY HOLDING IT TO BE A SPECULATIVE LOSS. 4.4 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS AS UN DER:- 1. AS PER SECTION 43(5), SPECULATIVE TRANSACTION MEANS A TRANSACTION IN WHICH THE CONTRACTS FOR THE PURCHASE OR SALE OF ANY COMMODITY INCLUDING STOCK AND SHARES, IS PERIODICALLY OR ULTI MATELY SETTLED OTHERWISE THAN BY THE ACTUAL DELIVERY OR TRANSFER OF THE COMMODITY OR SCRIPS. FINANCE ACT, 2013 AMENDED THE DEFINITION BY INSERTING A NEW SUB CLAUSE (E) W.E.F. AY 2014- 15 TO PROVIDE THAT AN ELIGIBLE TRANSACTION IN RESPE CT OF TRADING IN COMMODITY DERIVATIVES CARRIED OUT IN A RECOGNIZED ASSOCIATION SHALL NOT BE REGARDED AS SPECULATIVE TRANSACTION. THE FINANCE MINISTER IN HI S SPEECH IN INTRODUCING THE FINANCE BILL, 2013 EXPLAINED THE AMENDMENT AS UNDER :- 149. THERE IS NO DISTINCTION BETWEEN DERIVATIVE TR ADING IN THE SECURITIES MARKET AND DERIVATIVE TRADING IN THE COM MODITIES MARKET, ONLY THE UNDERLYING ASSET IS DIFFERENT. IT IS TIME TO INTRODUCE COMMODITIES TRANSACTION TAX (CTT) IN A LIMITED WAY. HENCE, I PROPOSE TO LEVY CTT ON NON-AGRICULTURAL COMMODITIES FUTURE CONTRACTS AT THE SAME RATE AS ON EQUITY FUTURES, THAT IS COMM ODITIES FUTURES CONTRACTS AT THE SAME RATES AS ON EQUITY FUTURES, T HAT IS AT 0.001 PER CENT OF THE PRICE OF THE TRADE. TRADING IN COMMODIT Y DERIVATIVES WILL NOT BE CONSIDERED AS SPECULATIVE TRANSACTION AND CTT SHALL BE ALLOWED AS DEDUCTION IF THE INCOME FROM SUCH TRANSACTION FO RMS PART OF BUSINESS INCOME. AS I SAID, AGRICULTURAL COMMODITIES WILL BE EXEMPT. 2. FROM THE ABOVE, IT CAN BE NOTED THAT THERE IS NO DISTINCTION BETWEEN THE DERIVATIVE TRADING IN SECURITIES AND THE DERIVATIVE TRADING IN THE COMMODITIES. SECTION 43(5)(D) WAS INSERTED W.E.F. 01.04.2006 WHE REBY DERIVATIVE TRADING IN SECURITIES WERE HELD NOT BE A SPECULATIVE TRANSACTI ONS. NCDEX IS ALSO NOTIFIED AS A RECOGNIZED ASSOCIATION FOR THE PURPOSE OF SECT ION 43(5)(E) VIDE NOTIFICATION DT. 27.11.2013. THEREFORE, TRANSACTION OF COMMODITY DERIVATIVE IN NCDEX IS NOT A SPECULATIVE TRANSACTION AS SPECIFICA LLY PROVIDED U/S 43(5)(E) W.E.F. 01.04.2014. 3. FROM THE ABOVE PROVISIONS OF THE LAW AND THE SPEECH OF T HE FINANCE MINISTER, IT IS CLEARED THAT INTRODUCTION O F SECTION 43(5)(E) IS ONLY EXPLANATORY IN NATURE AND THEREFORE HAS RETROS PECTIVE APPLICATION. FOR THIS PURPOSE RELIANCE IS PLACED ON THE FOLLOWIN G CASES: 4.5 THE LD. AR OF THE PLACED FOLLOWING CASE LAWS:- (I) CIT VS. VATIKA TOWNSHIP (P) LTD. 367 ITR 466 (SC) (II) ALLIED MOTORS (P) LTD. VS. CIT , 224 ITR 677 (SC) ITA NO. 599/JP/2013 SHRI PREM PRAKASH GUPTA VS. ITO, WARD- 2 (3), ALWAR . . 5 (III) CIT VS. VEGETABLE PRODUCTS LTD. 88 ITR 192 (S C) 4.6 THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AU THORITIES. 4.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS UNDISPUTED THAT NCDEX TE RMINAL WAS NOT A RECOGNIZED STOCK EXCHANGE AS PER RULE 6DDB R.W.S. 4 3(5)(D) OF THE INCOME TAX ACT, 1961 AT THE RELEVANT TIME. LD. CIT( A) WHILE TREATING THE LOSS AS SPECULATIVE HAS RELIED ON ITAT JAIPUR BENCH JUDGMENT IN ITA NO. 91/JP/2013 DATED 20.02.2013 IN CASE OF PREM PRAKASH UMA SHANKAR. SINCE THE ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH, WE FIND NO VALID REASON TO DEVIATE FROM THE SAME. IN THE INTER EST OF JUDICIAL DISCIPLINE, WE RESPECTFULLY FOLLOW THE SAME AND UPH OLD LD. CIT(A) ORDER. THIS SOLITARY GROUND OF THE ASSESSEE IS DISMISSED. 5.1 NOW WE TAKE UP THE APPEAL OF THE ASSESSEE IN I TA NO. 90/JP/2013 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUND. THAT LD. AO HAS ERRED IN LAW AS WELL AS ON THE FA CTS AND CIRCUMSTANCES OF THE CASE IN IMPOSING A PENALTY OF RS. 10,000/- WITHIN THE MEANING OF SECTION 271(1)(B) OF THE I.T. ACT, 1961 AND LD. CIT(A) HAS ERRED IN SUSTAINING TH E SAME. 5.2 THE PENALTY IN QUESTION WAS IMPOSED FOR NON-CO MPLIANCE OF NOTICES DATED 29-07-2009 AND 27-08-2009. THE ASSESS EE CONTENDED THAT HE WAS CONFINED TO BED ON ACCOUNT OF HIS ILLNESS ON THESE DATES. SUBSEQUENTLY, ALL THE COMPLIANCE HAS BEEN MADE AND THE ASSESSMENT IN ITA NO. 599/JP/2013 SHRI PREM PRAKASH GUPTA VS. ITO, WARD- 2 (3), ALWAR . . 6 QUESTION WAS FRAMED U/S 143(3) OF THE ACT. THUS THE RE WAS NO INTENTION OF THE ASSESSEE TO AVOID THE NOTICES DUE TO ILL-HEALTH . THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FOR NOT ATTENDING THE PROCEEDINGS. THE AO HOWEVER, LEVIED THE PENALTY OF RS. 10,000/- WHICH W AS CONFIRMED BY THE LD. CIT(A). 5.3 THE LD. COUNSEL FOR THE ASSESSEE REITERATED HIS ARGUMENTS AS RAISED BEFORE THE LOWER AUTHORITIES AND CONTENDED THAT THE ASSESSEE BEING SICK COULD NOT ATTEND THE PROCEEDINGS AND THIS FACT HAS NOT BEEN DENIED. THUS THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE. THU S THERE IS NO JUSTIFICATION FOR IMPOSING THE PENALTY. 5.4 THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AU THORITIES. 5.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW, THE AS SESSEE GAVE SATISFACTORY REPLY EXPRESSING HIS INABILITY TO ATTEND THE PROCEE DINGS DUE TO ILLNESS WHICH HAS NOT BEEN CONTROVERTED. THE ASSESSMENT IN QUESTION HAS BEEN FRAMED U/S 143(3) OF THE ACT. THUS IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THIS IS NOT A FIT CASE FOR IMPOSITION OF PENALTY OF RS. 10,000/- WHICH IS DELETED. THUS T HE SOLITARY GROUND OF THE ASSESSEE IS ALLOWED. ITA NO. 599/JP/2013 SHRI PREM PRAKASH GUPTA VS. ITO, WARD- 2 (3), ALWAR . . 7 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 599/JP/2013 IS DISMISSED AND THAT OF ITA NO. 90/JP/2013 IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 /08/20 15. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11 TH AUG, 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PREM PRAKASH GUPTA, ALWAR 2. IZR;FKHZ@ THE RESPONDENT- , THE ITO, WARD- 2 (3), ALWAR . 3. VK;DJ VK;QDRVIHY@ THE CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.599/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR