Shri Sanjay Agrawal , Indore V. ITO5(1), INDORE

ITA 739/Ind/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1020 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 10-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C SELVAMANI
• Assessee Lawyers: S S DESH
• Keywords: Speculation loss; Set aside
• Section: 44AD; 143(3); 142(1); 68

Judgement Text

SANJAY AGRAWAL ITA NO. 739/IND/2018 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.739/IND/2018 ASSESSMENT YEAR 2014-15 REVENUE BY SHRI K.C. SELVAMANI, SR.DR ASSESSEE BY SHRI S.S. DESHPANDE, CA DATE OF HEARING 2 0.03 .2019 DATE OF PRONOUNCEMENT 25 .0 3 .2019 O R D E R PER MANISH BORAD. THE ABOVE CAPTIONED APPEAL IS FILED AT THE INSTANC E OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2014-15 AND IS DIRE CTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- II (IN SHORT LD.CIT(A)], INDORE DATED 15.06.2018 WHICH IS ARI SING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHOR T THE ACT) DATED 30.11.2016 FRAMED BY ITO 5(1), INDORE. S HRI SANJAY AGRAWAL, 404-C BLOCK, YASH ELITE, 8/5 Y.N. ROAD, INDORE VS. IN COME TAX OFFICER 5(1) INDORE ( APPELLANT ) (RESPONDENT ) PAN NO. A ECPA6831M SANJAY AGRAWAL ITA NO. 739/IND/2018 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL; 1 THAT THE LD. CIT(A) HAS ERRED IN DISMISSING THE A PPEAL 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.19,93,449/- UNDER THE HEAD DISALLOWANCE OF LOSS OF TRADING IN COMMODITY EXCHANGE WHICH IS WRONG AND BAD IN LAW AN D IS LIABLE TO BE DELETED. 3. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.17,92,999/- UNDER THE HEAD OPENING CASH BALANCE WHICH IS WRONG AND BAD IN LAW AND IS LIABLE TO BE DELETED. THAT THE APPELLANT CRAVES ADD, ALTER AND/OR ANY GR OUNDS OF APPEAL SETOUT ABOVE 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF I NCOME ON 21.3.2016 DECLARING LOSS OF RS.13,86,223/-. CASE S ELECTED FOR SCRUTINY THROUGH CASS FOLLOWED BY SERVING OF NOTICE S U/S 143(2) AND 142(1) OF THE ACT. DURING THE COURSE OF ASSESS MENT PROCEEDINGS LD. A.O AFTER GOING THROUGH THE SUBMISS ION MADE BY THE ASSESSEE WAS NOT SATISFIED WITH SET OFF OF LOSS OF RS.19,93,449/- SUFFERED BY THE ASSESSEE FROM COMMODITY TRADING TRA NSACTIONS AGAINST THE INCOME EARNED UNDER OTHER HEADS DURING THE YEAR. LD. A.O WAS ALSO NOT SATISFIED WITH THE EXPLANATION GIV EN BY THE ASSESSEE ABOUT THE SOURCE OF OPENING CASH BALANCE O F RS.17,92,999/- . HE ACCORDINGLY COMPUTED THE INCOM E OF THE SANJAY AGRAWAL ITA NO. 739/IND/2018 3 ASSESSEE IN THE FOLLOWING MANNER; LOSS SHOWN IN THE RETURN OF INCOME RS.( - ) 138223/ - LESS: LOSS FROM COMMODITY TRADING DISALLOWED AS DISCUSSED RS.(+) 1993450/ - ADDITION U/S 68 ON A/C UNEXPLAINED OPENING CASH BALANCE SHOWN AND CASH DEPOSITED IN BANK ACCOUNTS RS.(+) 1792999/ - TOTA L INCOME ASSESSED RS. (+) 2400226/ - 4. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C IT(A) BUT FAILED TO SUCCEED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 6. GROUND NO.1 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 7. NOW WE WILL TAKE UP GROUND NO.2 RELATING TO ADDI TION OF RS.19,93,449/- BEING DISALLOWANCE OF SET OFF OF LO SS OF TRADING OF COMMODITY EXCHANGE AGAINST OTHER HEADS OF INCOME. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. 9. WE OBSERVE THAT WHILE COMPUTING THE INCOME ASSES SEE HAS SET OFF OF THE LOSS FROM THE COMMODITY EXCHANGE FROM ON LINE TRADING AT RS.19,93,449/- SHOWN BY THE ASSESSEE UNDER THE HEAD INCOME FROM SANJAY AGRAWAL ITA NO. 739/IND/2018 4 OTHER SOURCES AND WAS SET OFF AGAINST THE PROFITS A ND GAINS OF BUSINESS U/S 44AD OF THE ACT AT RS.3,07,229/- AND C OMMISSION INCOME OF RS.3,00,000/- SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCE. THE NET LOSS OF RS.13,86,223/- WAS CARRY FORWARD. 10. LD. A.O DISALLOWED THE CLAIM OF SET OFF OF LOSS FIRSTLY OBSERVING THAT THE ASSESSEE HAD FILED BELATED RETURN ON 21.3. 2016 AND SECONDLY HE FAILED TO GET ITS ACCOUNT AUDITED U/S 4 4AB OF THE ACT AS THE TURNOVER SHOWN BY THE ASSESSEE FROM COMMODITY T RADING WAS AT RS.22,82,80,930/- . WHEN THE ASSESSEE PREFERRED AP PEAL BEFORE LD. CIT(A) HE FAILED TO SUCCEED AND LD. CIT(A) TOOK A V IEW THAT THE FIRST OBSERVATION OF LD. A.O WAS BASELESS THAT THE ASSESS EE IS NOT ENTITLED TO SET OFF OF LOSS FROM ONE HEAD TO ANOTHER HEAD FO R THE SAME ASSESSMENT YEAR MERELY FOR BELATED FILING OF RETURN OF INCOME. AS REGARDS THE SECOND OBSERVATION OF LD. A.O ABOUT AC COUNTS BEING UNAUDITED EVEN WHEN THE TURNOVER EXCEEDED RS. 1 CRO RE, LD. CIT(A)HELD THAT THE ASSESSEE IS NOT MAINTAINING PRO PER BOOKS OF ACCOUNTS WHICH LEAD TO NON AUDIT OF THE FINANCIAL T RANSACTIONS AND IN ABSENCE OF WHICH IT WAS NOT POSSIBLE TO VERIFY T HE ALLEGED LOSS OF RS. 90,93,450/- AS TO WHETHER IT IS IS COMING UNDER THE CATEGORY OF SANJAY AGRAWAL ITA NO. 739/IND/2018 5 SPECULATION LOSS OR NORMAL BUSINESS LOSS. 11. NOW THE ISSUE BEFORE US IS THAT WHETHER THE CLA IM OF SETTING OF LOSS FROM COMMODITY TRADING SHOULD BE ALLOWED AGAIN ST INCOME UNDER OTHER HEADS MERELY FOR NOT GETTING ITS ACCOUN TS AUDITED. RECORDS SHOWS THAT THE ASSESSEE HAS FILED THE DETAI LED STATEMENT OF TRANSACTIONS CARRIED OUT FOR COMMODITY TRADING FROM KARVY COMMODITIES LTD PLACED AT PAGE 11 TO 23 OF THE PAP ER BOOK. THERE IS NO FINDING BY BOTH THE LOWER AUTHORITIES CHALLEN GING THE GENUINENESS OF THE COMMODITY TRADING TRANSACTIONS E NTERED DURING THE YEAR AND THE AMOUNT OF LOSS SUFFERED BY THE ASS ESSEE. DEFAULT BY THE ASSESSEE FOR NOT MAINTAINING PROPER BOOKS OF ACCOUNTS AND NOT GETTING ACCOUNTS AUDITED EVEN THOUGH ACHIEVING THE TURN OVER OF RS. 22828930/- ATTRACTS PENALTY UNDER OTHER PROVISI ONS OF THE ACT WHICH WERE OPEN TO THE REVENUE AUTHORITIES TO INITI ATE AS AND WHERE REQUIRED. HOWEVER IN THE INSTANT CASE NO QUESTION HAS BEEN RAISED FOR THE GENUINENESS OF THE TRADING LOSS. IT IS TRU E THAT IT HAS BEEN DISCLOSED UNDER HEAD INCOME FROM OTHER SOURCE BUT A CCORDING TO SECTION 71(1) OF THE ACT ASSESSEE IS ENTITLED TO SE T OFF THIS COMMODITY TRADING FROM INCOME UNDER THE HEAD BUSINE SS & SANJAY AGRAWAL ITA NO. 739/IND/2018 6 PROFESSION AND INCOME FROM OTHER SOURCES. 12. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE ARE OF THE CONSIDERED OPINION THAT FINDING OF LD. CIT(A) O F CONFIRMING THE DISALLOWANCE OF COMMODITY TRADING LOSS OF RS.19,93, 449/- DESERVES TO BE SET ASIDE. WE ACCORDINGLY DIRECT THE REVENUE AUTHO RITIES TO ALLOW THE ASSESSEES CLAIM OF COMMODITY TRADING LOSS BY WAY O F SET OFF TO THE EXTENT OF INCOME UNDER OTHER HEADS FOR THE YEAR UNDER APP EAL. CERTAINLY ASSESSEE WILL BE ALLOWED TO CARRY FORWARD THE LOSS TO THE SUBSEQUENT YEARS. IN THE RESULT GROUND NO.2 OF THE ASSESSEES APPEAL IS ALLOWED. 13. NOW WE TAKE UP GROUND NO.3 RELATING TO ADDITION OF RS.17,92,999/-BEING THE AMOUNT OF OPENING CASH BALA NCE NOT EXPLAINED BY THE ASSESSEE. DURING THE COURSE OF AS SESSMENT PROCEEDINGS LD. A.O ON THE BASIS OF AIR CAME TO NOT ICE THAT CASH OF RS.17,36,130/- HAVE BEEN DEPOSITED IN AXIS BANK AND CASH OF RS.75,91,800/-DEPOSITED IN VYAPARIK AUDOGIK SAHAKAR I BANK. ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH D EPOSITED IN BANK. CASH FLOW STATEMENT WAS FILED IN WHICH OPENI NG CASH BALANCE OF RS.17,92,999/- WAS SHOWN. ASSESSEE WAS ASKED TO FURNISH EVIDENCES IN THE FORM OF BALANCE SHEET/STAT EMENT OF AFFAIRS SANJAY AGRAWAL ITA NO. 739/IND/2018 7 TO EXPLAIN THE OPENING BALANCE OF RS.17,92,999/- BU T THE SAME REMAINED UNEXPLAINED BEFORE THE LD. A.O WHICH RESUL TED IN THE ADDITION. WHEN THE ASSESSEE PREFERRED APPEAL BEFOR E LD. CIT(A) ASSESSEE AGAIN FAILED TO FILE ANY EVIDENCE WHICH RE SULTED IN DISMISSAL OF THE GROUND AND THE ADDITION OF RS.17,9 2,999/- BEEN CONFIRMED BY LD. CIT(A) OBSERVING AS FOLLOWS; 4.0 THIS GROUND OF APPEAL IS WITH REGARD TO MAKING ADDITION OF RS.17,92,999/- U/S 68 OF THE IT ACT, 1961. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS SUBMISSION OF THE A PPELLANT IN THIS REGARD. 4.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS PER AIR INFORMATION, THE APPELLANT HAD DEPOSITED CASH IN HI S SAVING BANK A/C AT RS.1736130/-. THE APPELLANT WAS ASKED BY THE AO TO EXPLAIN THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNTS. IN REPLY T O THE SAID QUERY, THE APPELLANT AD SUBMITTED PROFIT & LOSS STATEMENT IN T HE REQUIRED FORMAT, CASH FLOW STATEMENT BEFORE THE AO. ON PERUSAL OF T HE CASH FLOW STATEMENT, IT WAS OBSERVED BY THE AO THAT THE APPEL LANT HAD SHOWN OPENING BALANCE OF RS.1792999 AND THE APPELLANT NOT SUBMITTED ANY EVIDENCE FOR THE SAID OPENING BALANCE. 4.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS SUBMITTED CASH FLOW STATEMENT. I HAVE GONE THROUGH THE SAID STATEMENT AND FIND THAT THE OPENING BALANCE AS ON 01.04.2013 WAS AT RS.17,92,999. BUT THE APPELLANT HAD NOT PRODUCED A NY EVIDENCE REGARDING THE SAID OPENING BALANCE. HENCE, THE APP ELLANT HAD FAILED TO PROVE HIS PRIMARY ONUS. THEREFORE, THE AO HAS RIGH TLY MADE THE SAID SANJAY AGRAWAL ITA NO. 739/IND/2018 8 ADDITION AND ACCORDINGLY THIS GROUND OF APPEAL IS D ISMISSED 14. EVEN DURING THE COURSE OF HEARING BEFORE US THE ASSESSEE HAS NOT PLEADED ON THIS GROUND NOR HAS INVITED OUR ATTE NTION TO ANY OF THE DOCUMENTARY PROOF TO EXPLAIN THE OPENING CASH I N HAND OF RS.17,92,999/-. WE HAVE ALSO PERUSED THE PAPER BOO K IN WHICH INCOME TAX RETURNS FOR ASSESSMENT YEAR 2010-11 TO 2 013-14 AT PAGE 27 TO 30 BUT ONLY ACKNOWLEDGEMENTS HAVE BEEN F ILED. ASSESSEE HAS NOT PROVIDED ANY DETAILS IN THE SHAPE OF BALANCE SHEET OR STATEMENT OF AFFAIRS FOR THE IMMEDIATE PRECEDING ASSESSMENT YEAR 2013-14. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE IT SEEMS THAT THE ASSESSEES CLAIM OF HAVING OPENING CASH BA LANCE OF RS.17,92,999/- IS BASELESS AND DEVOID OF MERIT. FU RTHER LD. COUNSEL FOR THE ASSESSEE FAILED TO MAKE ANY SUBMISS ION WHICH SHOWS THAT ASSESSEE HAS NO CREDIBLE DOCUMENTARY EVI DENCES TO SUPPORT THIS GROUND. WE THEREFORE HAVE NO OPTION L EFT EXCEPT TO DISMISS THE ASSESSEES GROUND AND CONFIRM THE FINDI NG OF LD. CIT(A) SUSTAINING THE ADDITION OF RS.17,92,999/- AS UNEXPLAINED OPENING CASH BALANCE. GROUND NO.3 OF THE ASSESSEE IS DISMISSED. SANJAY AGRAWAL ITA NO. 739/IND/2018 9 15. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 25.03.20 19. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 25 TH MARCH, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE