Vikramendra Prasad Bhalla, V. Income Tax Officer-2(3), Lucknow

ITA 808/LKW/2014

• Counselvise Citation: 80823714 RSA 2014
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-04-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PUNEET KUMAR
• Keywords: Business income; Opportunity of being heard; Speculation loss

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.808/LKW/2014 ASSESSMENT YEAR:2003 - 04 INCOME TAX OFFICER - 2(3), LUCKNOW. VS SHRI VIKRAMENDRA PRASAD BHALLA, C - 5/39 S.D.A., NEW DELHI. PAN:AABOV8241P (RESPONDENT) (APPELLANT) SHRI YOGESH AGARWAL, ADVOCATE APPELLANT BY SHRI PUNEET KUMAR, D. R. RESPONDENT BY 28/04/2015 DATE OF HEARING 16 /06/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, LUCKNOW DATED 18/11/2013 FOR THE ASSESSMENT YEAR 2003 - 2004. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: I. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, LUCKNOW [HERE - IN - AFTER REFERRED TO AS THE LD. CIT (A)'S] ERRED ON FACTS AND IN LAW IN CONFORMING THE ADDITION OF RS.24,88,338 / - AND IN NOT ALLOWING THE SET OFF OF THE SAME AGAINST THE SPECULATIVE GAIN OF RS. 24,85,229/ - ONLY ON NOTIONS, CONJECTURES AND SURMISES WITHOUT APPRECIATING THE TRUE NATURE OF TRANSACTIONS AND THUS THE ORDER SO PASSED ON WHIMS AND FANCIES MAY KINDLY BE ORDERED TO BE QUASHED AND ADDITION ORDERED TO BE DELETED. II. IN CONFORMING THE ADDI TION OF RS.24,88,338/ - THE LD. CIT (A)'S GROSSLY ERRED ON FACTS AND IN LAW IN NOT 2 APPRECIATING AND CHOOSING TO COMPLETELY IGNORE THE FACT THAT FIRSTLY THE GAIN SO SHOWN IN THE TRADING AND PROFIT & LOSS ACCOUNT WAS PURELY SPECULATIVE IN NATURE BEING NON - DEL IVERY BASED TRANSACTIONS WHICH WERE CLEAR FROM THE DEMAT ACCOUNTS, QUANTITATIVE DETAILS FILED, CONTRACT NOTES ETC. FURTHER THE APPELLANT HAD ALSO DULY FILED AN AFFIDAVIT BEFORE THE LD. CIT (A)'S DURING THE COURSE OF APPELLATE PROCEEDINGS THAT THESE ARE SPE CULATIVE TRANSACTIONS AGAINST WHICH NO DELIVERY HAD BEEN TAKEN OR GIVEN AND THUS THE SET OFF SHOULD HAVE BEEN ALLOWED. III. ON THE FACTS AND IN THE PECULIAR CIRCUMSTANCES OF THE PRESENT CASE THE LD CIT (A)'S DID NOT AFFORD THE APPELLANT SUFFICIENT TIME AN D OPPORTUNITY TO MAKE NECESSARY SUBMISSIONS OR TO ADDUCE RELEVANT DETAILS AND DOCUMENTS TO SUPPORT HIS CASE AND FURTHER EVEN DURING THE COURSE OF REMAND PROCEEDINGS THE AO HAS ALSO NOT CONDUCTED OR MADE ANY ENQUIRE AS TO WHETHER THE TRANSACTIONS WERE SPECU LATIVE OR BUSINESS GAIN AND THUS FOR THIS REASON ALONE THE ORDER SO PASSED NEEDS TO BE SET ASIDE AND ADDITION SO MADE DELETED. IV. THE LD. CIT (A)'S FURTHER GROSSLY ERRED ON FACTS AND IN LAW IN CONFORMING THE DISALLOWANCE OF RS. 1,93,280/ - AS COMMISSION P AID DURING THE YEAR WITHOUT APPRECIATING THE FACT THAT THE ENTIRE DETAILS REGARDING COMMISSION PAID HAD DULY BEEN FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF AND THAT THE SAME DULY VOUCHED AND VERIFIABLE AND THE BASIS OF CALCULATION OF THE SAM E IS ALSO AVAILABLE AND THUS THE ADDITION SO CONFIRMED ONLY ON WHIMS AND FANCIES AND ON INCORRECT CONSIDERATION MAY BE ORDERED TO BE DELETED. 3. REGARDING GROUND NO. I TO III, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT CIT(A) DID NOT AFFORD THE ASSESSEE SUFFICIENT TIME AND OPPORTUNITY TO MAKE NECESSARY SUBMISSION AND TO ADDUCE RELEVANT DETAILS AND DOCUMENTS TO SUPPORT HIS CASE AND ALSO IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOT CONDUCTED OR MADE ANY ENQUIRY IN THIS REGARD AS TO WHETHER THE TRANSACTIONS WERE SPECULATIVE OR BUSINESS GAIN. HE ALSO SUBMITTED THAT EVEN IF IT IS HELD THAT THE LOSS IS SPECULATIVE 3 LOSS T HEN ALSO IT HAS TO BE SET OFF AGAINST THE INCOME FROM THE B USINESS. HE SUBMITTED THAT SINCE THIS ASPECT WAS NOT EXAMINED AND DECIDED, THIS MATTER SHOULD GO TO CIT(A) FOR FRESH DECISION. 4. REGARDING GROUND NO. 4, HE REITERATED THE SAME CONTENTIONS, WHICH WERE RAISED BEFORE CIT(A). 5. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSING OFFICER HAS WORKED OUT THE BUSINESS INCOME OF THE ASSESSEE AT RS.26,73,64 5/ - CONSISTING OF RS.17,46,233/ - BEING PROFIT FROM DELIVERY BASED TRADING IN SHARES AS HAS BEEN STATED BY THE ASSESSING OFFICER IN PARA 12 OF THE ASSESSMENT ORDER AND RS.11,04,298/ - BEING COMMISSION INCOME AND MISC. INCOME AS HAS BEEN STATED BY THE ASSESSI NG OFFICER IN PARA 15 OF THE ASSESSMENT ORDER. THE CIT(A) HAS OBSERVED IN PARA 12 ON PAGE 17 THAT THE ASSESSEE HAS RELIED ON HIS DEMAT/LEDGER ACCOUNT APPEARING IN THE BOOKS OF M/S SVARN FINANCIAL SERVICES (P) LTD. AVAILABLE IN PAPER BOOK IN WHICH THESE TR ANSACTIONS ARE NOT FOUND RECORDED AND BASED ON IT, HE HELD THAT THIS IS ALSO SPECULATIVE PROFIT. THEREAFTER, IT IS STATED BY CIT(A) ON PARA 13 OF HIS ORDER THAT THE DEMAT ACCOUNT FURNISHED BY THE ASSESSEE IS NOT RELIABLE AND THE CIT(A) HAS REJECTED THE C LAIM OF THE ASSESSEE BY MAKING THIS OBSERVATION THAT THE PROFIT IS ALSO SPECULATIVE PROFIT BUT THERE IS NO CONCRETE FINDING GIVEN BY CIT(A) THAT HOW THE PROFIT FROM SHARE DEALING ASSESSED BY THE ASSESSING OFFICER AS INCOME OF THE ASSESSEE BY REJECTING SET OFF OF SPECULATIVE LOSS IS NOT SPECULATIVE PROFIT. CONSIDERING ALL THESE FACTS, WE FEEL THAT IN THE PRESENT CASE, THE MATTER SHOULD GO TO CIT(A) FOR FRESH DECISION WITH A CLEAR FINDING AS TO HOW THE INCOME IN QUESTION IS NOT SPECULATIVE INCOME. THE CIT(A ) SHOULD PASS NECESSARY ORDER AS PER LAW AFTER PROVIDING ADEQUATE 4 OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. WE ORDER ACCORDINGLY. GROUND NO. 1 TO 3 ARE ALLOWED FOR STATISTICAL PURPOSES. 7. REGARDING GROUND NO. 4, WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 22 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 22. THOUGH THE APPELLANT HAS RAISED THE OBJECTION IN GROUNDS OF APPEAL. BUT DURING APPELLATE PROCEEDINGS THIS ISSUE WAS NOT CONTENDED, EITHER IN WRITTEN SUBMISSIONS OR DURING THE COURSE OF HEARING. THE A.O. HAD FOUND THESE EXPENSES AS UNVERIFIABLE. AFTER CONSI DERING THE WRITTEN SUBMISSIONS OF APPELLANT, THE A.O. HAD RIGHTLY CONCLUDED THAT THE APPELLANT HAD FAILED TO FURNISH THE TOTAL VOLUME OF WORK DONE AND PAYMENT RECEIVED, IN LIEU OF COMMISSION PAID OF RS.1,93,280/ - . DURING APPELLATE PROCEEDINGS ALSO THE APPE LLANT HAS NOT FURNISHED ANY EVIDENCE TO JUSTIFY THE PAYMENT OF SAID COMMISSION. MOREOVER THE APPELLANT HAS NOT MADE ANY WRITTEN SUBMISSION ALONG WITH EVIDENCES IF ANY FOR JUSTIFICATION OF PAYMENT OF SUCH COMMISSIONER OF RS.1,93,280/ - . THEREFORE, KEEPING IN VIEW OF THESE FACTS AND CIRCUMSTANCES. I HOLD THAT THE ADDITION OF RS.1.93,280/ - ON ACCOUNT OF DISALLOWANCES OF COMMISSION PAID WAS RIGHTLY MADE BY A.O. THE GROUND NO. 3 TAKEN BY APPELLANT IS THEREFORE, DESERVE TO BE DISMISSED AND ACCORDINGLY DISMISSED. 7.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT THIS IS THE MAIN BASIS OF CIT(A) THAT DURING THE APPELLATE PROCEEDINGS, THIS ISSUE WAS NOT CONTESTED EITHER IN WRITTEN SUBMISSIONS OR DURING THE COURSE OF HEARING. AS PER THE ASS ESSMENT ORDER, IT IS SEEN THAT IN PARA 13, THE ASSESSING OFFICER HAS NOTED THE SUBMISSIONS OF THE ASSESSEE BEFORE HIM WHEREIN IT WAS SUBMITTED BY THE ASSESSEE THAT THE COMMISSION PAYMENT TO THREE PERSONS TO THE EXTENT OF RS.1,93,280/ - WAS MADE FOR FACILITA TING THE COMMISSION INCOME OF RS.9,79,260/ - FROM BIZTECH CONSULTANTS. IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THIS COMMISSION EXPENDITURE IS FULLY VOUCHED AND AMENABLE FOR COMPLETE VERIFICATION. THEREAFTER, IT IS STATED TH AT NO FURTHER DETAILS LIKE THE TOTAL VOLUME OF WORK DONE, PAYMENTS 5 RECEIVED ETC. WERE MADE AVAILABLE. AND THEREFORE, HE CAME TO THE CONCLUSION THAT THIS EXPENDITURE REMAINS UNSUPPORTED BY ANY POSITIVE EVIDENCE AND THEREFORE, IS BEING DISALLOWED. WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO MENTION IN THE ASSESSMENT ORDER AS TO WHAT SPECIFIC INFORMATION WAS CALLED FOR BY THE ASSESSING OFFICER, WHICH WAS NOT SUPPLIED BY THE ASSESSEE. UNDER THESE FACTS, WE FEEL THAT THIS ISSUE SHOULD GO TO CIT(A) FOR FR ESH DECISON . ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO CIT(A) FOR FRESH DECISION. THE CIT(A) SHOULD PASS NECESSARY ORDER AS PER LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO ASSESSEE. THIS GROUND IS ALSO A LLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 /06/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR