SHRI JASVIR KUMAR HASMUKH SHETH, Kolkata V. INCOME TAX OFFICER, Kolkata

ITA 907/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1685 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Validity of assessment; Accommodation entries
• Section: 43(5); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [BEFORE HONBLE SHRI P.M. JAGTAP] I.T.A. NOS. 907 & 908/KOL/2017 ASSESSMENT YEAR 2008-09 SHRI JASVIR KUMAR HASMUKH SHETH ..............................APPELLANT 40B, CHAKRABERIA ROAD (N), FLAT NO. 2B, 2 ND FLOOR, KOLKATA - 700020 [PAN : AMTPS 1716 N] ITO WARD NO. 35(2), KOLKATA...................RESPONDENT 110, SHANTIPALLY, NEAR RUBY HOSPITAL E.M. BYE PASS, KOLKATA - 700107 APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI S. VENKATRAMANI, ADDL CIT APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : AUGUST 14, 2017 DATE OF PRONOUNCING THE ORDER : AUGUST 18, 2017 ORDER THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE TWO SEPARATE ORDERS PASSED BY THE LD. CIT (A) 10, KOLKATA BOTH DATED 07.02.2017 AND SINCE THE ISSUES INVOLVED THEREIN ARE COMMON, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO FILED HIS RETURNS OF INCOME FOR BOTH THE YEARS UNDER CONSIDERATION ON 30.03.2009 AND 25.06.2009 DECLARING A TOTAL INCOME OF RS. 1,14,215/- AND RS. 1,38,576/- FOR A.Y. 2008-09 AND 2009-10 RESPECTIVELY. ON THE BASIS OF THE ADVERSE FINDINGS OF THE SURVEY OPERATION CARRIED OUT IN THE CASES OF M/S. M.G.F. PRIVATE LTD. AND M/S. P.L.P. STOCK BROKERS PRIVATE 2 I.T.A. NOS. 907 & 908/KOL/2017 JASVIR KUMAR HASMUKH SHETH LTD. ON 10.08.2009, THE ASSESSMENT FOR BOTH THE YEARS UNDER CONSIDERATION IN THE CASE OF THE ASSESSEE WERE REOPENED BY THE AO. IN RESPONSE TO THE NOTICES ISSUED BY THE AO UNDER SECTION 148 ON 18.03.2015, THE RETURNS OF INCOME FOR BOTH THE YEARS UNDER CONSIDERATION WERE FILED BY THE ASSESSEE DECLARING THE SAME INCOME AS DECLARED IN THE RETURNS OF INCOME ORIGINALLY FILED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CLAIM OF THE ASSESSEE FOR COMMODITY PROFITS OF RS. 29,05649/- AND RS. 13,36,766/- FOR A.Y. 2008-09 AND 2009-10 WAS EXAMINED BY THE AO. IN THIS REGARD, THE CONCERNED BROKERS WERE FOUND TO HAVE FAILED TO CONFIRM THE RELEVANT TRANSACTIONS PERTAINING TO THE COMMODITY PROFITS DECLARED BY THE ASSESSEE IN RESPONSE TO THE ENQUIRIES MADE DIRECTLY BY THE AO WITH THEM. THE ASSESSEE ALSO COULD NOT SUPPORT AND SUBSTANTIATE HIS CLAIM FOR THE SAID PROFIT TO THE SATISFACTION OF THE AO. THE AO ACCORDINGLY TREATED THE RELEVANT TRANSACTIONS AS A MERE ACCOMMODATION ENTRIES TAKEN BY THE ASSESSEE FOR THE PURPOSE OF ADJUSTING THE LOSS SUFFERED IN BOTH THE YEARS UNDER CONSIDERATION FROM DERIVATIVE TRANSACTIONS AND THE AMOUNT OF COMMODITY PROFITS WAS ASSESSED BY HIM IN THE HANDS OF THE ASSESSEE AS INCOME FROM OTHER SOURCES BY TREATING THE SAME AS UNEXPLAINED CASH CREDIT IN THE ASSESSMENTS COMPLETED UNDER SECTION 147/143(3) OF THE INCOME TAX ACT, 1961. 3. AGAINST THE ORDERS PASSED BY THE AO FOR BOTH THE YEARS UNDER CONSIDERATION, APPEALS WERE PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT (A) CHALLENGING THE VALIDITY OF THE SAID ASSESSMENTS AS WELL AS THE TREATMENT GIVEN BY THE AO TO THE COMMODITY PROFITS AS UNEXPLAINED CASH CREDIT. AFTER CONSIDERING THE SUBMISSION MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT (A) HOWEVER DID 3 I.T.A. NOS. 907 & 908/KOL/2017 JASVIR KUMAR HASMUKH SHETH NOT FIND MERIT IN THE APPEALS OF THE ASSESSEE FOR BOTH THE YEARS UNDER CONSIDERATION AND UPHOLDING THE ORDERS OF THE AO, HE DISMISSED THE SAID APPEAL. AGGRIEVED BY THE ORDERS OF THE LD. CIT (A), THE ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED RELEVANT MATERIAL AVAILABLE ON RECORD. THE MAIN CONTENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE AMOUNT OF COMMODITY PROFITS EARNED BY THE ASSESSEE IN BOTH THE YEARS UNDER CONSIDERATION WAS TREATED BY THE AO AS UNEXPLAINED CASH CREDIT ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES, BUT WHILE COMPUTING THE TOTAL INCOME, LOSS INCURRED FROM DERIVATIVES WAS NOT ALLOWED TO BE SET OFF BY THE AO. HE HAS CONTENDED THAT THIS ISSUE WAS SPECIFICALLY RAISED BY THE ASSESSEE EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT (A), BUT THE LD. CIT (A) HAS ALSO FAILED TO ADJUDICATE THE SAME MERIT. IN THIS REGARD, IT IS OBSERVED THAT THE DEFINITION OF SPECULATION TRANSACTION IS GIVEN IN SECTION 43(5) AND AS PER THE EXCEPTION GIVEN IN CLAUSE (D) OF FIRST PROVISO, ON ELIGIBLE TRANSACTION IN RESPECT OF THE TRADING IN DERIVATIVES REFERRED TO IN CLAUSE (AC) OF SECTION 2 OF THE SECURITIES TRANSACTION (REGULATION) ACT, 1956 CARRIED OUT IN THE RECOGNISED STOCK EXCHANGE SHALL NOT BE DEEMED TO BE SPECULATIVE TRANSACTION. IT, THEREFORE, FOLLOWS THAT IF THE LOSS CLAIMED TO BE SUFFERED BY THE ASSESSEE FROM DERIVATIVES IN BOTH THE YEARS UNDER CONSIDERATION IS COVERED BY CLAUSE (E) OF THE PROVISO TO SECTION 43(5), THE ASSESSEE IS ELIGIBLE TO SET OFF THE SAME AGAINST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND EVEN THE LEARNED DR HAS NOT BEEN ABLE TO DISPUTE THIS POSITION. HE HOWEVER HAS CONTENDED THAT THIS ISSUE HAVING NOT BEEN EXAMINED SPECIFICALLY EITHER BY THE AO OR 4 I.T.A. NOS. 907 & 908/KOL/2017 JASVIR KUMAR HASMUKH SHETH BY THE LD. CIT (A), THE MATTER MAY BE SENT BACK TO THE AO FOR SUCH EXAMINATION. I FIND MERIT IN THIS CONTENTION OF THE LEARNED DR. ACCORDINGLY, THE IMPUGNED ORDER OF THE LD. CIT (A) IS SET ASIDE AND THE MATTER IS RESTORED ON THE FILE OF THE AO FOR DECIDING THE ISSUE RELATING TO ASSESSEES CLAIM FOR SET OFF OF THE LOSS INCURRED FROM DERIVATIVES. 5. AS REGARDS THE PRELIMINARY ISSUE RAISED IN THESE APPEALS CHALLENGING THE VALIDITY OF REASSESSMENTS MADE BY THE AO U/S 147/143(3) FOR BOTH THE YEARS UNDER CONSIDERATION, IT IS OBSERVED THAT THE SAME WOULD BECOME INFRUCTUOUS IF THE CLAIM OF THE ASSESSEE FOR SET OFF OF LOSS FROM DERIVATIVES IS FOUND TO BE ACCEPTABLE BY AO ON VERIFICATION. HOWEVER, IN THE EVENT OF ASSESSEES FAILURE TO SUCCEED ON THIS ISSUE, THE PRELIMINARY ISSUE RELATING TO THE VALIDITY OF ASSESSMENT IS KEPT OPEN WITH A LIBERTY TO THE ASSESSEE TO RAISE THE SAME IN ACCORDANCE WITH LAW. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH AUGUST, 2017. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER DATED: 18/08/2017 BISWAJIT, SR. P.S. 5 I.T.A. NOS. 907 & 908/KOL/2017 JASVIR KUMAR HASMUKH SHETH COPY OF ORDER FORWARDED TO: 1. SHRI JASVIR KUMAR HASMUKH SHETH, 40B, CHAKRABERIA ROAD (N) FLAT NO. 2B, 2 ND FLOOR, KOLKATA 700020. 2. ITO WARD NO. 35(2), KOLKATA, 110, SHANTIPALLY, NEAR RUBY HOSPITAL, E.M. BYE PASS, KOLKATA 700107. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA