ITO 34(3)(2), MUMBAI V. PRENISH UMAKANT PACHBHAIYE, MUMBAI

ITA 1664/MUM/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted the addition made by the Assessing Officer on the grounds of unexplained cash credit under section 68 of the Income-tax Act, 1961. The assessee, Prenish Umakant Pachbhaiye, was initially assessed with a total income of Rs.12,10,85,338 for the assessment year 2010-11, based on his trading activities on a multi-commodity exchange. The CIT(A) after considering additional evidence and a remand report from the Assessing Officer, found that the assessee had a loss from speculation trading and his taxable income was only Rs.36,625, which was below the taxable limit, thus no return of income was filed by him for the said assessment year. The Tribunal agreed with the CIT(A)'s decision and dismissed the Revenue's appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471390 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-10-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 04-04-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: PRANJAL; KARANDIKAR
• Keywords: Speculation loss; Additional evidence; Reassessment proceedings; Unexplained cash credit; Capital Gains
• Section: 148; 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 1664/MUM/2024 Assessment Year: 2010-11 ITO-34(3)(2), Room No. 233, Kautilya Bhawan, Mumbai-400051. Vs. Prenish Umakant Pachbhaiye, A5, Duhil Castle, Hanuman Road, Vile Parle, Mumbai-400057. PAN NO. ANJPP 4784 G Appellant Respondent Assessee by : Mr. Pranjal, Karandikar Revenue by : Mr. Krishnakumar, Sr. DR Date of Hearing : 01/10/2024 Date of pronouncement : 22/10/2024 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the Revenue against order dated 18.07.2019 passed by the Ld. Commissioner of Income-tax (Appeals) – 1 [in short ‘the Ld. CIT(A)’] for assessment year 2010-11, raising following grounds: 1. The Ld. CIT(A) has also failed to consider the fact that the assessee has not produced the books of accounts which he was required by law to maintain and get them audited given the fact that Rs.34,59,58,110/ 2. Briefly stated, facts of the case are consideration, no regular return of income was filed by the assessee. Subsequently, statement (ITS) and ann was found to be engaged in trading worth Rs.34,59,58,110/ income filed, the case of the assessee was reopened by way of issue of notice u/s 148 of dated 31.03.2017, which was duly served upon the assessee. Thereafter, the reassessment proceedings were commenced and statutory notices were issued but no compliance was made on the part of the assessee. The reassessment at a total income of Rs.12,10,85,338/ profit component of the entire trade amount and held the same as unexplained cash credit u/s 68 of the Act. 3. On further appeal before the Ld. CI submitted that various notices issued upon the assessee as the assessee moved from Mumbai to Nagpur. In view of the additional evidences filed by the assessee CIT(A) called for a remand report from the Assessing Officer remand proceedings additional evidences Prenish Umakant Pachbaiye was required by law to maintain and get them audited given the fact that the turnover of the assessee was Rs.34,59,58,110/- Briefly stated, facts of the case are for the year under consideration, no regular return of income was filed by the assessee. Subsequently, in view of the individual transaction and annual information report (AIR) was found to be engaged in trading on multi commodity exchange worth Rs.34,59,58,110/-. Accordingly, in view of no return of he case of the assessee was reopened by way of issue of notice u/s 148 of the Income-tax Act, 1961 (in short ‘the Act’) which was duly served upon the assessee. Thereafter, the reassessment proceedings were commenced and statutory notices were issued but no compliance was made on the part of the assessee. The Assessing Officer ultimately completed the reassessment at a total income of Rs.12,10,85,338/ profit component of the entire trade amount and held the same as unexplained cash credit u/s 68 of the Act. On further appeal before the Ld. CIT(A), submitted that various notices issued by the AO were upon the assessee as the assessee moved from Mumbai to Nagpur. In view of the additional evidences filed by the assessee CIT(A) called for a remand report from the Assessing Officer remand proceedings, the Ld. Assessing Officer examined the and accepted the transactions Prenish Umakant Pachbaiye 2 ITA No. 1664/MUM/2024 was required by law to maintain and get them audited given the turnover of the assessee was for the year under consideration, no regular return of income was filed by the in view of the individual transaction (AIR), the assessee multi commodity exchange w of no return of he case of the assessee was reopened by way of issue tax Act, 1961 (in short ‘the Act’) which was duly served upon the assessee. Thereafter, the reassessment proceedings were commenced and statutory notices were issued but no compliance was made on the Assessing Officer ultimately completed the reassessment at a total income of Rs.12,10,85,338/- being the 35% profit component of the entire trade amount and held the same as , the assessee by the AO were not served upon the assessee as the assessee moved from Mumbai to Nagpur. In view of the additional evidences filed by the assessee, the Ld. CIT(A) called for a remand report from the Assessing Officer. In the Ld. Assessing Officer examined the of the assessee as genuine. The Ld. CIT(A) in the impugned order has rep the verification which was carried out by the Assessing Officer in remand proceedings, “6.3 The present AO has correctly carried out such verification and reported that assessee had a loss of Rs. 6,93,098/ trading through mul 6,93,098/- has been verified and it is seen that as per the capital account of the assessee, he has sufficient creditworthiness and also the loss has been paid through his bank account.\" Further the AO has now confirmed that income from capital gains amounting Rs. 11,772/ from other sources amounting to Rs. 50,857/ under chapter V to Rs. 36,625/ limit no return of income was filed by the assessee for A.Y. 2010 11.\" 6.4 The efforts take by the present A to examine and unravel the correct facts of the appellant's actual income/ loss is commendable. Considering her report on the subject, the appellant's income for AY 2010 Rs.36,625/- directed to be deleted. The AO is d demand by giving effect to this order, immediately, as such high demand raised in the present case is adversely affecting the appellant.” 4. Aggrieved with the finding of the Ld. CIT(A), the Revenue is in appeal before the Tribuna above. 5. We have heard rival submission of the parties and perused the relevant material on record. In the case representation by the assessee before the Assessing Officer however on submission of CIT(A), remand report was called for Prenish Umakant Pachbaiye . The Ld. CIT(A) in the impugned order has rep the verification which was carried out by the Assessing Officer in which is extracted as under: 3 The present AO has correctly carried out such verification and reported that- \"During the year under consideration the had a loss of Rs. 6,93,098/- from speculation loss in trading through multi commodity exchange. The source. of Rs. has been verified and it is seen that as per the capital account of the assessee, he has sufficient creditworthiness and loss has been paid through his bank account.\" Further the AO has now confirmed that- \"The assessee also had taxable income from capital gains amounting Rs. 11,772/- and income from other sources amounting to Rs. 50,857/-. After deduction under chapter VỊ-A, the net taxable income of the assessee comes to Rs. 36,625/-As the taxable income, was below the taxable limit no return of income was filed by the assessee for A.Y. 2010 6.4 The efforts take by the present A to examine and unravel the s of the appellant's actual income/ loss is commendable. Considering her report on the subject, the appellant's income for AY 2010-11 is required to be assessed at only, instead of Rs. 12,10,85,338/- directed to be deleted. The AO is directed to reduce the tax demand by giving effect to this order, immediately, as such high demand raised in the present case is adversely affecting the Aggrieved with the finding of the Ld. CIT(A), the Revenue is in appeal before the Tribunal by way of raising grounds as reproduced We have heard rival submission of the parties and perused the relevant material on record. In the case, there was representation by the assessee before the Assessing Officer however on submission of the relevant documents CIT(A), remand report was called for from the Assessing Officer Prenish Umakant Pachbaiye 3 ITA No. 1664/MUM/2024 . The Ld. CIT(A) in the impugned order has reproduced the verification which was carried out by the Assessing Officer in 3 The present AO has correctly carried out such verification \"During the year under consideration the tion loss in ti commodity exchange. The source. of Rs. has been verified and it is seen that as per the capital account of the assessee, he has sufficient creditworthiness and loss has been paid through his bank account.\" Further \"The assessee also had taxable and income . After deduction A, the net taxable income of the assessee comes As the taxable income, was below the taxable limit no return of income was filed by the assessee for A.Y. 2010- 6.4 The efforts take by the present A to examine and unravel the s of the appellant's actual income/ loss is commendable. Considering her report on the subject, the 11 is required to be assessed at - which is irected to reduce the tax demand by giving effect to this order, immediately, as such high demand raised in the present case is adversely affecting the Aggrieved with the finding of the Ld. CIT(A), the Revenue is in l by way of raising grounds as reproduced We have heard rival submission of the parties and perused the there was non- representation by the assessee before the Assessing Officer, s before the Ld. the Assessing Officer. During remand proceedings before the AO, the assessee and the Ld. CIT(A) accordingly deleted the addition. In our opinion, once the Assessing Officer himself has verified the claim of the assessee and recommended for deletion of the addition we do not find any infirmity in the order of the Ld. CIT(A) in deleting the addition. The action of the Assessing Officer of recommending the deletion of the addition on one hand and then filing the appeal against the same cannot be appreciated, u Officer who has filed appeal has found any mala remand report. No such observation has been made by the Ld. Departmental Representative (DR) alleging any malafide report, therefore, in such not justified in preferring the appeal, o the claim of the assessee. Accordingly, we reject the by the Revenue. 6. In the result, the appeal of the Revenue is accordingly dismissed. Order pronounced in the open Court on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 22/10/2024 Rahul Sharma, Sr. P.S. Prenish Umakant Pachbaiye During remand proceedings before the AO, he verified the claim of the Ld. CIT(A) accordingly deleted the addition. In the Assessing Officer himself has verified the claim of the assessee and recommended for deletion of the addition we do not find any infirmity in the order of the Ld. CIT(A) in deleting the addition. The action of the Assessing Officer of recommending e deletion of the addition on one hand and then filing the appeal the same cannot be appreciated, unless the Assessing d appeal has found any malafide error in the No such observation has been made by the Ld. rtmental Representative (DR) alleging any malafide in such circumstances; the Assessing Officer is ferring the appeal, once he himself has verified the claim of the assessee. Accordingly, we reject the In the result, the appeal of the Revenue is accordingly nounced in the open Court on 22/10/2024. Sd/ (SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Prenish Umakant Pachbaiye 4 ITA No. 1664/MUM/2024 fied the claim of the Ld. CIT(A) accordingly deleted the addition. In the Assessing Officer himself has verified the claim of the assessee and recommended for deletion of the addition, we do not find any infirmity in the order of the Ld. CIT(A) in deleting the addition. The action of the Assessing Officer of recommending e deletion of the addition on one hand and then filing the appeal nless the Assessing fide error in the No such observation has been made by the Ld. rtmental Representative (DR) alleging any malafide in remand essing Officer is nce he himself has verified the claim of the assessee. Accordingly, we reject the grounds raised In the result, the appeal of the Revenue is accordingly /10/2024. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Prenish Umakant Pachbaiye Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Prenish Umakant Pachbaiye 5 ITA No. 1664/MUM/2024 BY ORDER, (Assistant Registrar) ITAT, Mumbai "