The ACIT, Central Circle-1(1), Ahmedabad V. M/s. Amradeep Industries Ltd., Ahmedabad

ITSSA 342/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5025 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-10-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 29-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Keywords: Transactions in derivatives; Valuation report; Bonafide mistake; TDS; Set aside
• Section: 143(3); 153A; 43(5); 73; 132

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD ( CONVENED THROUGH VIRTUAL COURT ) BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ( . . ) ./ I.T. ( SS)A. NO. 342/AHD/2018 ( ASSESSMENT YEAR : 2010-11) ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(1), AHMEDABAD ROOM NO. 303, 3 RD FLOOR, AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD - 380009 / VS. M/S. AMRADEEP INDUSTRIES LTD. 24, LAXMI CHAMBERS, NAVJEEVAN PRESS ROAD, OPP. OLD GUJARAT HIGH COURT, AHMEDABAD 380 014 ./ ./ PAN/GIR NO. : AABCA8362K ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI O. P. SHARMA, SR.D.R. / RESPONDENT BY : SHRI ANIL KSHATRIYA, A.R. !' DATE OF HEARING 01/10/2020 #$%& !' / DATE OF PRONOUNCEMENT 13/10/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS)-11, AHMEDABAD (CIT(A) IN SHORT), DATED 12.09.2018 ARISING IN THE ASSESSMENT ORDER DATED 31.03.2015 PA SSED BY THE IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 2 - ASSESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 153A( 1)(B) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY. 2010- 11. 2. THE SUBSTANTIVE GROUND OF APPEAL RAISED BY THE REVENUE READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IS NOT APPRECIATING THE P ROVISIONS OF SECTION 153A OF THE I T ACT, 1961 WHICH REQUIRES THE TOTAL INCOME T O BE BROUGHT UNDER TAX WITHOUT ANY RESTRICTIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT SUCH ASSE SSMENT OR REASSESSMENT U/S 153A OF THE I T ACT, 1961 IS TO BE RESTRICTED ONLY TO THE INCRIMINATING MATERIALS FOUND DURING THE SEARCH. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.5,00,00,000/- MADE BY THE AO ON ACCOUNT OF LOSS ON SALE OF SHARES OF AMRA PALI CAPITAL & FINANCE SERVICES LTD. (ACFSL). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HIMSELF ADMITTED THAT THE PURCHASE AND SALES SHOWN IN AUDITED BOOKS OF ACCOUNTS ARE MERE UNILATERAL BOOK/PAPER ENTRIES AND NO ACTUAL PURCHASE AND SALE TRANSACTIONS HAVE BEEN CARRIED OUT AS MENTIONE D IN PARA 5.1 OF SAID ASSESSMENT ORDER. 3. BRIEFLY STATED, THE ASSESSEE COMPANY FILED ITS R ETURN OF INCOME FOR AY 2010-11 UNDER S.139(1) OF THE ACT ON 28.09.2 010 DECLARING TOTAL INCOME AT RS.NIL. A SEARCH UNDER S. 132 OF T HE ACT WAS CONDUCTED ON AMRAPALI GROUP ON 26.10.2012 WHERE THE ASSESSEE COMPANY WAS ALSO COVERED IN SEARCH ACTION. CONSEQU ENT UPON SEARCH, A NOTICE UNDER S.153A OF THE ACT WAS ISSUED ON THE ASSESSEE. IN RESPONSE TO THE NOTICE UNDER S.153A OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS. NIL. THE ASSESSMENT WAS THEREAFTER COMPLETED UNDER S.143(3) R.W.S. 153A OF THE ACT. WHILE FRAMING ASSESSMENT UNDER S.153A OF THE ACT, T HE AO INTER ALIA TOOK NOTE OF LOSS ON SALE OF SHARES OF ACFSL AMOUN TING TO RS.5CRORE CLAIMED BY THE ASSESSEE. THE AO ALSO TOO K NOTE OF THE CERTAIN SUBMISSIONS MADE BY THE ASSESSEE BUT HOWEVE R FOUND THE IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 3 - HUGE LOSS CLAIMED BY THE ASSESSEE TO BE A SHAM TRAN SACTION. THE LOSS IN SALE OF SHARES OF ACFSL AMOUNTING TO RS.5CR ORE WAS ACCORDINGLY REJECTED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE ALSO CHALLENGED JURISDICTIONAL GROUND FOR ADDITION MADE WITHIN THE SPHERE OF SECTI ON 153A OF THE ACT ON LEGAL SIDE, APART FROM THE CHALLENGE OF THE ADDITIONS ON MERITS. THE CIT(A) CALLED FOR REMAND REPORT FROM T HE AO AND REJOINDER THEREON FROM THE ASSESSEE WAS OBTAINED WH ICH HAS BEEN REFERRED IN THE FIRST APPELLATE ORDER. AFTER MAKING REFERENCE TO THE VARIOUS SUBMISSIONS AND REMAND REPORT ETC., THE CIT (A) FOUND MERIT IN THE OBJECTION RAISED BY THE ASSESSEE BY WAY OF A DDITIONAL GROUND ON JURISDICTIONAL ASPECTS OF THE AO TO MAKE ADDITIO NS UNDER S.153A OF THE ACT IN THE CIRCUMSTANCES, AS NARRATED FOR TH E PRESENT CASE. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT (A) IS REPRODUCED HEREUNDER: 4.2 I HAVE GONE THOUGH THE ASSESSMENT ORDER, CONSI DERED THE REMAND REPORT SUBMITTED BY A.O. AND ALSO THE AFORESAID WRI TTEN SUBMISSION AS WELL AS ORAL ARGUMENTS ADVANCED BY THE A.R. OF THE APPELLANT. THE APPELLANT CONTENDED THAT DURING THE COURSE OF SEARC H, NO INCRIMINATING MATERIAL WAS FOUND AND HENCE, THE ADDITIONS MADE BY THE AO ARE NOT BASED UPON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN THE ABSENCE OF ANY INCRIMINATING MATERIA L FOUND DURING THE COURSE OF SEARCH, ADDITIONS MADE ARE NOT JUSTIFIED. IN SUPPORT OF THIS CONTENTION, THE APPELLANT CITED SEVERAL BINDING JUD GEMENT OF HIGH COURTS & ITAT. IN THE CASE ON OF THE APPELLANT, THE A.O. HAS MERELY MENTIONED IN THE ORDER THAT A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT ON 26/10/2012. THERE IS NO REFERENCE TO ANY BOOKS O F ACCOUNTS, DOCUMENTS OR INCRIMINATING MATERIAL SEIZED AND BELO NGING TO THE APPELLANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATI ON. THE PARTICULAR OF INCOME AND ITS RELATED TRANSACTIONS ARE DULY REC ORDED IN THE STATUTORILY AUDITED BOOKS OF ACCOUNT FILED WITH THE RETURNS OF INCOME AND THE A.O. HAS MADE ADDITION OUT OF THE SAME AND NO OTHER ADDITION ON THE BASIS OF INCRIMINATING MATERIAL OR ADMISSION MADE BY THE APPELLANT IS MADE. IN THE ABSENCE OF ANY INCRIMINAT ING MATERIAL FOUND, NO ADDITIONS CAN BE MADE WHILE MAKING ASSESSMENT U/ S.153A OF THE ACT, AS THE APPELLANT HAD FILED ORIGINAL RETURN OF INCOM E ON 30.9.2008 AND ASSESSMENT PROCEEDINGS WERE NOT PENDING ON THE DATE OF SEARCH, SO AS IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 4 - TO ABATE. THE APPELLANT'S CASE HAS BEEN FOUND COVER ED BY FOLLOWING BINDING JUDGEMENTS :- (I) CIT VS. KABUL CHAWLA [2015] TAXCORP DT 61778 (DEL.HC) (II) INTAS PHARMACEUTICAL VS. DCIT IN IT (SS) A NO. 807- 809/AHD./2010 (AHD. ITAT) (III) JAY INFRASTRUCTURE & PROPERTIES PVT. LTD, VS. ACIT IN ITA NO. 2169/AHD./2011 (AHD. ITAT) (IV) VIJAYKUMAR D. AGRAWAL VS. DCIT IN IT (SS) A. N O.L53- 156/AHD./2012 (AHD. ITAT). (V) PCIT VS. DESAI CONSTRUCTION PVT. LTD. TAX APPEA L NO. 24 OF 2016 DECIDED ON 14/3/2016. (VI) PCIT VS. DIPAK J. PACHAL [2017] TAX CORP. 6856 8 (GUJ.) (VII) CIT VS. KHEMANI DISTILIARIES PVT. LTD. IN TAX APPEAL NO. 790 TO 796 OF 2010 ORDER DATED 22/7/2016 (GUJ.) (VIII) PCIT VS. LATA JAIN IN ITA NO.274 OF 2016 ORD ER DATED 6/5/2016 (DEL.) (IX) CIT VS. MEETA GUT GUTIA PROP. M/S. FERNS 'IM' PETALS 395 ITR 596 (DEL.) (X) ITO VS. SHANTISURI SECURITIES P. LTD. IN ITA NO . 2481/AHD/2014 ORDER DATED 21/12/2017 (XI) PR.CIT VS. RSA DIGI PRINTS IN TAX APPEAL NO. 4 69 OF 2017 ORDER DATED 06/09/2017. KEEPING IN VIEW THE ABOVE JUDGEMENTS, ADDITIONS OF RS. 5,0,00,000/- MADE BY THE AO ARE DELETED. THE CIT(A), IN CONCLUSION, QUASHED THE ADDITIONS MA DE TOWARDS DISALLOWANCE OF LOSS ON SALE OF SHARES ALLEGED TO S HAM BY AO ON THE GROUND THAT SUCH ADDITIONS ARE NOT SUSTAINABLE IN T HE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H. 6. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), T HE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL TO ASSAIL ITS ACTION. 7. THE LEARNED DR FOR THE REVENUE REFERRED TO THE O RDER OF THE CIT(A) AND SUBMITTED THAT THE REMAND REPORT OBTAINE D FROM THE AO IS SILENT ON PRESENCE OF INCRIMINATING MATERIAL OR OTHERWISE FOR MAKING ADDITIONS. IN THE ABSENCE OF ANY SPECIFIC OBSERVATION/RESPONSE FROM THE AO ON THE LEGAL POINT RAISED BY THE ASSESSEE BEFORE THE CIT(A) FOR THE FIRST TIME IN TH E APPELLATE PROCEEDINGS, THE ACTION OF THE CIT(A) IS NOT JUSTIF IED IN ASSUMING IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 5 - THE ABSENCE OF ANY INCRIMINATING MATERIAL OUTRIGHTL Y WITHOUT ANY PERCEPTIBLE ENQUIRY. THE LEARNED CIT D.R. THUS REL IED UPON THE ACTION OF THE AO AND THE OBSERVATIONS MADE IN THE A SSESSMENT ORDER AND URGED FOR UPHOLDING THE ASSESSMENT ORDER. 8. IN DEFENSE, THE LEARNED AR FOR THE ASSESSEE, ON THE OTHER HAND, POINTED OUT THAT IN THE LIGHT OF PLETHORA OF JUDGME NTS, THE LAW IS WELL SETTLED THAT ASSESSMENT IN 153A PROCEEDINGS AR E PERMISSIBLE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND I N THE COURSE OF SEARCH WHERE THE ASSESSMENT ALREADY STOOD CONCLUDED AND NOT PENDING AT THE TIME OF SEARCH. THE LEARNED AR THUS SUBMITTED THAT CIT(A) HAS RIGHTLY APPRECIATED THE LAW EVOLVED BY T HE JUDICIAL PRECEDENTS AND DECIDED THE ISSUE CORRECTLY IN FAVOU R OF THE ASSESSEE. ON INQUIRY FROM THE BENCH TOWARDS ANY AVERMENT MADE ON BEHALF OF THE AO IN THE REMAND REPORT ON ABSENCE OF INCRIMINA TING MATERIAL, THE LEARNED AR HOWEVER COULD NOT DEMONSTRATE SUCH F ACTS TO THE SATISFACTION OF THE TRIBUNAL. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE SHORT QUESTION PRESENT FOR ADJUDICATION IS WHETHER IT IS OPEN TO THE AO TO DISALLOW LOSS CLAIMED ON SALE OF SHARES IN THE CURR ENT PROCEEDINGS UNDER S.153A OF THE ACT IN THE CONTEXT OF THE FACTS OF THE CASE. THE JURISDICTION TO INVOKE THE PROVISIONS OF S. 153A PER SE IS NOT IN CHALLENGE HAVING REGARD TO THE SEARCH ACTION. WHAT IS IN CHALLENGE IS WHETHER IMPUGNED ADDITIONS/ DISALLOWANCES MADE DEHORS THE INCRIMINATING MATERIAL IS PERMISSIBLE AS PER THE SC HEME OF ASSESSMENT EMBODIED IN S. 153A OF THE ACT. IT IS TH E CASE OF THE ASSESSEE THAT THE RETURN OF INCOME FILED PRIOR TO S EARCH UNDER S.153A OF THE ACT HAD STOOD CONCLUDED AND WAS NOT PENDING AT THE TIME OF SEARCH. IT IS THUS THE CASE OF ASSESSEE THAT THE AO WAS PROHIBITED IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 6 - FROM MAKING ADDITIONS/ DISALLOWANCES UNCONNECTED TO THE MATERIAL FOUND IN THE COURSE OF SEARCH IN AN SUCH UNABATED A SSESSMENT. 9.1 IN THIS REGARD, WE FIRSTLY OBSERVE THAT ASSESSM ENT ORDER IS SILENT TOWARDS PRESENCE OR OTHERWISE OF INCRIMINATI NG MATERIAL FOR INDULGING IN IMPUGNED ADDITIONS OF RS.5CRORE AS SHA M LOSS ON SALE OF SHARES. THE EXTRACT OF THE REMAND REPORT FROM T HE AO ALSO DOES NOT ANSWER THE PRESENCE OR OTHERWISE OF SUCH INCRIM INATING MATERIALS IN CONNECTION WITH THE IMPUGNED ADDITIONS /DISALLOWANCE. THERE IS NO AVERMENT IN THE ASSESSMENT ORDER EITHER ON THE POINT WHETHER THE ASSESSMENT STOOD CONCLUDED ON THE DATE OF SEARCH OR NOT. IN THE ABSENCE OF DISCUSSION ON THESE ASPECTS , IT IS A DIFFICULT PROPOSITION TO DETERMINE THE ISSUE EITHER WAY WHICH IS DEPENDENT ON THE FACTS IN QUESTION. THE CIT(A) HAS MECHANICALLY APPLIED THE LAW EVOLVED BY JUDICIAL PRECEDENTS ON CONTOURS OF S. 1 53A IN AN ABSTRACT AND GENERIC MANNER. 9.2 IN OUR CONSIDERED VIEW, THE CIT(A) WAS UNDER BO UNDEN DUTY TO MAKE SUITABLE INQUIRY TO FIND THE PRESENCE OR OTHER WISE OF THE INCRIMINATING MATERIAL AND SHOULD SIMPLY OUGHT NOT TO HAVE BRUSHED ASIDE THE ADDITIONS AND DETERMINE THE VIABILITY OF ADDITIONS/ DISALLOWANCE UPON A VAGUE AND NON-DESCRIPT REMAND R EPORT WHERE PERTINENT POINTS RAISED BY THE CIT(A) REMAINS UNANS WERED. THE FINDINGS OF CIT(A), IN OUR VIEW, LACKS COMPREHENSIO N. AS A MATTER OF COURSE AND TO REACH TO A LOGICAL CONCLUSION, THE CIT(A) OUGHT TO HAVE REPEATED THE INQUIRY ON INCRIMINATING MATERIAL FROM THE AO WHERE THE REMAND REPORT ALLEGEDLY DID NOT COGENTLY ADDRESS THE PERTAINING ISSUE RAISED BY THE CIT(A) HIMSELF AT TH E FIRST INSTANCE. IN THE HIERARCHY OF POWER, THE FIRST APPELLATE AUTH ORITY POSSESSES CO- TERMINUS POWERS AND DUTIES IN EQUIVALENCE WITH THAT OF AO APART FROM THE APPELLATE POWERS TO ADJUDICATE THE GRIEVAN CE OF THE ASSESSEE. THESE ARE SPECIAL AND EXCEPTIONAL ATTRIBU TES OF THE IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 7 - JURISDICTION OF A TAX APPELLATE AUTHORITY. THESE AT TRIBUTES UNDERLINE THE TRUTH THAT THE APPELLATE AUTHORITY IS NO DIFFER ENT, FUNCTIONALLY AND SUBSTANTIALLY, FROM THE ASSESSING AUTHORITY ITS ELF. IN EXERCISE OF SCOPE OF ITS PLENARY POWERS CO-TERMINUS WITH THE SU BORDINATE AUTHORITY, THE CIT(A) COULD HAVE CALLED THE ASSESSM ENT RECORD HIMSELF TO ASCERTAIN TO THE ALLEGED CLAIM OF ABSENC E OF INCRIMINATING MATERIAL WHILE DISCHARGING ITS APPELLATE FUNCTIONS. NO SUCH INQUIRY HAS BEEN MADE AS ENJOINED IN LAW TOWARDS CORROBORAT ION OF ASSERTIONS MADE BY AO IN SUPPORT OF ITS CHALLENGE T O JURISDICTION FOR ADDITIONS. 9.3 IN THE SAME TOKEN, WE ARE EQUALLY FLUMMOXED BY THE APPALLING ASSERTIONS MADE IN THE SUBMISSIONS OF THE ASSESSEE BEFORE AO WHICH WENT UNNOTICED BY THE CIT(A). FOR THE SAKE OF EASY REFERENCE, THE SUBMISSIONS AS REPRODUCED IN PARA 5.1 OF THE ASSESS MENT ORDER IS EXTRACTED HEREUNDER: '(A) AT THE OUTSET, IT IS SUBMITTED THAT IN THE AUD ITED ACCOUNTS, THE WORKING USED ARE LOSS FROM F&O ACTIVITY. HOWEVER, I T MAY BE NOTED THAT THE WORDS [F&O] USED WERE INADVERTENTLY WRITTE N ON ACCOUNT OF COPY AND PASTE FUNCTION AND WAS A BONAFIDE MISTAKE. THE CORRECT WORDS ARE 'LOSS FROM SHARE TRADING'. THIS IS TO EMPHASIZE THE FACT THAT MERE WORDS WOULD NOT CHANGE THE NOMENCLATURE OF THE TRAN SACTION, WHICH IN THE INSTANT CASE IS SHARE TRADING LOSS. (B) THE INVESTMENT IN SHARES OF ACFSL HAS BEEN CONV ERTED INTO STOCK IN TRADE AS ON 01.04.2010 AND THEREFORE TREATED AS LOSS ON SALE OF SUCH SHARES HAS BEEN TREATED AS BUSINESS LOSS DURING THE YEAR. (C) IT IS FURTHER SUBMITTED THAT THE ENTRIES OF PUR CHASE AND SALE AS SHOWN IN THE AUDITED ACCOUNTS ON WHICH PROFIT OF RS .5,02,25,000/- HAS BEEN SHOWN ARE MERE UNILATERAL BOOK/PAPER ENTRIES A ND NO ACTUAL PURCHASE AND SALE TRANSACTIONS HAVE BEEN CARRIED OU T. THAT APART, IT MAY BE NOTED THAT NO PURCHASE AND SALES BILLS ARE A VAILABLE IN SUPPORT OF THE SAID TRANSACTIONS. (D) IT MAY BE NOTED THAT THE ENTIRE TRANSACTION IS MERELY A UNILATERAL BOOK ENTRY IN THE BOOKS OF ACCOUNT OF THE COMPANY A ND IS SHOWN IN 2 TO 3 ENTRIES ONLY WHICH IS HIGHLY ILLOGICAL AND ITSELF SUGGESTS THAT IT IS NOTHING MORE THAN A BOOK ENTRY AND NOT A REGULAR BU SINESS ACTIVITY WHICH WOULD OTHERWISE INVOLVE SERIES OF PURCHASE AN D SALE TRANSACTIONS. 3. THE INVESTMENT IN THE SHARES AND SUBSEQUENT SALE IS JUSTIFIED ON VALUATION REPORT BASED ON FUTURE GROWTH AS WELL AS NET WORTH OF THE IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 8 - COMPANY AND NON-ACHIEVEMENT OF THE PROJECTED GROWTH DUE TO NON- VIABILITY OF THE SAME. IN VIEW OF THE ABOVE FACTS AND MORE PARTICULARLY TH E FACT THAT THE ENTIRE TRANSACTION IS MERELY A UNILATERAL BOOK ENTRY OF PU RCHASE AND SALE AS STATED ABOVE, IN CASE YOUR HONOUR PROPOSES TO DISAL LOW THE LOSS, THE CONSEQUENTIAL PROFIT ALSO SHOULD BE IGNORED.' 9.4 A BARE GLANCE OF THE SUBMISSIONS, IT CAN BE NOT ICED THAT THE ASSESSEE HIMSELF HAS DISCREDITED THE ENTRIES PERTAI NING THE PURCHASE AND SALE TRANSACTIONS OF SHARES IN ITS BOOKS. THE S UBMISSIONS REMAINS UN-REPUDIATED TO OUR UNDERSTANDING. IT IS T HUS OBSERVED THAT THE ASSESSEE HAS COME FORWARD TO MAKE AN INEXPLICAB LE AND STRANGE ADMISSION THAT CERTAIN PROFITS ARISING ON SALE OF S HARES AMOUNTING TO RS.5,02,25,000/- HAVE BEEN INTRODUCED IN THE BOOKS UNILATERALLY AS BOOK / PAPER ENTRIES WITHOUT ANY SUPPORTING MATERIA L. THIS ASSERTION HAS A DIRECT IMPACT TO THE IMPUGNED LOSS IN CONTROV ERSY. WE ARE AT LOSS TO UNDERSTAND AS HOW SUCH ACQUIESCENCE, IF TRU E INDEED, WOULD NOT IPSO FACTO TAINT THE BOOKS OF ACCOUNTS OF THE ASSESSEE CO. FO UND AT THE TIME OF SEARCH AND WOULD NOT CONSTITUTE AS I NCRIMINATING MATERIAL IN ITSELF FOR THE MATTER TO FALL WITHIN TH E SWEEP OF S. 153A OF THE ACT? OSTENSIBLY, THE PRESENCE OF INCRIMINATI NG MATERIAL CAN NOT BE ORDINARILY SEEN IN ISOLATION BUT HAS TO BE A PPRECIATED IN CONJUNCTION WITH BOOKS MAINTAINED BY THE ASSESSEE C O. NEEDLESS TO SAY, THE DISTRAUGHT FACT OF INSERTION OF SHAM TRANS ACTIONS BY CONCOCTING THE BOOKS IN A CAVALIER MANNER HAS OMNIB US IMPLICATIONS AND BLEMISHES THE STATE OF AFFAIRS OF THE ASSESSEE AND MAKE IT SUSCEPTIBLE. 9.5 THIS APART, AS PER THE SUBMISSIONS RECORDED ABO VE, THE IMPUGNED LOSS CLAIMED RS.5 CRORES ON SALE OF ACFSL SHARES IN CONTROVERSY IS STATED TO BE WRONGLY CLAIMED IN BOOK S AS DERIVATIVE TRANSACTION BY THE ASSESSEE AND CONSEQUENTLY CHARA CTERIZED AS BUSINESS LOSS AS PER THE SCHEME OF THE ACT. ON TH E CONTRARY, THE LOSS ARISING ON ORDINARY SHARE TRANSACTION, NEEDS T O BE TESTED ON THE IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 9 - TOUCHSTONE OF DEEMING FICTION EMBEDDED IN EXPLANATI ON TO SECTION 73 OF THE ACT TO DETERMINE WHETHER THE IMPUGNED LOS S IS SPECULATIVE IN NATURE AND THUS TO BE TREATED ON A DIFFERENT TAN GENT. AS PER THE AVERMENTS OF THE ASSESSEE BY WAY OF IT SUBMISSIONS, THE SHARE TRADING TRANSACTIONS HAVE THE ATTRIBUTES OF ORDINAR Y TRANSACTIONS IN CONTRAST TO DERIVATIVE TRANSACTIONS ENJOYING A DIFF ERENT LEGAL STATUS IN VIEW OF EXCEPTIONS CARVED OUT IN S. 43(5) OF THE ACT. HENCE, THE ISSUE NEEDS TO BE EXAMINED BY THE CIT(A) FROM THIS PERSPECTIVE AS WELL WHICH MAY CALL FOR SOME FACTUAL VERIFICATIONS. 9.6 AS NARRATED, THE CONTROVERSY INVOLVED IS COMPLE X AND CANNOT BE STEREOTYPED BY APPLYING THE JUDICIAL PRECEDENTS SUMMARILY IN THE WAKE OF VERY PECULIAR FACTS EXISTING IN THE PRESENT CASE AS NARRATED ABOVE. THE ASSESSEE HAS CLAIMED LACK OF ECONOMIC SU BSTANCE IN THE SHARE TRANSACTIONS ARISING ON PURCHASE AND SALE OF SHARES AS RECORDED IN THE BOOKS. IN OUR VIEW, THE PLEA OF ASSESSEE TOW ARDS ABSENCE OF ANY INCRIMINATING MATERIAL IN THE LIGHT OF SUCH AN AGGRAVATING WRITTEN STATEMENT CANNOT OBFUSCATE REALITY. THE CIT (A) OUGHT TO HAVE EXAMINED THESE CRUCIAL ASPECTS WITH A DEGREE O F OBJECTIVITY BY MAKING INQUIRIES AND VERIFICATION IN THIS REGARD IN ACCORDANCE WITH LAW. WE THUS SEE OBSCURE MERITS IN THE FIRST APPEL LATE ORDER IN CHALLENGE. 9.7 THESE GLARING FACTS DO RAISE CONCERN ON THE OBJ ECTIVITY WITH WHICH THE TASK HAS BEEN PERFORMED BY THE CIT(A). HO WEVER, IN THE ABSENCE OF COGENT FACTS AVAILABLE IN THIS REGARD, W E ARE NOT DWELLING ANY FURTHER ON THE ASPECT AND LEAVE THE QUESTION EN TIRELY OPEN FOR DETERMINATION OF THE CIT(A) AFRESH IN ACCORDANCE WI TH LAW AFTER MAKING NECESSARY INQUIRIES AND VERIFICATIONS AS MAY BE CONSIDERED EXPEDIENT. WE THUS SET ASIDE THE APPELLATE ORDER PA SSED BY THE CIT(A) IN ENTIRETY AND REMIT THE MATTER BACK TO THE FILE OF THE CIT(A) FOR RE-CONSIDERATION OF THE WHOLE ISSUE IN A N ORDERLY MANNER IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 10 - IN ACCORDANCE WITH LAW AND WITHOUT ANY FETTERS AFTE R GRANTING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. 10. AT THIS JUNCTURE, WE MAY HASTEN TO ADD THAT SEC TION 254(1) OF THE ACT DEFINES THE POWERS OF THE TRIBUNAL IN WIDES T POSSIBLE TERMS. WHERE IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON TO PREVENT ASSESSEE FROM RAISING GRIEVANCE BEFORE THE TRIBUNAL IN THIS REGAR D. BY THE SAME TOKEN, THE ITAT IS UNDER SOLEMN DUTY TO SET THE FAC TS RIGHT AND IN PERSPECTIVE TO DETERMINE THE CORRECT POSITION OF TA XABILITY ON A GIVEN ISSUE. THE ASPECTS OF ALLEGED HOAX TRANSACTIONS AN D CAMOUFLAGING OF BOOKS IS INTEGRAL TO DETERMINE THE PRESENCE OF INCR IMINATING MATERIAL. THE ITAT CAN VENTURE INTO EXAMINATION OF SUCH AN INTEGRALLY CONNECTED CRITICAL ASPECT OF THE MATTER TO DETERMINE THE SUSTAINABILITY OF ADDITIONS/ DISALLOWANCE. THIS VIE W IS FORTIFIED BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF FIDELITY BUSINESS SERVICES INDIA PVT. LTD. VS. ACIT (2018) 95 TAXMANN.COM 253 (KAR.). SIMILAR VIEW HAS BEEN EXPR ESSED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JAN SAMPARK ADVERTISING AND MARKETING PVT. LTD. (2015) 56 TAXMA NN.COM 286 (DEL.). THE HONBLE DELHI HIGH COURT IN THIS CASE OBSERVED THAT WHERE THE AO FAILED TO DISCHARGE ITS OBLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION, I T IS ALSO THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY AND IND EED THAT OF ITAT TO HAVE ENSURED THAT EFFECTIVE INQUIRY IS CARRIED OUT ON THE SUBJECT MATTER OF APPEAL. LIKEWISE, THE HONBLE BOMBAY HIG H COURT IN ITO (TDS) VS. THYROCARE TECHNOLOGY LTD. (BOM) INCOME TA X APPEAL NO.53 OF 2016 & ORS. JUDGMENT DATED 11.09.2017 ALSO SIMILARLY OBSERVED THAT ONCE THE TRIBUNAL WAS OBLIGED IN LAW TO EXAMINE THE MATTER AND RE-APPRECIATE ALL THE FACTUAL MATERIALS, THEN IT SHOULD HAVE PERFORMED THAT DUTY SATISFACTORILY AND IN TERM S OF POWERS CONFERRED BY LAW. THE AURANGABAD BENCH OF THE HON BLE BOMBAY IT(SS)A NO. 342/AHD/18 [ACIT VS. M/S. AMRADEEP INDUSTRIES LTD.] A.Y. 2010-11 - 11 - HIGH COURT IN THE CASE OF CIT VS. CHALISGAON PEOPLE S CO-OP. BANK LTD. (TAX APPEAL NO. 31 OF 2005 & ORS. JUDGMENT DAT ED 23.03.2015) HAS ALSO UNDERLINED THE NEED FOR APPROP RIATE ENQUIRY ON THE FACTUAL ASPECTS TO DETERMINE THE ISSUE. IT OBS ERVED THAT IT WAS OBLIGATORY ON THE PART OF FACT FINDING AUTHORITIES TO MAKE INQUIRY AND ARRIVE AT A FINDING. THUS, THE SOLEMN DUTY REQ UIRES US TO DIRECT THE CIT(A) TO EXAMINE THE WHOLE ISSUE IN ACCORDANCE WITH LAW AFTER TAKING NOTE OF CRUCIAL ASPECTS ON PURPORTED SHAM NA TURE OF SHARE TRANSACTIONS, IF ANY. THE MATTER IS REMANDED BACK T O THE FILE OF CITA(A) ACCORDINGLY. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMAR K EDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 13/10/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- ). / REVENUE 2. / ASSESSEE +. ,-.! /! / CONCERNED CIT 4. /!- / CIT (A) 2. 345 6!6-.7 ' -.&7 89, / DR, ITAT, AHMEDABAD :. 5;< = / GUARD FILE. BY ORDER / 7 /8 ' -.&7 89, THIS ORDER PRONOUNCED ON 13/10/2020