SRESTHA ARTS & COMMODITIES PVT LTD.,MUMBAI V. DCIT (OSD)-2(3), MUMBAI

ITA 6248/MUM/2024

AI Insights

The case revolves around the dispute concerning the nature of transactions in gold bullion by Srestha Arts & Commodities Private Limited during the assessment year 2008-09. Initially, the AO treated these transactions as non-genuine and speculative, leading to an addition of Rs. 2,51,01,817 to the assessee's income. The assessee contested this decision, and the matter reached the Tribunal, which directed the AO to verify the transactions. Upon re-assessment, the AO again treated the transactions as speculative, prompting the assessee to appeal again. The Tribunal, after considering the evidence and the submissions, ruled in favor of the assessee, highlighting that the genuineness of the transactions was established and that the transactions did not fall under the speculative category as per the provisions of section 43(5) of the Income Tax Act, 1961.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32105 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHANGEPATIL PUSHKARAJ RAMESH
• Assessee Lawyers: SUKHSAGAR SYAL
• Keywords: Speculation loss; Opportunity of being heard; Corroborative evidences
• Section: 143(3); 131; 234B; 43(5)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G”, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER ITA No. 6248/Mum/2024 Assessment Year : 2008-09 Srestha Arts & Commodities Private Limited, Unit No. 34, ‘C’ Block, 3rd Floor, Film Centre, 68, Tardeo Road, Mumbai PAN : AABCT4238P vs. Deputy Commissioner of Income Tax, OSD-2(3), Room No. 555, 5th Floor, Aayakar Bhavan, Mumbai (Appellant) (Respondent) For Assessee : Shri Sukhsagar Syal For Revenue : Shri Bhangepatil Pushkaraj Ramesh Date of Hearing : 03-03-2025 Date of Pronouncement : 05-03-2025 O R D E R PER NARENDRA KUMAR BILLAIYA, A.M : This appeal by the assessee is preferred against the order dt. 18-10-2024 by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [‘Ld.CIT(A)’] pertaining to AY. 2008- 09. The grievance of the assessee reads as under: 2 ITA No. 6248/Mum/2024 “1. The Learned Commissioner of Income-tax (Appeals) erred in agreeing with the observation and decision of the AO regarding the non-genuineness of the transactions in bullion of Rs.2,51,01,817/-, in the order dated 30.12.2016, without examining the submissions made during the course of assessment proceedings. 2. The Learned Commissioner of Income-tax (Appeals) erred in not heeding to the fact that delivery challans, invoices and bank statements establishing the genuineness of transactions in respect of gold, bullion have been overlooked and not taking cognizance of the same, without establishing the reasons thereof. 3. The Learned Commissioner of Income-tax (Appeals) erred in confirming the levying of interest u/s 234B and 234C of the Income Tax Act, 1961. 4. The Appellant craves the leave to add to, alter, amend and / or delete all / any of the foregoing grounds of appeal.” 2. Briefly stated facts of the case are that this is the second round of litigation as in the first round of litigation, the quarrel travelled up to the Tribunal and the Tribunal in ITA No. 2936/Mum/2013 vide order dt. 21-08-2015 has held as under: “8. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the AO treated the entire transaction as a sham transaction whereas the First Appellate authority has confirmed the findings of the AO treating the loss as a speculative WWE loss which means that now the genuineness of the transaction is not in dispute before us as Revenue is not in appeal. 8.1 All that we have to decide is whether the impugned transaction is of speculative in nature or not? One of the tests to determine whether the transaction is done with an intention to speculate and make profit from the rate fluctuation is to see whether the assessee has sufficient funds to make the payment for purchases. If the assessee does not have money to make the payment for purchases, then the conduct of the assessee is suggestive of speculation. Undisputedly, the purchase and sales are supported by respective invoices. The transactions have also been confirmed by the respective parties. However, at the same time we find that the impugned transactions have not been verified by the AO from the respective parties which is a clear distinguishing factor from the facts of the decision relied upon by the Ld. Counsel in the case of Mobile Trading & Investment Pvt. Ltd. (supra). In that case the parties were produced before the AO as mentioned at page-8 of the order of the Tribunal. We also find that in that 3 ITA No. 6248/Mum/2024 case the AO has issued summons u/s. 131 of the Act to the dealers from whom the assessee claimed to have purchases and sales, such investigations are not made in the present case. Therefore, in the interest of justice and fair play, we restore this issue to the file of the AO. The AO is directed to verify the impugned transactions from the respective parties by making verifications from their end as per the provisions of the law. The AO is also directed to verify whether the assessee was having sufficient funds to make the first purchase and decide the issue afresh after giving reasonable and fair opportunity of being heard to the assessee.” 3. Pursuant to the directions of the Tribunal, the AO framed the assessment u/s. 143(3) r.w.s. 254 of the Income Tax Act, 1961 (‘the Act’) vide order dt. 30-12-2016 and once again made an addition of Rs. 2,51,01,817/-. The assessee carried the matter before the CIT(A), but without any success. 4. The counsel pointed out that once the Tribunal has decided that the only quarrel is in respect of whether the impugned transaction is speculative, there is no question of not treating the transaction as ‘genuine’ as the same has attained finality in the first round of litigation. It is the say of the counsel that the assessee has produced all the purchase invoices, sales invoices and delivery challans alongwith bank statements to show that the impugned transaction is not a speculative transaction. But, the lower authorities have ignored the documentary evidences and made the addition. 5. Per contra, the DR strongly supported the finding of the AO. It is the say of the DR that the AO issued summons, but the summons returned unserved, therefore, the AO could not make necessary enquiries nor the assessee has produced the parties for verification. 6. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that in the first round of 4 ITA No. 6248/Mum/2024 litigation, the Tribunal has categorically held that the only dispute to be decided is whether the loss is a speculative loss and has further held that genuineness of the transaction is not in dispute. 7. We find that the assessee has not only furnished the names, addresses and PAN details of the sellers and the purchasers of gold bullion, but also filed confirmation of the transactions from the respective parties, bank statements were filed along with contract notes, purchase and sales invoices and delivery notes. 8. In our considered opinion, once the commodities transacted are delivered, it go out of the ambit of the provisions of section 43(5) of the Act, thereby proving that it is not a speculative transaction. In our considered opinion, the assessee has furnished all the supporting evidences to justify that the impugned transaction is not a speculative transaction. We also find that the AO has issued summons to Pushpak Bullion Pvt. Ltd., which is the purchase party and to Prakash Patel, Chandrakant Patel, Yogesh Patel and Jorss Bullion, the seller parties. Out of these summons, only summons to Prakash Patel and Chandrakant Patel remained unserved by post, which means that in the case of all other parties, the summons have been served. In fact one of the Directors of Pushpak Bullion Pvt. Ltd., Shri Amit Sampat attended the proceedings and confirmed the transaction. 9. In our considered view, the AO has all the powers to force the attendance of the parties summoned. Therefore, it would be incorrect to put the blame on the assessee. 5 ITA No. 6248/Mum/2024 10. Considering the vortex of the evidences, we are of the considered view that the assessee has successfully proved the genuineness of the transaction and there is no merit in the impugned addition, the AO is directed to delete the same. Appeal of the assessee is accordingly allowed. Order pronounced in the open court on 05-03-2025 Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Date: 05-03-2025 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "