VARUN BATRA,MUMBAI V. NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI

ITA 3205/MUM/2022

AI Insights

The case involves Varun Batra, the appellant, who challenged the order of the Commissioner of Income Tax (Appeals), Delhi, regarding the assessment of his income for the Assessment Year 2013-14. The primary contention was the treatment of losses incurred from trading in share derivatives, which the Assessing Officer classified as speculative transactions, thus not allowing the set-off of these losses against other heads of income. The CIT(A) upheld this classification, and the Tribunal agreed, noting the absence of compliance and substantiation from the assessee during the proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713238 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAVITA P. KAUSHIK
• Keywords: Speculation loss; Business income; Corroborative evidences; Salary income; Income from undisclosed sources; Period of limitation; Principle of natural justice; Transactions in derivatives; Deemed to accrue or arise in india
• Section: 143(3); 142(1); 68; 43(5)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JM AND SHRI PRABHASH SHANKAR, AM ITA No. 3205/Mum/2022 (Assessment Year: 2013-14) Varun Batra Flat 5, 5th Floor, La Mer, Mistry Park, Kadeshwari Temple Road, Bandra West, Mumbai – 400050. Vs. National Faceless Appeal Centre (NFAC) PAN/GIR No. AEZPB9157L (Appellant) : (Respondent) Assessee by : None Respondent by : Ms. Kavita P. Kaushik, (SR DR) Date of Hearing : 01.07.2025 Date of Pronouncement : 31.07.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2013-14. 2. The assessee has raised the following grounds of appeal: 1. That the learned Commissioner of Income Tax (Appeals), Delhi has grossly erred both in law and, on facts in upholding the determination of total income of the appellant at Rs. 2,46,16,528/- as against declared income at Rs. 2,30,52,930/- in an order of assessment dated 18.03.2016 u/s 143(3) of the Act. 2. That the learned Commissioner of Income Tax (Appeals), Delhi has grossly erred both in law and fact in holding that sum of Rs. 15,33,595/-representing loss on account of share trading. Printed from counselvise.com ITA No. 3205Mum/2022 (A.Y. 2013-14) Varun Batra 2 3. That while sustaining the aforesaid addition and denying the exemption learned Commissioner of Income Tax (Appeals) has failed to appreciate that, the trading in share derivatives (F&O segment of NSE) was carried out by the assessee at a recognized stock exchange electronically on screen based system through a stock broker registered with SEBI and the transactions are duly supported with stamped contract notes, the said transaction was not a speculative transaction, consequently giving it the nature of normal business transaction. 3.1. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the evidence tendered by the appellant to support the claim of loss of Rs. 15,23,598.00 during the year under consideration and since it qualifies as a normal business loss, it has been set off against income of other head apart from salary as mandated by the provisions of section 72 of IT Act 1961 read with the provisions of section 71 of the said Act. 3.2. That the learned Commissioner of Income Tax (Appeals) has confirmed the above addition and denied exemption without confronting the material/investigation to appellant and also providing cross examination of the parties on whose statements reliance has been placed in impugned order of assessment and therefore order so made is in disregard of principles of natural justice is vitiated. 3.3 That further more the learned Commissioner of Income Tax (Appeals) has sustained the addition on mere speculation, generalized statements, theoretical assumptions and allegations and assertions, without there being any supporting evidence and is therefore not in accordance with law. 3.4 That the learned Commissioner of Income Tax (Appeals) while sustaining the above addition has arbitrarily and, mechanically rejected the explanation and evidence tendered by the appellant and made the addition and denied exemption by drawing subjective, premeditated and preconceived inferences therefore the same is not sustainable. 3.5 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that in absence of books of accounts maintained by the appellant, section 68 of the Act has no application to the case of the appellant 3.6 That various adverse findings and conclusions recorded by the learned Commissioner of Income Tax (Appeals) are factually incorrect and contrary to record, legally misconceived and untenable 3.7 That the learned Commissioner of Income Tax (Appeals) has erred in concluding without any basis that assessee has introduced his unaccounted income in the form of long-term capital gain by manipulating the penny stock. Printed from counselvise.com ITA No. 3205Mum/2022 (A.Y. 2013-14) Varun Batra 3 4 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest under section 234B, and interest u/s 234C of the Act which are not leviable on the facts and circumstances of the case of the appellant.” 3. None appeared for and on behalf of the assessee when these appeals were called out for hearing, nor any adjournment application stands received. It was observed from the order sheet entries on the file that there has been no representation whatsoever by the assessee on several hearings. We therefore proceed to decide this appeal by hearing the ld. DR for the revenue and on perusal of the materials available on record. 4. Brief facts of the case are that the assessee is an individual and had filed his return of income dated 01.08.2013, declaring total income at Rs. 2,30,52,930/-. The assessee’s case was selected for scrutiny under CASS and notices u/s. 143(2) and 142(1) of the Act were duly issued and served upon the assessee. In response to the notices, the assessee’s Authorized Representative is said to have appeared and furnished details before the learned Assessing Officer (ld. A.O. for short). The ld. AO observed that the assessee earned income from salary, other sources, house property, business income and capital gain and had also declared loss from business and profession amounting to Rs. 15,23,598/-, where Rs. 14,41,815/- was set off from the income from house property, other sources and capital gain. The ld. AO also observed that the assessee has traded in commodity derivatives and had incurred loss of Rs. 15,23,598/- which the ld. AO treated as speculative transaction which cannot be set off with other heads of income. Further, the ld. AO had allowed the carry forward of set off of speculative loss with speculative income if any in the future. The ld. AO also determined the Annual Printed from counselvise.com ITA No. 3205Mum/2022 (A.Y. 2013-14) Varun Batra 4 Letting Value (ALV) of the assessee’s house property at Rs. 1,60,000/- and passed the assessment order u/s. 143(3) of the Act dated 18.03.2016, determining total income at Rs. 2,46,36,749/- after making addition of Rs. 1,12,000 on account of deemed income from rental property, addition of Rs. 15,33,595/- as disallowance of loss on speculative trading. 5. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 23.08.2022 had partly allowed the grounds of appeals filed by the assessee. 6. The assessee is in appeal before us, challenging the order of the ld. CIT(A). 7. We have heard the ld. DR and perused the materials available on record. It is observed that the assessee has challenged the additions made by the ld. A.O. before the first appellate authority on account of transaction of share trading. The assessee had traded in derivative trading in shares in his trading account maintained with M/s. Crosseas Capital Services Pvt. Ltd. which is a recognized stock broker with NSE and registered with SEBI, where the assessee is said to have incurred a loss of Rs. 15,33,598/- on account of the said derivative trading in shares. It is observed that the assessee has furnished the copy of tax audit report and contended that he had carried the transaction electronically on screen based system in Future & Option Segment and had incurred trading loss during the year under consideration. The assessee further submitted before the ld. CIT(A) that he had furnished the necessary documents such as contract notes, statement of accounts of the broker and other related documents which has not been considered by the ld. AO who had merely held the transaction to be a speculative transaction without considering the provisions of Section 43(5) of the Act. The assessee Printed from counselvise.com ITA No. 3205Mum/2022 (A.Y. 2013-14) Varun Batra 5 further submitted that the profit/loss from share/commodity derivatives qualify as business profit or loss as per Section 43(5) of the Act r.w.s. 71(2) and 71(2a) of the Act. The assessee had relied on various decisions in support of his contentions. The same was rejected by the lower authorities for the reason that the amendment brought about to the provision to Section 43(5) of the Act where commodity derivative transactions was included as business income and excluded from the preview of speculative transaction as per Finance Act, 2013 was applicable only from F.Y. 2013-14 relevant to A.Y. 2014-15 onwards and not for the year under consideration. Further, it was held that the assessee has not substantiated as to how the said provision would apply in the assessee’s case for the year under consideration i.e., A.Y. 2013-14. The ld. CIT(A) upheld the order of the ld. AO on the said observation. 8. Before us, the assessee has not made compliance to substantiate his claim to the satisfaction of the Bench as to why the said claim of the assessee is to be allowed. Further, the assessee has also not filed a delay condonation application along with affidavit to explain the reason for the delay in filing the present appeal within the period of limitation. In the absence of compliance by the assessee inspite of several opportunities, we deem it fit to hold that there is no infirmity in the order of the ld. CIT(A) and thereby dismiss the grounds of appeal raised by the assessee. 9. In the result, the appeal filed by the assessee is hereby dismissed. Order pronounced in the open court on 31.07.2025 Sd/- Sd/- (PRABHASH SHANKAR) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Printed from counselvise.com ITA No. 3205Mum/2022 (A.Y. 2013-14) Varun Batra 6 Mumbai; Dated: 31.07.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai Printed from counselvise.com "