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Income Tax Appellate Tribunal, KOLKATA BENCH ‘SMC’, KOLKATA
Before: Dr. Manish Borad & Shri Sonjoy Sarma]
ORDER
Per Sonjoy Sarma, JM:
The present appeal has been preferred by the assessee against the order dated 30.01.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). The assessee has raised the following grounds of appeal:
“1. That on the facts and in the circumstances of the case, the action of the Ld.CIT(A) to confirm the addition made by the AO of Rs.6,43,238/- by disallowing loss on trading in shares is contrary to the material evidences on record and the addition is illegal, arbitrary and excessive 2. That on the facts and in the circumstances of the case, the action of the Ld.CIT(A) to confirm the action of the AO in making addition of Rs.12,89,526/- on account of loss of sale of securities amounts to double addition and which is Contrary to the material evidences on record and the addition is arbitrary, excessive and illegal.
That on the facts and in the circumstances of the case, the action of the Ld.CIT(A) to confirm the addition of Rs.5,775/- made by the AO u/s 14A of the Act is contrary to the settled principle of law and the addition made income is illegal, arbitrary and excessive without any exempt income is illegal, arbitrary and excessive.
M/s. Instyle Tradelinks Pvt. Ltd.
4. That on the facts and in the circumstances of the case, the action of the Ld.CIT(A) to confirm the addition made by the AO of Rs.2,60,354/- on account of interest income being the difference as per 26AS and as declared in the accounts is on mistaken facts and the addition is uncalled for and arbitrary, excessive and illegal.
That the order of the Ld.CIT(A) confirming the action of the A.0. is arbitrary, excessive and illegal. 6. That the above grounds of appeal
will be argued in details at the time of hearing and the appellant craves leaves to submit additional grounds of appeal if any and or alter, vary, modify or rectify the statement of facts and grounds of appeal at or before the time of hearing.
2. Brief facts of the case are that the assessee filed its return of income at Rs. 1,36,951/- for the assessment year 2014-15 and it was processed u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment through CASS followed by notices issued u/s 143(2) and 142(1) of the Act calling for various details stated in notices. In response to such notices, the assessee furnished various details along with its submission as asked by the ld. AO. The ld. AO after considering the various submission made by the assessee and document placed by the assessee, he viewed that loss claimed by the assessee arising out of share trading amounting to Rs. 6,43,238/- was not genuine and disallowed. Accordingly, he added to the income of the assessee. In addition to that he further found that the assessee debited a loss of Rs. 12,89,526/- on securities under the head of other expenses and the ld. AO disallowed the same and added back to the income of the assessee. Further, the ld. AO disallowed another sum of Rs. 5,775/- by applying section 14A read with Rule 8D of the Act and M/s. Instyle Tradelinks Pvt. Ltd. also added under assessed income of interest of Rs. 2,60,354/- in the hands of assessee. 3. Aggrieved by the above order, assessee preferred an appeal before the ld. CIT(A) where the ld. CIT(A) dismissed the appeal filed by the assessee.
Dissatisfied with the above order, assessee is in appeal before the Tribunal raising six grounds of appeal. However, at the time of hearing, ld. AR submitted before us that ground no. 3 in the appeal, assessee do not like to press and he further contended that ground no. 5 and 6 are general in nature therefore need not required to be adjudicated. In such circumstances, the effective grounds for adjudication before this Tribunal are ground no. 1, 2 and 4 only.
5. We, therefore, first take up ground no. 1 raised by the assessee regarding the issue of confirming the addition made by the ld. AO of Rs. 6,43,238/- on the loss shown by the assessee on trading in shares. According to ld. AR, the view taken by the authorities below is contrary to the material evidence on record and illegal, arbitrary and excessive therefore it needed to be deleted. He further submitted that the view taken by the AO is not in accordance with law as all the transactions are carried out by the assessee through cheque and recognized stock-exchange. Besides that all the shares were transferred by the assessee through proper D-mat account and in such scenario, the addition made by the AO on the ground of mere statement of third party is M/s. Instyle Tradelinks Pvt. Ltd.
not proper and arbitrary. On the other hand, ld. DR supported the decision rendered by the authorities below.
We after hearing the rival submission of the party as well as perusal of the material available on record, we notice that the assessee-company booked a loss of Rs. 6,43,238/- from the transaction of shares of First Financial Services Ltd. whereas assessee’s returned income during the assessment year is only Rs. 1,36,951/-. Besides that the alleged company from which assessee booked loss is also identified one of the 84 BSE listed penny stock which have been used for generating bogus loss from share transactions as we noticed from the assessment order passed by the ld. AO and while dealing with the instant issue, similar view was taken by the ld. CIT(A) by sustaining the order passed by the ld. AO and assessee could not controvert the alleged facts before us. Even on similar facts and circumstances of the case, Hon’ble Jurisdictional High Court passed an order in the case of Swati Bajaj (2022) 446 ITR 56 (Cal) which covered against the assessee. We, therefore, going through the facts of the case and material available on record and relying on the decision rendered by the Jurisdictional High Court in the case of Swati Bajaj (supra), we do not find any infirmity in the order passed by the authorities below. We, therefore, sustained the order passed by the authorities below and the ground taken by the assessee is dismissed.
Now, we take up ground no. 2 raised by the assessee stating that action of the ld. CIT(A) by confirming the addition of Rs. 5,89,586/- on account of loss on sale of securities which turns
M/s. Instyle Tradelinks Pvt. Ltd. into double addition in the hands of assessee and is contrary to the material evidence on the record. On this issue, the ld. AR contended before us that the Assessing Officer while making addition of loss of securities twice i.e. total loss securities was Rs. 12,89,586/- and out of that amount of Rs. 6,43,238/- was from alleged penny stock company i.e. First Financial Services Ltd. However, the ld. AO while framing the assessment order added the loss of Rs. 6,43,238/- from First Financial Services Ltd. separately and again added Rs. 12,89,526/- in the hands of assessee which is included the loss from the First Financial Services Ltd. Therefore, the addition made by the ld. AO is arbitrary and needs to be deleted by the Tribunal.
On the other hand, ld. DR relied on the view taken by the authorities below.
We after hearing the rival submission of the parties and material available on record, we notice that the ld. AO while framing the assessment order already disallowed a sum of Rs. 6,43,238/- in the hands of assessee on account of loss of trading in shares from First Financial Services Ltd. separately and in addition to that Rs. 12,89,526/- in the hands of assessee which turned into double addition in the hands of assessee and same is not in accordance with law, therefore, we are not conformity with the view taken by the ld. CIT(A) by confirming the order passed by the ld. AO regarding the instant issue. Accordingly, ground taken by the assessee is allowed and addition made in the hands of assessee of Rs. 12,89,526/- is hereby deleted.
M/s. Instyle Tradelinks Pvt. Ltd.
Regarding ground no. 4, ld. CIT(A) confirmed the addition of Rs. 2,60,345/- made by the AO on account of interest income due to the difference of income of assessee as per 26AS statement and actual interest figure shown in the profit & loss account. On this issue, the ld. AR submitted that addition was made due to mistaken of fact and, therefore, such addition is uncalled for. The ld. AR contended that alleged addition was made in the hands of assessee due to wrong reflection of interest income as shown in the 26AS statement of assessee and one of such alleged figure does not belong to the assessee and it was happened due to wrong credit given by the party i.e. Bengal Merlin Housing Ltd. The assessee had already taken corrective measure and appropriate steps with the party for necessary correction in the TDS return, as the assessee has never earned such interest income as reflected in the 26AS statement of the assessee. Besides that the ld. AR submitted that in the intervening time such credit of wrong interest entry given by the party has already been rectified by doing necessary correction in parties TDS return. Therefore, the instant addition is uncalled for in the hands of assessee and needed to be deleted by this Tribunal.
We after hearing the parties on this issue and notice that the addition was done due to wrong reflection of interest income as reflected in 26AS statement of the assessee which does not belong to the assessee as the assessee has never earned such interest income from said credit entry reflected in 26AS statements and also from the statements of the ld. AR that during the intervening time, assessee has already taken
M/s. Instyle Tradelinks Pvt. Ltd. appropriate corrective steps to rectify the interest income which the assessee has never earned from the said credit and reflected in 26AS statement and necessary correction has already been done in 26AS statement of the assessee relevant to assessment year in question. We find it fit to allow the grounds taken by the assessee by setting aside the addition sustained by the ld. CIT(A) of Rs. 2,60,354/- in the hands of assessee and direct the AO to delete the same.
In the result, the appeal of the assessee is partly allowed.