AVISHA CREDIT CAPITAL LTD,NEW DELHI vs. ITO WARD - 3(4), NEW DELHI

Date of hearing 21.07.2022 Date of pronouncement 29.07.2022 ORDER This is an appeal by the assessee against order dated 30.04.2019 of learned Commissioner of Income Tax (Appeals)-1, New Delhi, for the assessment year 2014-15.

For the assessment year under dispute, the assessee filed its return of income on 31.03.2015 declaring income of Rs.95,580/-.

Assessee’s case was selected for scrutiny and assessment was completed under section 143(3) of the Act vide order dated 11.11.2016 accepting the income returned by the assessee. Post completion of assessment, the Assessing Officer issued a show- cause notice to the assessee seeking to rectify the assessment order by exercising power conferred under section 154 of the Act. In the show-cause notice, the Assessing Officer observed that interest on income tax amounting to Rs.7,172/- was inadvertently allowed, though, it is not an eligible business expenditure. Further, he observed, loss on sale of shares of VKJ Infra Developers Ltd. amounting to Rs.6,00,000/- debited to the profit and loss account was wrongly allowed as the shares were held as investment and not as stock in trade. In reply to the show-cause notice, though, the assessee accepted the mistake insofar as deduction of interest on income tax amounting to Rs.7,172/-, however, insofar as claim of loss of Rs.6,00,000/-, the assessee submitted that it does not come within the purview of rectifiable mistake. The Assessing Officer, however, rejected the explanation of the assessee and proceeded to pass an order under section 154 of the Act on 31.07.2017 adding back the amounts of Rs.7,172/- and Rs.6,00,000/- respectively. Though, the assessee contested the addition of Rs.6,00,000/- before learned Commissioner (Appeals), however, the addition was sustained.

While completing the assessment under section 143(3) of the Act, the Assessing Officer obviously has accepted the claim. The Assessing Officer has initiated proceeding under section 154 of the Act qua the claim of loss on the ground that the shares were held as investment and not as stock in trade. It is observed, in reply to show-cause notice issued under section 154 of the Act, the assessee has clearly and categorically submitted that the shares were held as stock in trade and the issue was examined in course of scrutiny assessment. Thus, from the aforesaid facts, it is patent and obvious that the issue, whether the loss on sale of shares claimed by the assessee is a trading loss or capital loss is a highly debatable issue. That being the factual position emerging on record, in my considered opinion, proceeding under section 154 of the Act could not have been initiated by the Assessing Officer to rectify the so called mistake as it is not a mistake in the nature of mistake apparent on the fact of record. Therefore, I delete the addition of Rs.6,00,000/-. Ground raised is allowed.

Order pronounced in the open court on 29th July, 2022