AAKASH SUREKA,KOLKATA vs. DCIT, CEN. CIR. 3(3), KOLKATA

ITSSA 28/KOL/2024Status: DisposedITAT Kolkata16 April 2025AY 2015-1613 pages
AI SummaryPartly Allowed

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Kolkata Bench 'A', heard appeals filed by Aakash Sureka and Shivam Sureka for Assessment Years (AY) 2014-15 and 2015-16. These appeals arose from orders passed by the Commissioner of Income Tax (Appeals)- Kolkata-21. The cases involved a search and seizure operation conducted on December 17-18, 2014. The Assessing Officer (AO) made several additions, including estimated drawings, disallowing set-off of speculation loss against commodity profits, treating commodity profits as unexplained cash credit, and taxing a gift received from the father's HUF under Section 56(2). The CIT(A) upheld these additions. The assessees challenged these confirmations before the ITAT.

What did the Tribunal hold?

The Tribunal decided the issues as follows: Regarding the commodity profits and the set-off of speculation loss (Issues 1 & 2): The Tribunal noted that the AO treated the commodity income as bogus because the exchange confirmed the transactions were not carried out on their platform. However, the assessee had submitted contract notes from the broker showing transactions using the platform of the Indian Commodity Exchange of India Limited (ICEX) and had set off earlier speculation loss. The Tribunal, in its detailed discussion for AY 2014-15, found that the commodity profit added by the AO and confirmed by the CIT(A) was directed to be deleted. This decision was applied mutatis mutandis to AY 2015-16. The reasoning for deletion was based on the fact that the AO himself had confirmed that the exchange informed that such transactions were not carried out on their platform, which was an essential ingredient to invoke Section 43(5) of the Act. The Tribunal also noted that the assessee had provided contract notes and broker ledgers, and that off-market transactions do not necessarily need to be reported to the exchange. Regarding the addition under Section 56(2) for amounts received from father's HUF and Aakash Sureka Educational Trust (Issue 3): For the amount received from the father's HUF (AY 2014-15), the judgment does not explicitly record a separate finding, but it is implied that the decision on the trust amount would guide the outcome. For the amount received from Aakash Sureka Educational Trust (AY 2015-16), the Tribunal found that the deed of trust was made by the assessee's mother. The Tribunal relied on the decision in ACIT vs. Mrs. Sandhya A Pratap, which held that amounts received on dissolution of a trust cannot be termed as received without consideration. The Tribunal noted that the trust had filed its return and paid taxes on the income earned, and the amount transferred to the beneficiary had already been subjected to taxation. Therefore, the addition made by the AO and confirmed by the CIT(A) was deleted. Operative Directions: The additions related to commodity profits and amounts received from the Aakash Sureka Educational Trust were deleted. The appeals were partly allowed.

What were the issues?

The Tribunal had to decide the following issues: 1. Whether the Commissioner of Income Tax (Appeals) erred in confirming the Assessing Officer's action in disallowing the set-off of speculation loss of Rs. 14,03,951/- against profit from trading in commodity derivatives, as per Section 43(5) of the Income Tax Act, 1961. 2. Whether the Commissioner of Income Tax (Appeals) erred in confirming the Assessing Officer's action in treating the amount of commodity profit of Rs. 21,96,328/- (for AY 2014-15) and Rs. 3,04,711/- (for AY 2015-16) as unexplained cash credit under Section 68 of the Income Tax Act, 1961. 3. Whether the Commissioner of Income Tax (Appeals) erred in confirming the Assessing Officer's action in making an addition of Rs. 13,02,000/- (for AY 2014-15) received from the father's HUF, Shri Anank Akash Sureka (HUF), and Rs. 17,74,878/- (for AY 2015-16) received from M/s Aakash Sureka Educational Trust, under Section 56(2) of the Income Tax Act, 1961. Assessee's Contentions: - Regarding commodity profits and speculation loss, the assessee argued that the AO admitted transactions were not on a recognized platform, which is a condition for invoking Section 43(5). They submitted that transactions were through banking channels, with broker ledgers and contract notes, and treating them as bogus merely due to non-confirmation by the exchange was erroneous. They cited Explanation 2 to Section 43(5) and decisions in PCIT vs. M/s BCB Cables and Contractors Pvt. Ltd., CIT vs. Prudent Finance pvt. Ltd., and ACIT vs. M/s R. K Commercial Ltd. - Regarding the gift from father's HUF, the assessee contended that all members of an HUF are relatives, and cited Gyanchand M. Bardia vs. ITO. - Regarding the amount from Aakash Sureka Educational Trust, the assessee argued it was a discretionary trust created by the mother, who is a relative. They also contended that even if used for non-educational purposes, it cannot be assessed under Section 56(2), that the amount was already taxed in the hands of trustees, and that amounts received on dissolution of a trust cannot be termed as received without consideration. They cited ACIT vs. Mrs. Sandhya A Pratap and other decisions. Revenue's Contentions: The Ld. D.R. supported the impugned orders.

Which sections of the Income-tax Act were involved?

Section 132,Section 153,Section 143(2),Section 142(1),Section 43(5),Section 68,Section 56(2),Section 250,Section 161,Section 166

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH: KOLKATA

Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

Per Pradip Kumar Choubey, JM:

These are the appeals preferred by the different assessees against the separate orders of Commissioner of Income Tax (Appeals)- Kolkata-21, Kolkata (hereinafter referred to as the Ld. CIT(A)] dated 07.03.2

The order continues below.

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