PRINCIPAL COMMISSIONER OF INCOME TAX - 5 vs. KAMLESH JAYANTILAL JHAVERI

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TAXAP/464/2018HC GujaratGJHC24011185201805 May 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the entire issue was factual in nature and no substantial question of law arose for consideration. Consequently, the Tax Appeal filed by the Revenue was dismissed. The reasoning for this decision was that the Tribunal had already examined the factual matrix, including the banking channels, confirmations, recorded statements of parties, and maintenance of books of accounts, and had found the transactions to be genuine. The Tribunal's observation that the AO had selectively considered only loss-making transactions while ignoring profitable ones further supported the deletion of the addition. The principle derived is that if an appeal raises only factual disputes that have been adequately addressed by the lower appellate authority, and no demonstrable error of law is apparent, the High Court will not interfere.

What were the facts?

The Revenue is in appeal against the Income Tax Appellate Tribunal's (ITAT) order dated January 25, 2017. The ITAT had deleted an addition of Rs. 77,95,670 made by the Assessing Officer (AO). The AO had held that the assessee, Kamlesh Jayantilal Jhaveri, had projected a contrived loss, which was self-generated and not incidental to his business. The ITAT's decision was based on its observation that all transactions were conducted through banking channels, confirmations were received from transacting parties, their statements were recorded, and they maintained regular books of accounts. The ITAT also noted that the AO selectively considered only loss-making transactions while ignoring profitable ones.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the assessee was entitled to a loss of Rs. 77,95,670, which was found to be self-generated and not incidental to the business of the assessee? (Question of law or mixed law and fact, concerning the allowability of business loss). Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's reasoning suggests that the assessee likely argued that the transactions were genuine, supported by documentary evidence and banking channels, and that the AO's selective approach was flawed. Revenue's Contention: The Revenue argued that the loss of Rs. 77,95,670 was self-generated and not incidental to the assessee's business, implying it should not be allowed as a deduction.

AI-generated summary — verify with the full judgment below

C/TAXAP/464/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 464 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX - 5 Versus KAMLESH JAYANTILAL JHAVERI ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 05/05/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The Revenue is in appeal against the judgment of the Tribunal dated 25.01.2017 raising the following substantial question of law for our consideration; Whether on the facts and in the circumstances of the case, the assessee was entitled to loss of Rs.77,95,670/, which was found self generated and also was not incidental to the business of the assessee ? 2. The Tribunal, while deleting the addition of a sum of Rs.77.95 Lakhs (rounded off) made by the Assessing Officer holding that the assessee had Page 1 of 2

C/TAXAP/464/2018 ORDER projected a contrived loss, observed that all the transactions had taken place through banking channels, confirmations were received from the transacting parties and their statements were also recorded. These entities were also maintaining

their

regular

books.

More importantly, the Tribunal recorded that while analyzing the transactions, the Assessing Officer took into account only few transactions where the assessee had suffered loss, ignoring those where the assessee had gained. 3. The entire issue is factual in nature. No question of law arises. The Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) PRAVIN KARUNAN Page 2 of 2

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