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Facts
The assessee's appeal pertains to AY 2008-09, involving an addition of Rs. 2,51,01,817/- for non-genuine or speculative transactions. This is the second round of litigation after the Tribunal restored the issue to the AO for verification. The AO again made the addition, which was upheld by the CIT(A).
Held
The Tribunal held that the genuineness of the transaction was not in dispute in the first round of litigation. The assessee provided purchase invoices, sales invoices, delivery challans, and bank statements. One of the directors of the purchasing party also attended and confirmed the transaction.
Key Issues
Whether the transactions were speculative, and if the assessee provided sufficient evidence to prove their genuineness, especially after the first round of litigation had established genuineness as not in dispute.
Sections Cited
143(3), 254, 234B, 234C, 43(5), 131
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI NARENDRA KUMAR BILLAIYA
O R D E R PER NARENDRA KUMAR BILLAIYA, A.M :
This appeal by the assessee is preferred against the order dt. 18-10-2024 by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [‘Ld.CIT(A)’] pertaining to AY. 2008- 09. The grievance of the assessee reads as under:
“1. The Learned Commissioner of Income-tax (Appeals) erred in agreeing with the observation and decision of the AO regarding the non-genuineness of the transactions in bullion of Rs.2,51,01,817/-, in the order dated 30.12.2016, without examining the submissions made during the course of assessment proceedings.
2. The Learned Commissioner of Income-tax (Appeals) erred in not heeding to the fact that delivery challans, invoices and bank statements establishing the genuineness of transactions in respect of gold, bullion have been overlooked and not taking cognizance of the same, without establishing the reasons thereof.
3. The Learned Commissioner of Income-tax (Appeals) erred in confirming the levying of interest u/s 234B and 234C of the Income Tax Act, 1961.
4. The Appellant craves the leave to add to, alter, amend and / or delete all / any of the foregoing grounds of appeal.”
Briefly stated facts of the case are that this is the second round of litigation as in the first round of litigation, the quarrel travelled up to the Tribunal and the Tribunal in vide order dt. 21-08-2015 has held as under:
“8. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the AO treated the entire transaction as a sham transaction whereas the First Appellate authority has confirmed the findings of the AO treating the loss as a speculative WWE loss which means that now the genuineness of the transaction is not in dispute before us as Revenue is not in appeal. 8.1 All that we have to decide is whether the impugned transaction is of speculative in nature or not? One of the tests to determine whether the transaction is done with an intention to speculate and make profit from the rate fluctuation is to see whether the assessee has sufficient funds to make the payment for purchases. If the assessee does not have money to make the payment for purchases, then the conduct of the assessee is suggestive of speculation. Undisputedly, the purchase and sales are supported by respective invoices. The transactions have also been confirmed by the respective parties. However, at the same time we find that the impugned transactions have not been verified by the AO from the respective parties which is a clear distinguishing factor from the facts of the decision relied upon by the Ld. Counsel in the case of Mobile Trading & Investment Pvt. Ltd. (supra). In that case the parties were produced before the AO as mentioned at page-8 of the order of the Tribunal. We also find that in that case the AO has issued summons u/s. 131 of the Act to the dealers from whom the assessee claimed to have purchases and sales, such investigations are not made in the present case. Therefore, in the interest of justice and fair play, we restore this issue to the file of the AO. The AO is directed to verify the impugned transactions from the respective parties by making verifications from their end as per the provisions of the law. The AO is also directed to verify whether the assessee was having sufficient funds to make the first purchase and decide the issue afresh after giving reasonable and fair opportunity of being heard to the assessee.”
Pursuant to the directions of the Tribunal, the AO framed the assessment u/s. 143(3) r.w.s. 254 of the Income Tax Act, 1961 (‘the Act’) vide order dt. 30-12-2016 and once again made an addition of Rs. 2,51,01,817/-. The assessee carried the matter before the CIT(A), but without any success.
The counsel pointed out that once the Tribunal has decided that the only quarrel is in respect of whether the impugned transaction is speculative, there is no question of not treating the transaction as ‘genuine’ as the same has attained finality in the first round of litigation. It is the say of the counsel that the assessee has produced all the purchase invoices, sales invoices and delivery challans alongwith bank statements to show that the impugned transaction is not a speculative transaction. But, the lower authorities have ignored the documentary evidences and made the addition.
Per contra, the DR strongly supported the finding of the AO. It is the say of the DR that the AO issued summons, but the summons returned unserved, therefore, the AO could not make necessary enquiries nor the assessee has produced the parties for verification.
We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that in the first round of litigation, the Tribunal has categorically held that the only dispute to be decided is whether the loss is a speculative loss and has further held that genuineness of the transaction is not in dispute.
We find that the assessee has not only furnished the names, addresses and PAN details of the sellers and the purchasers of gold bullion, but also filed confirmation of the transactions from the respective parties, bank statements were filed along with contract notes, purchase and sales invoices and delivery notes.
In our considered opinion, once the commodities transacted are delivered, it go out of the ambit of the provisions of section 43(5) of the Act, thereby proving that it is not a speculative transaction. In our considered opinion, the assessee has furnished all the supporting evidences to justify that the impugned transaction is not a speculative transaction. We also find that the AO has issued summons to Pushpak Bullion Pvt. Ltd., which is the purchase party and to Prakash Patel, Chandrakant Patel, Yogesh Patel and Jorss Bullion, the seller parties. Out of these summons, only summons to Prakash Patel and Chandrakant Patel remained unserved by post, which means that in the case of all other parties, the summons have been served. In fact one of the Directors of Pushpak Bullion Pvt. Ltd., Shri Amit Sampat attended the proceedings and confirmed the transaction.
In our considered view, the AO has all the powers to force the attendance of the parties summoned. Therefore, it would be incorrect to put the blame on the assessee.
Considering the vortex of the evidences, we are of the considered view that the assessee has successfully proved the genuineness of the transaction and there is no merit in the impugned addition, the AO is directed to delete the same. Appeal of the assessee is accordingly allowed.