INCOME TAX OFFICER, WD-3(1), KOLKATA, KOLKATA vs. ARYANSH FORGING PRIVATE LIMITED, KOLKATA

It appears from the report of the registry that the appeal has been filed after a delay of 94 days. The Department has filed condonation petition. On perusal of the condonation petition, the reason for delay in filing the appeal is genuine and bonafide. The Ld. A.R did not raise any objection in condoning the delay. Keeping in view, the Assessment Year: 2013-14 Aryansh Forging Pvt. Ltd. condonation petition as well as judicial pronouncement that the case should be decided on merit not on technical issue. The delay is hereby condoned.

Brief facts of the case of the assessee are that the assessee M/s Aryansh Forging Pvt. Ltd. filed original return of income declaring total income at Rs. 3,36,970/-. The case of the assessee was reopened, notice u/s 148 was issued. In response to this notice, the assessee did not file return of income for the assessment year under consideration, further notice u/s 142(1) were issued wherein the assessee was requested to submit supporting documents however no submission was made. The AO issued show cause notice in corroborating the draft assessment order in which transaction amount to Rs. 29,68,00,718/- have been disallowed and added to the total income of the assessee and requested to submit the reply. In response to the same, the assessee filed his submission and he has filed return under protest on 13.09.2021. The AO held that there was no valid return and after perusal of the submission furnished by the assessee held that trading transaction on USE currency amounting to Rs. 29,65,00,718/- during FY 2012-13 remained unexplained u/s 69A of the Act and assessed the total income at Rs. 29,68,37,690/-.

The said order has been challenged by the assessee before the Ld. CIT(A) wherein the Ld. CIT(A) has allowed the appeal of assessee by holding that Rs. 29,65,00,718/- is the total of the loss traded by the assessee and not his loss and actual loss is only Rs. 11,92,144.02/-.

The ld. Counsel appeared on behalf of the department have challenged the impugned order thereby submitting that the Ld. CIT(A) did wrong in deleting the addition made by A.O, as the assessee did not furnish any substantial documentary evidences in this regard and nor filed any justification of the loss of US currency deliberating amount of Rs. 29,65,00,718/-.

Contrary to that the Ld. A.R supports the impugned order thereby submitting that there is no illegality in the impugned order as the Ld. CIT(A) after considering the submission of the assessee, documentary evidences and the settled law has held that the actual loss of the assessee was Rs. 11,92,144.02/- and the assessee has filed party broker ledger, contract notes and relevant bank statement in support of the transaction. The Ld. Counsel further submits that contract notes clearly established that there amount of Rs. 29,65,000/- was actually trade value and not the loss amount as allowed by the AO. The Ld. Counsel further challenges the reason stated in the reopening of the cases and submitted that going over the above reason, it is clearly seen that it has been mentioned that the total trade value in the present case was Rs. 29,65,00,718/-. However, the figures of loss have not been mentioned in the above reason. The Ld. Counsel further submits that the AO has mislead the reasons recorded in the present case and making huge addition merely on the basis of wrong interpretation. The Ld. Counsel further submits that the assessee company had provided the audited accounts, in which it has clearly been depicted that the assessee company has not claimed the loss of Rs. 29,65,00,718/- in the profit and loss account.

Upon hearing the submission of the counsel of the respective parties, we have perused the case of the assessee and the order of Ld. CIT(A). Looking over the broker ledger of the assessee, we find that Purchase for us Sold for us The total trade of ledger no 1 is Rs 31499713/- Rs 264478696/- The total trade of ledger no 2 is Rs 31344034/- Rs 265819807/-

We are not aware that as to how the Ld. AO has calculated the figure of Rs.29,65,00,718/- But as per Ledger of the broker, the total amount of currency futures purchased for us is Rs 29, 59 ,78,409/-( lot total) and total amount of currency sold for US was Rs 29, 71 ,63,841/. (Lot total) As per above transaction, the net loss of the Assessment Year: 2013-14 Aryansh Forging Pvt. Ltd. Loss in USE Currency derivatives on 14.03.2013 Rs. 13,46,943.70 Profit in in USE Currency derivatives on 26.03.2013 Rs. 1,54,799.68 Net Loss in USE Currency derivatives Rs. 11,92,144.02 As seen from the above calculation, the loss incurred as per contract notes and broker ledger is Rs. 11,92,144.02 and not Rs. 29,65,00,718/- as alleged by the Ld. A.Ο. Therefore, the Ld. AO has erred in treating the amount of Rs. 29,65 ,00,718/- as loss of the assessee. The said amount is nothing but the total of each lot traded and the same is not required to be recorded in the books of accounts. However, the assessee is required to record the difference of favorable and unfavorable trades i.e. net profit or net loss i.e. Rs.11,92,144.02 (in the present case) as detailed above. In support of our contention, we are enclosing the guidelines given by the Institute of chartered accounts of India. The has enclosed the guidelines given by Institute of Chartered Accounts of India and submitted thus:

The assessee has further submitted that copies of contract notes are also enclosed evidencing the traded entered into by the appellant. From the enclosed contract notes we find that the appellant had traded in the future of currencies. The net loss of the assessee is computed as under :-

Going over the facts of the case as well as the order of Ld. CIT(A), we do not find any infirmity in the assessment order. The Ld. CIT(A) in its order not only discussed the submission that appreciated the same and thereby allowed the appeal of the assessee. We do not find any infirmity in the impugned order. Accordingly, the appeal of the revenue is hereby dismissed.