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This appeal by assessee is directed against the order of ld. Commissioner (Appeals)-36, Mumbai for Assessment Year 2010-11. The assessee has raised the following ground of appeal:
1. In the facts and circumstances of the case and in law the issue of notice under sec.148 is not legal as no reason for reopening the assessment for assessment year 2010-11 is recorded 2. In the fact and circumstances of the case and in law the learned Assessing Officer erred in passing the assessment order under sec. 143(3) without issuing any notice under sec. 143(2) 3. In the facts and circumstances of the case the learned Assessing Officer did not consider the data available with him such as the MTM Summary obtained by him from the NSE Mum 2018-Shri Gagandeep Singh
4. In the facts and circumstances of the case the learned AO failed to appreciate that the income/loss of F&O transactions in shares and commodities are speculative in nature and ought to have adjusted loss of F&O transactions in commodities against the alleged profit in F&O in equities. Assessment order where loss in F&O commodities is determined at (-) Rs.16,54,890/- and gains in F&O equities is determined at Rs.12,99,664/- leaving a net loss from speculation at Rs.3,55,226/-.
Brief facts of the case are that assessee is individual and is in the business of share trading. No return of income was filed by assessee for Assessment Year 2010-11. The case was reopened by Assessing Officer after receiving information from various sources on the financial activity of assessee. The Assessing Officer served notice u/s 148 to the assessee on 07.03.2014. No return in response to the notice under section 148 was filed by assessee. The Assessing Officer recorded that the notice u/s 142(1) on 04.08.2014, 02.09.2014 & 08.01.2015 was served on the assessee and that a final opportunity vide notice dated 16.03.3015 was given. The Assessing Officer further recorded that neither the assessee appeared nor filed any requisite reply. The Assessing Officer issued notice to Multi Commodity Exchange and National Stock Exchange. In response to the notice of Assessing Officer under section 133(6), Multi Commodity Exchange and National Commodity Exchange filed their reply. As per the reply of Multi Commodity Exchange, the assessee reported the following details were received :
Multi Commodity Exchange : - 2 Mum 2018-Shri Gagandeep Singh Total Sale Value Traded Rs. 10,25,52,980/- Total Purchase Value Traded Rs. 10,42,07,870/-
Loss (-) Rs. 16,54,890/- 3. Further as per reply of the National Stock Exchange the following details were reported:
National Stock Exchange: - Sale Value Rs. 18,97,048/-
Buy Value Rs. 5,97,384/-
Profit Rs. 12,99,664/- 4. The Assessing Officer also noted that the assessee has deposited cash of Rs. 1,00,000/- in PMC Bank. Since no documentary evidences or explanation was furnished the same was treated as unexplained cash credit under section 68 of the Act. The Assessing Officer also added sale value/gain earned with the transaction in National Stock Exchange of Rs. 12,99,664/- and assessed a total income at Rs. 13,99,664/-. On appeal before the ld. CIT(A), the action of Assessing Officer in reassessment as well as on additions was confirmed. The ld. CIT(A) confirmed the action of Assessing Officer by proceeding ex-parte against the assessee. Thus, further aggrieved, the assessee has filed the present appeal before us.
We have heard the submission of ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the revenue and perused the material available on record. The ld. AR of the assessee 3 Mum 2018-Shri Gagandeep Singh submits that though the assessee has raised grounds of appeal
against the validity of re-opening as well as non-issuance of notice under section 143(2). However, otherwise the assessee has good case on merit. On merit, the ld. AR of the assessee submits that the Assessing Officer while computing the income of the assessee has not adjusted the loss suffered by assessee on account of F&O transaction in share and commodities against the gain/loss in F&O Commodities. The Assessing Officer passed the order added the profit and the deposits in the bank, without giving setoff of the loss. The ld. AR further submits that no proper notice of hearing was served by ld. CIT(A).
6. On the other hand, the ld. DR for the revenue supported the order of lower authorities.
7. We have considered the submission of both the parties and perused the material available on record. We have noted that the assessment was re- opened by Assessing Officer by issuing notice under section 148. The Assessing Officer further issued notice under section 142(1) on several occasion. The Assessing Officer also issued notice under section 133(6) to National Stock exchange and Multi Commodity Exchange. The AO recorded that he has received reply from Multi Commodity Exchange and National Stock Exchange, wherein Multi Commodity Exchange reported the loss of Rs. 16,54,980/-, whereas National Stock Exchange reported the profit/gain of Rs. 12,99,664/-. The Assessing Officer determined the 4 Mum 2018-Shri Gagandeep Singh income by taking into consideration the profit reported in the transaction with National Stock Exchange, however, no set off of loss reported in the reply of Multi Commodity Exchange was set off of against the gain/positive income of the assessee. We have noted that ld. CIT(A) has not discussed the merit of the case. Therefore, considering the submission of ld. AR of the assessee, we deem it appropriate to restore the matter back to the file of Assessing Officer with the direction to set off of the loss against the profit/gain earned and earned by the assessee as reported in the reply of National Stock Exchange. Needless to say that before giving effect to the order of our direction, the Assessing Officer shall grant opportunity to the assessee of hearing.
8. Considering the fact that ld. AR of the assessee has not seriously pressed the Ground No. 1 & 2, therefore, the same was treated as not pressed.
In the result the appeal of the assessee is partly allowed.
Order pronounced in the open court on 06/08/2019.