AMU SHARES & SECURITIES LTD,MUMBAI vs. DCIT 4(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH “A” MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No.408 /Mum/2016 (Assessment Year- 2009-10)

Amu Shares & Securities Ltd. Deputy Commissioner of Crescent Chambers, Ground Income tax, 4(1) Vs. Floor, Homi Modi Street, Fort, Aayakar Bhavan, Mumbai-400020. Mumbai-4000 01. PAN: AAACA3778L (Appellant) ( Respondent)

Assessee by Shri B.V. Jhaveri, B.J. Vyas, : Devang Divecha & Devershi Mehta (AR) Revenue by : Sh. Rajesh Kumar Sr DR Date of hearing : 15.02.2018 Date of Pronouncement : 27.04.2018 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee under section 253 of Income Tax Act is directed against the order of Commissioner (Appeals) dated 10th November 2015 for Assessment Year 2009-10, which in turn arises from the Assessment Order passed under section 143 (3) of the Income tax Act on 16th November 2011. The assessee has raised following grounds of appeal; (1) On the facts and in the circumstances of the case and in law, honorable Commissioner of income tax (Appeals) has erred in holding that delay cannot be condoned in filing the appeal before the Commissioner of income tax (Appeals)

ITA No. 408/Mum/2016 - Amu Shares & Securities Ltd.

(2) On the facts and in the circumstances of the case and in law, the Commissioner (Appeals) erred in not deciding the issue on merits and upheld the order of assessing officer who had erred in not considering the loss on trading of shares of Rs. 8033000/-while calculating the Gross total income and determined the same as speculation loss from dealing in shares stated that explanation to section 73 of the Act without appreciating the fact that in the case of the assessee, the cross total income of the assessee was required to be computed inter alia by computing the income under the head of profit and gains of business or profession as well. Both the business income as assessed in the assessment order amounting to Rs. 5134452/-and the loss in share trading as assessed in the assessment order of Rs. 8033000/-would have to be taken into account in computing the income under the head, both being source under the same head. The assessee had also assessed to the capital gain income of Rs. 6093476/-and thereby, the assessee fell within the purview of the exception carved out in the Explanation to section 73 and that consequently, the assessee would not be deemed to be carrying on speculation business for the purpose of section 73(1) and in view of the same the case of the assessee is not covered by Explanation to section 73 as it falls within the first limb of exception to the Explanation and, therefore, the assessee’s loss of Rs.80,33,000/-should not be treated as respect of speculative loss and the same should be allowed to be set off against the business profit for the year under consideration.

business activity in buying and selling of shares of its own as well as to

provide the platform for its client being a member of Bombay Stock

Exchange (BSE) and National Stock Exchange (NSE), the assessee

company filed its return of income for Assessment Year 2009-0 on 23

September 2009 declaring total income of Rs. 38,48,450/-. The assessment was completed on 21st November 2011 under section 143(3). The assessing

officer while passing assessment order made the disallowance under

section 14A for Rs. 3,17,014/-, income from long-term capital gain

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(LTCG) at Rs. 60,93,476/- and thereby determined total income of assessee at Rs. 1,15,44,942/-. In the return of income the assessee also claimed loss on trading of shares of Rs. 80,33,000/-. The Assessing Officer while passing assessment order not passed any order on set off of such loss claimed by assessee. The assessee on the basis of legal advice, instead of filing appeal before Commissioner (Appeals), filed an application under section 154 of the Income tax Act before assessing officer, for rectification of mistake for considering the loss on trading of shares for Rs. 80,33,000/-. The application the assessee under section 154 of the Act, was dismissed by assessing officer vide its order dated 31st January 2014 holding that the contention of the assessee involved legal issue and the same cannot be considered under the category of rectification mistake. Aggrieved by the order of assessing officer, on application under section 154 of the Act, the assessee filed appeal before Commissioner (Appeals). However, during the pendency of said appeal the assessee was advised to file appeal against the original order passed under section 143(3) by assessing officer on 16th November 2011 along with the application for praying condonation of delay. The assessee withdrew his appeal on 22nd January 2015 and filed fresh appeal before Commissioner (Appeals) on 23rd March 2015. Along with the appeal the assessee filed an application for condonation of delay of 1184 days in filing appeal. The ld. Commissioner (Appeals) dismissed

ITA No. 408/Mum/2016 - Amu Shares & Securities Ltd.

the application for condonation of delay, thereby not condoned the delay.

Consequently, the appeal of the assessee was dismissed in limine being not

admitted for hearing due to delay in filing appeal. Therefore, further

aggrieved by the order of Commissioner (Appeals) the assessee has filed

present appeal before us. 3. We have heard learned Authorized Representative (AR) of the assessee

and the learned Departmental representative (DR) for the revenue and

perused the material available on record. The ld. AR of the assessee

submits that the learned Commissioner (Appeals) grossly erred in not

condoning the delay in filing appeal before him. The ld. AR for the

assessee further submits that the assessee has properly explained the delay

in filing appeal before Commissioner (Appeals). The ld. Commissioner

(Appeals) has not considered the contention of assessee sympathetically

and rejected the application for condonation of delay, in mechanical way.

The ld AR of the assessee further submits that the assessee has filed an

application for condonation of delay before the landed Commissioner

(Appeals) explaining the circumstances and the advise on the basis of

which assessee acted bonafidely. There was no intentional or deliberate

delay in filing appeal before Commissioner (Appeals). The assessee was

pursuing the remedy under bonafide legal advice. The ld. AR for the

assessee drawn our attention on the contents of assessment order, which

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does not reflect or show that the assessing officer applied as mind while

passing assessment order with regard to the loss claimed by the assessee.

The ld. AR submits that the assessee has very good case on merit and

would certainly succeed if his cases hard and decided on merit. 4. In support of his submission the landed AR of the assessee relied upon the

honorable Supreme Court in case of N. Balakrishnan V/s M.

Krishnamurthy, AIR 1998 SC-3222, the Collector Land Acquisition Vs

Mst Katiji & others (167 ITR 471 SC), Concord of India Insurance

Company Ltd Versus Smt. Nirmala Devi and others (118 ITR 507 SC) and

the decision of Tribunal in Phonixs Mills Ltd Versus ACIT in ITANo.

6240/M/2007 dated 23 March 2010, Systamatic Capital Markets Services

Private Limited V/s DCIT in ITA No. 1259/M/2012&, 2583/M/2014 dated

24 March 2017. On merit the ld AR of the assessee relied upon the

decision of jurisdictional High Court in case of CIT Vs Darshan Securities

[2012] 18 taxman.com 142 (Bombay) and CIT Vs HSBC Securities and

Capital Markets India Private Limited [2012] 23 taxman.com 377

(Bombay). 5. On the other hand the learned DR for the revenue supported the order of

lower authorities. The ld DR for the revenue submits that before the ld

Commissioner (Appeals) the assessee contended that the delay in filing the

appeal was due to the reasons that his representative, Sh. Vinod Saboo,

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CA, who was handling his case was not keeping well and ultimately died

on 09.07.2011. The ld Commissioner (Appeals) has considered the fact

that the assessment order under section 143(3) was passed on 16.11.2011,

much after the death of the representatives of the assessee. The contentions

of the assessee was not accepted by the ld. Commissioner (Appeals) as

discussed in para 5.3.5 of its order. In support of his contention the ld. DR

for the revenue relied on the decision of Tribunal in Kunal Sharma Vs ITO

in ITA No. 3297/M/2012 dated 19.04.2013. 6. We have considered the rival submissions of the ld. representatives of the

parties and have gone through the orders of the authorities below. There is

no dispute on the facts that after passing the assessment order under section

143(3), the assessee filed an application under section 154 of the Act for

seeking rectification of the order to the extent that the assessing officer has

not considered the set-off of the loss claimed by the assessee in its return of

income. The assessing officer dismissed the application of the assessee

filed under section 154 of the Act in its order dated 31.01.2014, holding

that the same involve the legal issue and cannot be considered by way of

rectification. The order of the assessing officer is non-speaking order.

Further, there is not dispute that the order dated 31.01.2014 was challenged

by the assessee before ld. Commissioner (Appeals). The ld. AR for the

assessee vehemently argued that the said appeal was withdrawn by

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assessee on the advice of ld. Commissioner (Appeals) and filed fresh

appeal with the application for condoning the delay. We have noted that

the fact is not controverted by ld. DR in his submissions. While filing fresh

appeal the assessee filed an application for condonation of delay, which is

supported by the affidavit of Sh. Arvind M Shah, Director of the assessee

company. In the affidavit the deponent has contended that after passing

the assessment order under section 143(3), the assessee was advised to file

application for rectification of mistake under section 154 of the Act. The

deponent further contended that the said advice was based on the decision

of Hon’ble Bombay High Court in case of Darshan Securities (Supra).

That the non filing the appeal to the ld. Commissioner (Appeals) was

neither intentional nor deliberate. In the affidavit Sh. Arvind M Shah also

contended that his earlier CA/ representative, Sh. Vinod Saboo who was

handling his case was not keeping well and died ultimately. It was preyed

on behalf of assessee to condone the delay of 1184days in filing the appeal

before ld. Commissioner (Appeals). The ld Commissioner (Appeals) not

accepted the explanation about condonation of delay, offered by assessee.

The ld. Commissioner (Appeals) concluded that assessee has not explained

the delay in filing appeal, holding that assessee filed application under

section 154 before the Assessing Officer on 16.03.2012, whereas the

assessment was completed on 16.11.2011 and demand was issued on the

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same date. The disallowance/addition was made by Assessing Officer on

merit. The assessee has not filed proper appeal in time in a proper manner

before appropriate jurisdiction, where appeal lied. Since, the delay in filing

appeal was not condoned, consequently, the appeal was not admitted for

hearing was dismissed in limine. 7. The Hon’ble Supreme Court in Concord of India Insurance Co. Ltd. v.

Smt. Nirmala Devi (AIR 1979 SC 1666), has held that a legal advice

tendered by a professional and the litigant acting upon it one way or the

other could be a sufficient cause to seek condonation of delay and coupled

with the other circumstances and factors for applying liberal principles and

then said delay can be condoned. Eventually, an overall view in the larger

interest of justice has to be taken. None should be deprived of adjudication

on merits unless the Court of law or the Tribunal/Appellate Authority finds

that the litigant has deliberately and intentionally delayed filing of the

appeal that he is careless, negligent and his conduct is lacking in

bonafidies. 8. We are conscious of the facts that when technicalities and substantial

justice are pitted against each other, the technicalities must be avoided.

Considering the facts of the present case we have seen that substantial right

of the assessee is an involved in the appeals. As we have noted earlier that

the Assessing Officer passed the non-speaking order on the application and

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the appeal against the said order was withdrawn by assessee. In our view,

the assessee was pursuing remedy under bonafide belief and legal advice.

We are refraining ourselves for giving any finding, whether the application

of the assessee under section 154 for seeking rectification of set off of loss

was correct or not. The fact is that the assessee was not sitting idle rather

pursuing the remedy as per the legal advice. In our view, the delay in filing

appeal, in peculiarity of the facts of the case deserves to be condoned. 9. The decision in case of Kunal Surana (supra) relied by ld. DR for the

Revenue is not helpful to him. In the said case, the assessee has not

explained the delay in filing appeal. The assessee contended that due to

visit outside Mumbai on urgent work, the appeal paper was given to

Assistant, who kept the paper in his drawer and failed to take necessary

action in the matter and/or not informed about the submission of appeal.

However, in the present case, the assessee has categorically contended that

they were pursuing the remedy under legal advice and on bonafide belief.

Considering the fact that substantial right of the assessee are involved

which require consideration and examination on merit, we deem it

appropriate to condone the delay in filing appeal in quantum assessment

before learned Commissioner (Appeals) and set aside the impugned order

dated 23.03.2015 and restored back the appeal to the file of ld. CIT(A) to

decide the issue of set off of loss claimed by assessee, on merit in

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accordance with law. Needless to say that ld CIT(A) shall afford sufficient

and adequate opportunity to the assessee before passing the order on merit.

In the result the appeal of assessee is allowed for statistical purpose.

Order pronounced in the open court on 27th day of April 2018.

Sd/- Sd/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 27/04/2018 S.K.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai Guard file.�ािपत�ितC 6. BY ORDER (Asstt.Registrar) ITAT, Mumbai