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Facts
The assessee, engaged in multi-commodity exchange trading with a turnover of Rs. 34,59,58,110/-, did not file a regular income tax return. The Assessing Officer (AO) reopened the case under section 148, completed reassessment at Rs. 12,10,85,338/-, treating it as unexplained cash credit. The assessee claimed notices were not served due to relocation. Upon remand proceedings, the AO verified the transactions and found a loss of Rs. 6,93,098/- from speculation and other taxable income, resulting in a net taxable income of Rs. 36,625/-, below the taxable limit.
Held
The Tribunal held that the Assessing Officer's own verification and recommendation for deletion of the addition during remand proceedings indicated no infirmity in the Ld. CIT(A)'s order. The AO's action of recommending deletion and then filing an appeal against it was not appreciated. Therefore, the grounds raised by the Revenue were rejected.
Key Issues
Whether the addition made by the AO was justified given the subsequent verification and findings during remand proceedings by the Ld. CIT(A)?
Sections Cited
148, 68
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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
This appeal has been preferred by the Revenue against order dated 18.07.2019 passed by the Ld. Commissioner of Income-tax (Appeals) – 1 [in short ‘the Ld. CIT(A)’] for assessment year 2010-11, raising following grounds:
The Ld. CIT(A) has also failed to consider the fact that the assessee has not produced the books of accounts which he
was required by law to maintain and get them audited given was required by law to maintain and get them audited given was required by law to maintain and get them audited given the the fact fact that that the the turnover turnover of of the the assessee assessee was was Rs.34,59,58,110/ Rs.34,59,58,110/- 2. Briefly stated, facts of the case are Briefly stated, facts of the case are for the year under for the year under consideration, no regular return of income was filed by the consideration, no regular return of income was filed by the consideration, no regular return of income was filed by the assessee. Subsequently, assessee. Subsequently, in view of the individual transaction in view of the individual transaction statement (ITS) and ann and annual information report (AIR) (AIR), the assessee was found to be engaged in trading was found to be engaged in trading on multi commodity exchange multi commodity exchange worth Rs.34,59,58,110/ worth Rs.34,59,58,110/-. Accordingly, in view of no return of w of no return of income filed, the case of the assessee was reopened by way of issue he case of the assessee was reopened by way of issue he case of the assessee was reopened by way of issue of notice u/s 148 of of notice u/s 148 of the Income-tax Act, 1961 (in short ‘the Act’) tax Act, 1961 (in short ‘the Act’) dated 31.03.2017, which was duly served upon the assessee. which was duly served upon the assessee. which was duly served upon the assessee. Thereafter, the reassessment proceedings were commenced and Thereafter, the reassessment proceedings were commenced and Thereafter, the reassessment proceedings were commenced and statutory notices were issued but no compliance was made on the statutory notices were issued but no compliance was made on the statutory notices were issued but no compliance was made on the part of the assessee. The part of the assessee. The Assessing Officer ultimately completed the Assessing Officer ultimately completed the reassessment at a total income of Rs.12,10,85,338/- being the 35% reassessment at a total income of Rs.12,10,85,338/ reassessment at a total income of Rs.12,10,85,338/ profit component of the entire trade amount and held the same as profit component of the entire trade amount and held the same as profit component of the entire trade amount and held the same as unexplained cash credit u/s 68 of the Act. unexplained cash credit u/s 68 of the Act.
On further appeal before the Ld. CI On further appeal before the Ld. CIT(A), , the assessee submitted that various notices issued submitted that various notices issued by the AO were by the AO were not served upon the assessee as the assessee moved from Mumbai to Nagpur. upon the assessee as the assessee moved from Mumbai to Nagpur. upon the assessee as the assessee moved from Mumbai to Nagpur. In view of the additional evidences filed by the assessee, the Ld. In view of the additional evidences filed by the assessee In view of the additional evidences filed by the assessee CIT(A) called for a remand report from the Assessing Officer. In CIT(A) called for a remand report from the Assessing Officer CIT(A) called for a remand report from the Assessing Officer remand proceedings remand proceedings, the Ld. Assessing Officer examined the the Ld. Assessing Officer examined the additional evidences and accepted the transactions of the assessee as genuine. The Ld. CIT(A) in the impugned order has rep . The Ld. CIT(A) in the impugned order has rep . The Ld. CIT(A) in the impugned order has reproduced the verification which was carried out by the Assessing Officer in the verification which was carried out by the Assessing Officer in the verification which was carried out by the Assessing Officer in remand proceedings, which is extracted as under:
“6.3 The present AO has correctly carried out such verification 3 The present AO has correctly carried out such verification 3 The present AO has correctly carried out such verification and reported that and reported that- "During the year under consideration the "During the year under consideration the assessee had a loss of Rs. 6,93,098/ had a loss of Rs. 6,93,098/- from speculation loss in tion loss in trading through mul trading through multi commodity exchange. The source. of Rs. ti commodity exchange. The source. of Rs. 6,93,098/- has been verified and it is seen that as per the capital has been verified and it is seen that as per the capital has been verified and it is seen that as per the capital account of the assessee, he has sufficient creditworthiness and account of the assessee, he has sufficient creditworthiness and account of the assessee, he has sufficient creditworthiness and also the loss has been paid through his bank account." Further loss has been paid through his bank account." Further loss has been paid through his bank account." Further the AO has now confirmed that the AO has now confirmed that- "The assessee also had taxable "The assessee also had taxable income from capital gains amounting Rs. 11,772/ income from capital gains amounting Rs. 11,772/- and income and income from other sources amounting to Rs. 50,857/ from other sources amounting to Rs. 50,857/-. After deduction . After deduction under chapter V under chapter VỊ-A, the net taxable income of the assessee comes A, the net taxable income of the assessee comes to Rs. 36,625/ to Rs. 36,625/-As the taxable income, was below the taxable As the taxable income, was below the taxable limit no return of income was filed by the assessee for A.Y. 2010 limit no return of income was filed by the assessee for A.Y. 2010 limit no return of income was filed by the assessee for A.Y. 2010- 11." 6.4 The efforts take by the present A to examine and unravel the 6.4 The efforts take by the present A to examine and unravel the 6.4 The efforts take by the present A to examine and unravel the correct facts of s of s of the the the appellant's appellant's appellant's actual income/ loss actual actual income/ loss is income/ loss is is commendable. Considering her report on the subject, the commendable. Considering her report on the subject, the commendable. Considering her report on the subject, the appellant's income for AY 2010 appellant's income for AY 2010-11 is required to be assessed at 11 is required to be assessed at Rs.36,625/- only, instead of Rs. 12,10,85,338/- - which is directed to be deleted. The AO is d directed to be deleted. The AO is directed to reduce the tax irected to reduce the tax demand by giving effect to this order, immediately, as such high demand by giving effect to this order, immediately, as such high demand by giving effect to this order, immediately, as such high demand raised in the present case is adversely affecting the demand raised in the present case is adversely affecting the demand raised in the present case is adversely affecting the appellant.”
Aggrieved with the finding of the Ld. CIT(A), the Revenue is in Aggrieved with the finding of the Ld. CIT(A), the Revenue is in Aggrieved with the finding of the Ld. CIT(A), the Revenue is in appeal before the Tribuna appeal before the Tribunal by way of raising grounds as reproduced l by way of raising grounds as reproduced above.
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. In the case relevant material on record. In the case, there was there was non- representation by the assessee before the Assessing Officer, representation by the assessee before the Assessing Officer representation by the assessee before the Assessing Officer however on submission of however on submission of the relevant documents s before the Ld. CIT(A), remand report was called for CIT(A), remand report was called for from the Assessing Officer the Assessing Officer.
During remand proceedings before the AO, During remand proceedings before the AO, he verified the claim of fied the claim of the assessee and the Ld. CIT(A) accordingly deleted the addition. In the Ld. CIT(A) accordingly deleted the addition. In the Ld. CIT(A) accordingly deleted the addition. In our opinion, once the Assessing Officer himself has verified the the Assessing Officer himself has verified the the Assessing Officer himself has verified the claim of the assessee and recommended for deletion of the addition, claim of the assessee and recommended for deletion of the addition claim of the assessee and recommended for deletion of the addition we do not find any infirmity in the order of the Ld. CIT(A) in deleting we do not find any infirmity in the order of the Ld. CIT(A) in deleting we do not find any infirmity in the order of the Ld. CIT(A) in deleting the addition. The action of the Assessing Officer of recommending the addition. The action of the Assessing Officer of recommending the addition. The action of the Assessing Officer of recommending the deletion of the addition on one hand and then filing the appeal e deletion of the addition on one hand and then filing the appeal e deletion of the addition on one hand and then filing the appeal against the same cannot be appreciated, u the same cannot be appreciated, unless the Assessing nless the Assessing Officer who has filed appeal has found any mala d appeal has found any malafide error in the fide error in the remand report. No such observation has been made by the Ld. No such observation has been made by the Ld. No such observation has been made by the Ld. Departmental Representative (DR) alleging any malafide rtmental Representative (DR) alleging any malafide rtmental Representative (DR) alleging any malafide in remand report, therefore, in such in such circumstances; the Assessing Officer is essing Officer is not justified in preferring the appeal, o ferring the appeal, once he himself has verified nce he himself has verified the claim of the assessee. Accordingly, we reject the grounds raised the claim of the assessee. Accordingly, we reject the the claim of the assessee. Accordingly, we reject the by the Revenue.
In the result, the appeal of the Revenue is accordingly In the result, the appeal of the Revenue is accordingly In the result, the appeal of the Revenue is accordingly dismissed.