ALAGAPPA CHETTIAR PERIYAKARUPPAN,COIMBATORE vs. ITO, COIMBATORE

आदेश / O R D E R

ITA No. 1739/Mds/2016 :- 2 -:

Through its grounds 2 & 3 assessee assails an addition of �32,33,017 and in its ground No.4, assessee assails disallowance of claim of loss �14,74,969/- incurred by it in share trading business. According to assessee, the addition/disallowance were made by the ld. Assessing Officer without proper application of mind and without giving proper opportunity for representing its case.

Facts apropos are that assessee is a dealer in iron & steel 3. had filed return of income for the impugned assessment year disclosing income of � 6,75,606/-. Ld. Assessing Officer was having information from AIR that assessee was having an account with ICICI Bank Ltd, Personal Banking Branch, Ramnagar, Coimbatore.

This account No. 615201137916 was opened by the assessee on 09.05.2010. As per ld. Assessing Officer it represented transactions reflecting share trading done by the assessee through M/s. ICICI Securities Ltd. Ld. Assessing Officer also obtained from M/s. ICICI Securities Ltd statement of accounts of the assessee, by issuing notice u/s.133(6) of the Act. Peak cash credit deposited in this account �32,33,017/-. As per ld. Assessing Officer assessee had offered the ITA No. 1739/Mds/2016 :- 3 -: said amount for assessment. Ld. Assessing Officer made an addition of �39,08,623/- and completed assessment.

Aggrieved, the assessee moved in appeal before ld. 4.

Commissioner of Income Tax (Appeals). As per assessee, the facts and circumstances of the case were not properly considered and his loss from share trading business, expenditure on brokerage, Service Tax, Securities Transactions Tax were not allowed. Contention of the assessee was that it had incurred a loss of �14,74,969/- which was required to be set off. However, ld. Commissioner of Income Tax (Appeals) was not appreciative of the above contention. According to him, assessee never made any claim on loss before ld. Assessing Officer. Ld. Commissioner of Income Tax (Appeals) noted that profit and loss account showing the loss of �14,71,969/- was filed first time before him. As per ld. Commissioner of Income Tax (Appeals) share trading turnover of the assessee as per the profit and loss account exceeded �60,00,000/-, but there was no audit u/s.44AB of the Act conducted nor a report filed. He therefore dismissed the appeal and confirmed the addition.

Now before me, ld. Authorised Representative stated that 5. peak cash even if it was to be considered for addition, was computed

ITA No. 1739/Mds/2016 :- 4 -: incorrectly. According to ld. Authorised Representative, assessee was having more than one bank account and drawings from one of the bank was not considered in working out peak credit. Further, according to him, loss in share trading business was rejected by the ld. Commissioner of Income Tax (Appeals) though it was a genuine claim.

I have considered the rival contentions and perused the 7. orders of the authorities below. First taking up, the claim of the assessee to set off of loss suffered on share trading business, I am of the opinion that assessee had never filed a profit and loss account before the ld. Assessing Officer. Assessee had never made any such claim before ld. Assessing Officer. Though assessee had shown turnover in excess of �60,00,000/- in such Profit and Loss account, neither any books of accounts were maintained or nor audit conducted as mandated u/s.44AB of the Act. Therefore, I am of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in not acceding to such claim. However, with regard to the claim of the assessee that peak credit in his account with ICICI Bank was worked out without considering withdrawal from certain other bank accounts he had, I am of the opinion that rules of justice demand a fresh

ITA No. 1739/Mds/2016 :- 5 -: consideration. I, therefore set aside the order of the ld. Assessing Officer in so far as it relates the addition of peak credit in the account of the assessee with M/s.ICICI Bank back to the file of the ld. Assessing Officer for consideration afresh in accordance with law. Assessee shall be given one more opportunity to file a cash flow statement and explain the peak cash credit. However, I sustain the order of the lower authorities in so far as it relates to disallowance of claim of loss of �14,74,969/-.

Order pronounced on Friday, the 3rd day of March , 2017, at Chennai.