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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
These two appeals by the assessee are directed against two separate orders of the Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi arising from assessment order u/s 147 r.w.s 144 and penalty order passed u/s 271(1)(c) respectively for A.Y.2010-11. In the quantum appeal the assessee has raised following grounds:
“1. The learned Income Tax Commissioner ITANo.512 & 513/Ind/2023 Vinita Raheja (A) had not considered all produced documents at appeal stage as (1) NSE profit and loss a/c (2)financial transition statement (3) NSE profit and loss future & option (4) BSE soda summery profit and loss a/c that was ground to determine Income relied upon hence, whole appeal proceeding is not accordance with law and deserve to be set-aside 2.The learned Income Tax Commissioner (A) had not collected or considered A.O report to take proper decision of appeal in his order hence, order without is incriminated materials as per law and deserve to set-aside. 3.The learned Income Tax Commissioner (A) had not confirmed notice served personally to appellant in his appeal order hence ,appeal order is not accordance with law and deserve to be set- aside.”
The assessee is an individual and did not file any return of income u/s 139 for the year years consideration. Ld. AO issued notice u/s 148 on 27.03.2016/17. Since there was no response on behalf of the assessee to the notices issued u/s 148 as well as u/s 142(1) the AO has framed assessment u/s 144 r.w. section 147 and assessed the total income of the assessee at Rs.4,38,832/- on account of unexplained income from undisclosed sources. The said addition was made by the AO on the basis of the information regarding the purchase and sale of shares by the assessee to the tune of Rs.4,38,832/-. The assessee challenged the action of the AO before the CIT(A) but could not succeed.
Before the Tribunal Ld. AR of the assessee has submitted that the assessee has carried out transactions of purchase and sale of shares and the income for the year under consideration was below the income chargeable to tax. Hence the assessee did not file any Page 2 of 9
ITANo.512 & 513/Ind/2023 Vinita Raheja return of income. He has further submitted that the AO did not have tangible material on record to show that the income assessable to tax has escaped assessment and to make the addition in question. During the physical hearing before the CIT(A) remand report was called from the AO however, while passing the impugned order the CIT(A) has not considered the remand report of the AO. He has pointed out that the assessee has produced all the relevant details and documents before the AO during remand proceeding and the AO has also collected the relevant documents by issuing notice u/s 133(6) from the broker through whom the assesse has carried out the share transactions. Thus, Ld. AR has submitted that the impugned order passed by the CIT(A) without considering remand report of the AO is not sustainable and liable to be set aside.
3.1 Ld. AR has referred to the details of the transactions of purchase and sale of shares in cash as well as derivative segment and contended that the assessee has earned profit of Rs.32,166/- on cash segment and incurred loss of Rs.21,117/- on derivative transactions. Apart from the profit and loss on the share transaction the assessee has also earned dividend income of Rs.33,962/-. He has then referred to the remand report of the AO dated 17.03.2020 and submitted that the AO after considering relevant record produced by the assessee as well as collected by the AO u/s 133(6) has also worked out profit of the assessee at Rs.32,166/- on purchase and sale of shares in cash segment and business loss of Rs.21,117/- on derivative transactions. Thus Ld. Page 3 of 9
ITANo.512 & 513/Ind/2023 Vinita Raheja AR has submitted that when the AO has given factual details of the income earned by the assessee from the transactions of purchase and sale of shares then the addition confirmed by the CIT(A) is highly arbitrary and not sustainable. Hence, he has pleaded that the income of the assessee as arrived by the AO in the remand report is less than the threshold limit of taxable income then the addition made by the AO in the assessment framed u/s 144 r.w. section1 47 without any tangible material is liable to be deleted.
On the other hand, Ld. DR has relied upon the orders of the authorities below and submitted that the assessee has failed to produce any details or evidence to explain the source of amount of Rs.4,38,832/- as involved in the share transaction.
We have considered rival submissions as well as relevant material on record. It is manifest from the assessment order that the AO has issued notice u/s 148 to assess the income of the assessee in respect of sale of share of Rs.4,38,832/-. Thus, it appears that the AO has taken the total turnover of the assessee as income for reopening of the assessment. It is pertinent to note that the sale price of the shares cannot be an income or profit of the assessee without reducing the cost of purchase of the shares. The AO has made the addition of the entire sale proceeds of Rs.4,38,832/- while framing the assessment u/s 144 r.w. section 147. The CIT(A) has confirmed the addition made by the AO and dismissed the appeal of the assessee on the ground that the AO had given sufficient opportunities to the assessee but the assessee did
ITANo.512 & 513/Ind/2023 Vinita Raheja not file any evidence. It is pertinent to note that there was an order of the CIT(A) dated 06.11.2019 calling for remand report from the AO after considering the reply submitted by the assessee. In response to the said directions of the CIT(A) the AO has prepared the remand report dated 17.03.2020. The relevant part of the remand report reads as under:
“ii) In compliance to 'Paper book' annexed with the aforesaid letter, vide letter dated 20.01.2020, the assessee was asked to submit the following documents for verification:
1. 1. Documents submitted with Hon'ble CI(A)-I, Indore in original.
2. All Bank account statements from 01.04.2009 to 31.03.2010.
3. Please furnish the name and postal address of Security brokers, with whom your share account was maintained, your id, and all D'mat account statement maintained for the year under consideration 4. Furnish segment wise statement of Purchase/Sale transactions of shares alongwith the details of gain/loss (segment wise) if any, incurred on those transactions.
5. Furnish 'Computation of income' for the year under consideration. (iii) The date was fixed on 23.01.2020. In compliance, Shri R.S. Dave (Adv.), A.R. of the assessee attended and requested for adjournment up to 27.01.2020, but no compliance was made on the given date. Therefore, again a reminder letter was issued on 31.01.2020, for furnishing required information up to 06.02.2020. In compliance, Shri R.S. Dave (Adv.), A.R. of the assessee attended the proceedings on 11.02.2020 and submitted the above required documents along with the 'Computation of income' for A.Y. 2010-11 declaring total income at Rs.33,962/- (Copy enclosed). Therefore, for the purpose of verification of information, a notice u/s 133(6) was issued to the Page 5 of 9
ITANo.512 & 513/Ind/2023 Vinita Raheja broker M/s SSJ Finance & Securities Pvt. Ltd., Mumbai on 12.02.2020 and requested to furnish the following information/documents:
1. 1. Provide details of all the category/segment in which the above assessee had transacted during F.Y. 2009-10.
2. Copy of all D'mat A/c statements from 01.04.2009 to 31.03.2010.
3. Form no. 10-DB of the transactions.
4. Registered bank account details of above assessee, as per your record. (iv) In response, M/s SSJ Finance & Securities Pvt. Ltd. furnished the required information through mail (Copy enclosed). After verification of received information/documents, following points are emerged, are as under:- 1.The assessee was engaged in the Delivery based, Speculation (Intra- Hay) and Derivative (F&O) transactions. 2.As per received chart, the assessee incurred profit of Rs.32,166/- on cash segment and business loss of Rs.21,117/- on Derivative (F&O) transactions. As per financial ledger, the assessee had made following payments to broker during F.Y. 2009-10.
Date Amount is Rs. Mode of payment 25.06.2009 13,972/- DD 14.07.2009 19,960/- Cheque 09.07.2009 19,960/- DD
ITANo.512 & 513/Ind/2023 Vinita Raheja Submitted for your kind perusal.” 5.1 Thus, it is clear that during the remand proceedings the assesse furnished requisite documents along with computation of income declaring total income of Rs.33,962/-. A copy of the said computation of income was also Annexed by the AO to the remand report. The AO also verified details furnished by the assesse as well as gathered from broker by issuing notice u/s 133(6) and after considering the details and information furnished by the broker M/s SSJ finance & Securities Pvt. Ltd. the AO come to the conclusion that the assessee was engaged in the delivery based, speculation and derivative transactions. Thus, the AO found that the assessee earned profit of Rs.32,166/- on cash segment and incurred loss of Rs.21,117/- on derivative transactions. Apart from this income the assessee also earned dividend income of Rs.33,962/- as per the computation of income. The AO has also given the details of the amount paid by the assessee to the broker. Thus, the income of the assessee from the transactions in shares as well as dividend comes to Rs.66,128/- which is below the threshold limit of taxable income. The CIT(A) has passed impugned order without considering remand report of the AO. Accordingly in view of the facts and circumstances as discussed above when the total income from the transactions of purchase and sale of shares as well as dividend is less than the threshold limit of taxable income then the addition made by the AO is not sustainable and the same is deleted.
ITANo.512 & 513/Ind/2023 Vinita Raheja 5.2 We further note that the AO in the assessment order has stated that notice u/s 148 was issued on 27.03.2017 which prima facie barred by limitation as per the provisions of section 149 of the Act. Therefore, the assessment order framed by the AO on the basis of notice issued u/s 148 beyond the limitation is otherwise not sustainable in law and liable to be quashed.
In the penalty appeal the assessee has raised following grounds of appeal:
1. The learned Income Tax Commissioner (A) had not considered all produced documents at appeal stage as against original assessment case (1) NSE profit and loss a/c (2)financial transition statement (3) NSE profit and loss future & option (4) BSE soda summery profit and loss a/c that was ground to determine Income relied upon hence, whole appeal proceeding is not accordance with law and deserve to be set- aside 2.The learned Income Tax Commissioner (A) had not collected or considered A.O report in against original assessment case to take proper decision of appeal in his order hence, order without is incriminated materials as per law and deserve to set-aside. 3.The learned Income Tax Commissioner (A) had not confirmed notice served personally to appellant in his against original assessment case appeal order hence ,appeal order is not accordance with law and deserve to be set-aside.
We have heard Ld. AR as well as Ld. DR and considered the relevant material on record. In the quantum appeal the addition made by the AO has been deleted, therefore, the penalty levied
ITANo.512 & 513/Ind/2023 Vinita Raheja against the said addition is not sustainable and the same is deleted.
In the result, both the appeals by the assesse arising the assessment order as well as penalty order are allowed.
Order pronounced in the open court on 22.04.2024.