Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE
PER DUVVURU RL REDDY, Judicial Member :
This appeal filed by the assessee is against the order of the Ld. Addl/JCIT(A)-4, Delhi in DIN & Order No. ITBA/APL/S/250/2023-24/1059371425(1), dated 04/01/2024 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 [“the Act”] for the AY 2015-16.
2 2. At the outset, it is noticed that there is a delay of 09 days in filing this appeal before the Tribunal. With respect to belated filing of the appeal, the assessee explained before the Tribunal that due to change in the assessee’s Counsel, the assessee could not file the appeal before the Tribunal within the stipulated time limit. On perusal of the submissions made by the assessee, I find that the assessee was prevented by a reasonable and sufficient cause to file the appeal within the prescribed time limit. Therefore, I hereby condone the delay of 09 days in filing the appeal of the assessee before the Tribunal and proceed to adjudicate the appeal on merits.
Briefly stated the facts of the case are that the assessee is an individual deriving income from salary. For the AY 2015-16, the assessee e-filed his return of income on 24/02/2016 declaring an income of Rs. 9,43,810/-. The case was selected for limited scrutiny under CASS with a reason of salary income mismatch and business in large value sale of futures (derivatives). In response to the notices issued U/s. 143(2) and 142(1) of the Act, the assessee’s representative appeared from time to time and submitted the information called for. During the assessment proceedings, the Ld. AO observed that as per the 3 information available with the Department, the assessee has made derivative (futures) transactions on a large scale for the year under consideration and in the computation, no income from the business has been admitted by the assessee. Accordingly, the Ld. AO asked the assessee to explain as to why no income from derivative transactions has been admitted and in response the assessee submitted that even though there were transactions, the assessee suffered huge losses in the derivative transactions and in support of his claim the assessee also filed a statement of transactions done by him. The assessee further submitted that due to oversight the loss suffered by the assessee was not shown in the computation of total income filed along with the return of income. However, as per the statement filed by the assessee, the Ld. AO observed that with respect to the derivative transactions, the assessee earned profit to the extent of Rs. 15,75,352/- but the assessee requested the Ld. AO to set off the profit against the loss incurred by the assessee to the extent of Rs. 19,05,385/-. The Ld. AO also observed that assessee did not produce any books of account and while filing the return of income no such loss was claimed by the assessee. The Ld. AO did not consider the submissions of the assessee with regard to the loss claimed by the assessee and observed that the assessee’s claim cannot be 4 allowed to be forwarded as it was a belated return. The Ld. AO also observed that with regard to the set off income against loss derived by the assessee is also not allowed as the assessee has failed to declare the same in the return of income. Thus, the Ld. AO added the amount of Rs. 15,75,352/- as undisclosed income of the assessee and made addition and determined the assessed income of the assessee at Rs. 25,19,162/- and passed the assessment order dated 30/11/2017. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A)-NFAC.
4. On appeal, since there was no response from the assessee with respect to the hearing notices issued and in the absence of any representation on behalf of the assessee, the Ld. Addl/JCIT(A)-NFAC passed the order ex-parte and dismissed the assessee’s appeal by confirming the addition made by the Ld. AO. Aggrieved by the order of the Ld. Addl/JCIT (A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal:
“1. The order of the Ld. Addl. CIT(A) is not correct either on facts or in law and in both. 2. The order of the Ld. Addl. CIT(A) is factually incorrect in stating that no evidences were filed an the order was passed without proper appreciation of facts and submissions filed before the Commissioner of Income Tax (Appeals), Vijayawada and is 5 against the principles of natural justice, which forms part of appeal record.
3. The Ld. First Appellate Authority is not justified in sustaining the addition made in the Assessment order dated 30/11/2017 of unearned profit of Rs. 15,75,352/- as income from shares delivery, without appreciating the fact that the appellant had done trading in derivatives only and never undertook any shares delivery.
The Ld. First Appellate Authority is not justified in not appreciating the fact that the profit / loss in derivative transactions has to be computed under the head income from business, in totality (as a whole) and not in isolation. There is no segregation into speculative derivatives and short term (non- speculative) derivatives.
The Ld. First Appellate Authority is not justified in appreciating the fact that the Assessing Officer has made addition of unearned profit of Rs. 15,75,352/- instead of the actual loss of Rs. 19,05,385/- from derivative trading, without any valid basis of rejection of such claim of losses.
6. The Ld. First Appellate Authority failed to appreciating the fact that the appellant had done trading only in derivatives, which resulted in losses of Rs. 19,05,385/- and there are no shares delivery transactions at all.
7. The Ld. First Appellate Authority has failed to appreciate the fact that the Assessing Officer erred in disallowing the claim of losses in derivatives for the reasons not stipulated in the income tax Act ie., there was no claim of loss in the income tax return and the return was filed belatedly.
8. The appellant craves leave to add, amend or alter any of the grounds at the time of the hearing of the appeal.”
5. At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted before us that the Ld. Addl. CIT (A)-NFAC has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld Addl. JCIT (A)-NFAC in order to provide one more opportunity to the assessee of being heard.
Ld. Departmental Representative [“Ld. DR”], on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the 6 given dates of hearing, neither the assessee nor his Representative has responded to the notices issued nor filed any details / submissions as called for by the Ld. Addl./JCIT (A)-NFAC. It was further submitted that, under these circumstances, the Ld. Addl/JCIT (A)-NFAC had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded that the order passed by the Ld. Addl/JCIT (A)-NFAC does not call for any interference.
I have heard the both the sides and carefully perused the materials available on record. On examining the facts of the case, I find that the Ld. Addl/JCIT (A)-NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the Addl/JCIT (A)-NFAC on the dates of hearing with regard to the details / submissions as called for by the Ld. Addl/JCIT (A)-NFAC. Therefore, the Ld. Addl/JCIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed appeal in-limine. In this situation, considering the issues involved in the appeal, I am of the considered view that the Ld. Addl/JCIT (A)-NFAC ought to have decided the case on merits instead of dismissing the appeal in-limine. However, considering the prayer of the Ld. AR, and in the interest of justice as well as strictly following the principles of natural justice, I hereby remit the matter back to the file of Ld. Addl/JCIT (A)-NFAC in order to consider the 7 appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. At the same breath, I also hereby caution the assessee to promptly co-operate before the Ld. Addl/JCIT (A)-NFAC in the proceedings failing which the Ld. Addl/JCIT (A)-NFAC shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.
Pronounced in the open Court on 30th September, 2024.