INCOME TAX OFFICER, WARD-1, ICHALKARANJI, ICHALKARANJI vs. SACHIN SAMBHAJI THOMBARE, HATKANANGALE
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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
PER SATBEER SINGH GODARA, J.M. :
This Revenue’s appeal, for assessment year 2010-
11, arises against the National Faceless Appeal Centre [in
short the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/
250/2023-24/1059051241(1), dated 26.12.2023, involving
proceedings u/s. 143(3) r.w.s.147 of the Income Tax Act, 1961
(in short “the Act”).
Heard both the parties. Case file perused.
This Revenue’s appeal pleads the following
substantive grounds :
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“On the facts and the circumstances of the case and in
law, the Ld.CIT(A) erred in deleting the addition of
Rs.49,20,87,960/- on account of commodity/share
transaction without appreciating the fact that the assessee
has accepted that all transactions were done through his
own bank account by cheques.
On the facts and the circumstances of the case and in law,
the Ld.CIT(A) erred in appreciating the fact that the
assessee himself has admitted that he has done the
transactions by depositing the cash in savings bank
account maintained by him and failed to prove the sources
of investment in commodity/share transaction of
Rs.49,20,87,960/-.
On the facts and the circumstances of the case and in law,
the Ld.CIT(A) erred in appreciating the fact that where
there is no requirement of maintaining the books of
accounts, the bank account statement can be considered
as the basis for making the addition u/s.68 of the I.T. Act.
On the facts and the circumstances of the case and in law,
the Ld.CIT(A) erred in considering the fact that in Form
no.35, the assessee has answered 'No' in the section
'Statement of facts, Grounds of Appeal and additional
evidence' column no.12 i.e. 'Whether any documentary
evidence other than evidence submitted during the course
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of proceedings before the Income Tax Authority has been
filed in terms of Rule 46A.
On the facts and the circumstances of the case and in law,
the Ld.CIT(A) erred in not recording the reasons for
admitting the additional evidence submitted by the
assessee which is the preliminary requirement as per rule
46A(2) of the I.T. Act.
On the facts and the circumstances of the case and in law,
the Ld.CIT(A) erred in not giving reasonable opportunity to
the Assessing Officer as per Rule 46A of the Income Tax
Act to examine the evidence or document produced by the
assessee and completed the appellate proceedings. 7. On the facts and the circumstances of the case and in law,
the Ld.CIT(A) erred in passing order on 26/12/2023
without waiting for the submission of remand report called
from the AO by 29/12/2023.
The appellant craves leave to add, alter, amend, modify
any of the grounds or raise any other grounds at the time
of proceedings before the ITAT, which may be granted.”
It emerges at the outset during the course of
hearing that the learned CIT(A)-NFAC has reversed the
Assessing Officer’s action treating the assessee’s transactions
in commodity trading of Rs.49,20,87,960/- as “bogus”
resulting in alleged huge loss(es); vide following lower appellate
discussion :
4 ITA.No.186/PUN./2024
“5. Appellant filed submissions on different dates and
filed demat statement issued by broker J. K. Enterprise,
Kolhapur, which shows loss of Rs. 23,63,995/- as claimed
by assessee. This also shows other expenses claimed by
appellant as under:
Remand report was called for by CIT (Appeals)
vide letter dated 11.9.2018 but no report is on record.
The above submissions of appellant means he
admitted that he did some of the transactions and some
others did remaining transactions. But he has not
furnished details of such other persons. Consequently, his
disowning some of the transactions and passing the same
to others is not acceptable for want of evidence. But
nevertheless, entire transactions cannot be income. What
is chargeable to tax under the Act is stipulated in section 5
of the Act which says that it is the income received or
arising or accruing is chargeable to tax. Now, it is common
knowledge that in commodity or share trading or, for that
matter, any trade, if total transaction is Rs.
5 ITA.No.186/PUN./2024
49,20,87,960/-, itself cannot be the profit out of such
transactions because, firstly, there will be purchase cost
and, secondly, there will be other direct and indirect costs.
Assessing Officer (AO) has not even deducted purchase
cost. It would mean that assessee sold the
commodities/shares without buying at the first place. This
is an impossible proposition. Therefore, AO's action of
addition of Rs.49.20,87,960/- cannot be sustained.
Accordingly, the same is deleted.
Next issue is profit or income generated out of such
transactions. From the statement of accounts issued by
the broker, it is seen that there was actually loss.
Therefore, nothing is there to be added on this account.
Thirdly, another issue comes to the fore, viz., whether
the capital involved in these transactions is liable to be
added? In a series of deposits in a bank account, capital
or seed money is rolled over and over giving rise to total
turnover. So, sum of all transactions is not the income
involved and, hence, from this viewpoint also AO's making
addition of whole amount cannot be sustained. On this
issue, AO has not mentioned anything. The relevant bank
statement is also not brought into records. Hence, it is not
known what is the peak credit. It is also not known
whether, for the purpose of section 68 of the Act, whether
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any amount was recorded in books of accounts, what was
the nature and source of such sums, whether such
explanation was satisfactory or not. In absence of these,
no addition can be made on this account also.
In the result, the appeal is allowed.”
It is, therefore, clear that the assessee had filed his
detailed submissions in the course of the lower appellate
proceedings only. Learned CIT(A)-NFAC had admittedly sought
for a remand report on 11.09.2018 and thereafter, he has
deleted the impugned addition inter alia on the ground that no
such remand came from the field authorities. We put a specific
question to the assessee during the course of hearing as to
where is the CIT(A)-NFAC’s detailed discussion in compliance
to sec.250(6) of the Act requiring him to frame points of
determination followed by a detailed adjudication thereupon.
No satisfactory reply has come from the assessee’s side
through his learned counsel. We are of the considered view in
this factual backdrop that merely because there is no remand
report came from the Assessing Officer; learned CIT(A)-NFAC
has erred in law and on facts in deleting the impugned
addition made in assessee’s hands during the course of
assessment by above extracted “cryptic” findings. We
accordingly deem it appropriate to restore the Revenue’s
instant sole substantive ground back to the Assessing Officer
7 ITA.No.186/PUN./2024
for his afresh appropriate adjudication as per law, with a
liberty to the assessee to plead and prove all the relevant facts
within three effective opportunities of hearing at his own risk
and responsibility only. Ordered accordingly.
This Revenue’s appeal is allowed for statistical
puropses in above terms.
Order pronounced in the open Court on 28.08.2024.
Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune, Dated 28th August, 2024
VBP/-
Copy to
The appellant 2. The respondent 3. The Pr. CIT, Pune concerned 4. D.R. ITAT, “B” Bench, Pune. 5. Guard File.
//By Order//
//True Copy //
Sr. Private Secretary, ITAT, Pune Benches, Pune.
