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Assessee by Shri Suresh K. Kabra-CA Revenue by Ms. Anupma Singla, Sr.DR 02/03/2022 Date of hearing 02/03/2022 Date of pronouncement PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeal by the assessee are directed against the common order of ld. Commissioner of Income Tax (Appeals)-3, (hereinafter referred as “ld. CIT(A)” Surat dated 12.12.2017 for the assessment years 2010-11 & 2011- 12. In both the appeals facts are common, the assessee has raised certain common grounds of appeal s, except variation of addition on account of peak amount of investment, therefore, with the consent of parties both the appeals clubbed, heard together and decided by consolidated order. For appreciation of facts in appeal for AY 2010-11 is treated as a lead case. The assessee in appeal for AY 2010-11 in has raised the following grounds of appeal:- &169/SRT/2018 Amit Dhirajlal Akbari “1. As regards addition of Rs. 64,20,775/- 1.1 The ld. CIT(A) has erred and was not justified on the facts of the case and in law in confirming the addition of Rs. 64,20,775/- being peak amount of investment and not going by the actual profit/loss in the shares transaction
2. The appellant prays that 2.1 The addition of Rs. 64,20,775/-- may be kindly deleted. 2.2 personal hearing may be granted. 2.3 Any other relief that your honours may deem fit may be granted.
3. The appellant craves leave to amend, alter or delete any or all of the above grounds of appeals and to add any new or additional ground of appeal at the time of hearing.”
2. Brief facts of the case are that assessee has not filed return of income for the assessment year under consideration. The case of the assessee was reopened on the basis of data on ITD system in NMS module showing that the assessee is involved in share transaction and has not filed his return of income. The assessee was issued two notices before for reopening on 22.07.2013 and 28.07.2013. The assessing officer (AO) recorded that the assessee avoided the said notices. The Assessing Officer thereafter recorded reasons of reopening and issued notice under section 148 of the Act on 22.09.2014. In response to notice under section 148 of the Act no return of income was filed by assessee within time prescribed in the said notice. The Assessing Officer issued various other notices under section 142 of the Act for seeking various details. The AO also issued notice under section 133(6) to Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and National Multi Commodity Exchange (NMSX) of India and Multi Commodity Exchange (MCX) for transaction in shares. The AO recorded 2 ITA No.168 &169/SRT/2018 Amit Dhirajlal Akbari that MCX provided data on various transactions took place through, Anand Rathi Commodities Ltd’, Globe Commodities, and through Religare Commodities Pvt. Ltd. The AO further recorded that due to non-availability of any document on the part of assessee, difference of purchase and sale and maximum amount of investment were identified and the basis of such information, assessee was again issued final show cause notice dated 15.01.2016, mentioning clearly as to why peak amount of investment of Rs. 64,20,775/- should not treated as income for computation of tax. The AO recorded despite given numerators opportunity to the assessee, the assessee failed to attend and provide any evidence.Accordingly, the AO made addition of Rs. 64,20,775/- in the assessment order passed U/s 144 r.w.s. 147 of the Act dated 29.01.2016.
3. Aggrieved by the additions and reopening, the assessee filed an appeal before ld. CIT(A). Before ld. CIT(A) the assessee made his submission and furnished certain evidence in the form of additional evidence on 20.12.2016. The submission of the assessee and the contents of submission for additional evidence are in para 6 of the ld. CIT(A). The assessee in sums and substance contended that peak amount of investment is misconceived, the assessee could not represent his case before the AO, due to the situation beyond his control. In the submission with regard to peak amount of investment in &169/SRT/2018 Amit Dhirajlal Akbari ‘Anand Rathi Commodities Ltd.’ the assessee submitted that the AO made addition of peak investment of amount. The assessee invested of Rs. 1.30 lacs out of which Rs. 1.25 lacs from his own source and Rs. 5,000/- received from his father the assessee incurred a loss to the tune of Rs. 1,60,795/-and in no point of year there was peak investment of Rs. 56,25,300/-. The assessee furnished the ledger account from Anand Rathi Ltd.
4. For peak amount of investment in ‘Globe Commodities Ltd’, the assessee submits that the AO made addition of Rs. 6,58,600/- of peak amount of investment. The assessee invested only Rs. 22,000/- from his own source and suffer loss of Rs. 23,009/- and in no point of year there was a peak investment of Rs. 6,58,600/- and part peak amount of investment. For investment in ‘Religare Commodities Ltd.’ the assessee stated that the AO made addition of Rs. 1,36,875/- by considering of peak investment. The assessee stated that he invested of Rs. 10,000/- as margin money from his own source and incurred as loss to the tune of Rs. 779/- and stated that there was no peak investment at any point of time of Rs. 1,36,875/-.
5. On the submission of the assessee, the ld CIT(A) called remand report from AO. The AO furnished his remand report on 29.05.2017. The remand report was share with assessee. The assessee filed his rejoinder. The ld. CIT(A) after considering the submission of the assessee and remand report when the ITA No.168 &169/SRT/2018 Amit Dhirajlal Akbari material gathered concluded that the assessee has not any filed evidence. Therefore, there is no requirement to interfere with the action of the Assessing officer. Further, aggrieved the assessee has filed the present appeal before us.
We have heard the submissions of ld. Authorised Representative (AR) and ld. Departmental Representative (DR) for the revenue. The ld. AR of the assessee submits that the AO passed the assessment order under section 144 r.w.s. 147 of the Act. The AO made addition on account of peak investment for both the assessment years. Before ld. CIT(A), the assessee submitted that material gathered by the AO from stock exchange on the basis of which the quantification of income was made, was not provided to the assessee. The assessee repeatedly requested the AO to supply copy of material gathered at his back. In absence of any material the assessee could not make effective representation before the ld. CIT(A). The ld. AR of the assessee submits that before this Tribunal, the assessee filed an application for production of such documents on the basis of which the additions on account of alleged peak investment was made. The assessee prayed for supply of such material to the assessee, vide his application dated 07.09.2021. On the application of the assessee, the AO provided copy of transactions conducted &169/SRT/2018 Amit Dhirajlal Akbari through Anand Rathi Commodities Ltd., Globe Commodities Ltd., and Religare Commodities Ltd. for A.Ys. 2010-11 & 2011-12.
The ld. AR of the assessee submits that these evidences are furnished to the assessee for the first time and was not made available to the assessee either at the time of first appellate stage, therefore, the assessee has no opportunity to explain such entries of transactions of various commodities. The ld. AR further submits that it is settled law that no material or evidence can be used against the assessee unless the same is confronted to the assessee. The ld AR for the assessee submits that the assessee has good case on merit and would likely to succeed, if the assessee is given opportunity to the assessee. The ld AR for the assessee submits that keeping in view the principles of natural justice matter may be restore to the file of AO, with the liberty to the assessee to explain the various entity in the transaction.
On the other hand, the ld. Sr. DR for the Revenue submits that the assessee was given sufficient opportunity of hearing before the lower authorities. The assessee chooses not to appear for the reasons best known to him. There is no reference in the order of ld. CIT(A) that the assessee made demand of such material as requested before the Bench. The ld. Sr. DR submits that the assessee was given sufficient opportunity and he does not deserve any more opportunity.
ITA No.168 &169/SRT/2018 Amit Dhirajlal Akbari 9. We have considered the rival submissions both the parties and perused the orders of the lower authorities and the material available on record. We find that the AO passed the assessment order U/s 144 of the Act on 29.11.2016. The ld. CIT(A) confirmed the action of AO by taking view that addition calculated by the AO of peak investment is actually based on account of statement and that the assessee has not given any detail the same. We find that the material on the basis of which the peak investment was gathered by the AO during the assessment. Before us, the ld AR for the assessee made prayer for supply of the material gathered by the AO. The assessing officer supplied the copy of such material for the first time of filing before the Tribunal on 07.09.2021. No doubt that the assessee remained absent during the assessment proceedings and not fully cooperated and made compliance to various notices. However, keeping in view the complexity of various entries of commodities transaction, which has material bearing on the addition made by the AO and the facts that before ld CIT(A) the assessee specifically claimed that in all transaction transacted through Anand Rath Commodities Ltd, Globe Commodities Ltd and Religare Commodities ltd, the assessee made a meagre investment and that there was no such investment as added by AO, all such facts are not verified by lower authorities. Therefore, keeping in view the principles of natural justice, the &169/SRT/2018 Amit Dhirajlal Akbari issue is restored back to the file of AO. The assessee is directed to explain all the transactions qua the investments through Anand Rathi Commodities Ltd, Globe Commodities, and through Religare Commodities Pvt. Ltd. The assessee is further directed to comply all the notices of AO and to provide all necessary evidence and information without further delay and not to seek the adjournment without any valid reasons. Accordingly, the appeal of the assessee for A.Y. 2010-11is allowed for statistical purposes.
Considering the fact that the assessee parties various additions on account of beak investment for A.Y. 2011-12. Considering the fact that we have restored the appeal for A.Y. 2010-11 to the file of the AO, therefore keeping in view the principal of consistency the appeal for A.Y 2011-12 is also restored to the file of the AO with similar direction.
In the result, both the appeals of the assessee are allowed for statistical purposes. Order announced on 02 March, 2022 in the open Court and result was also place on the notice board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 02 /03/2022 /SKM* Copy to: 1. Appellant 2. Respondent 3. CIT(A) 8 ITA No.168 &169/SRT/2018 Amit Dhirajlal Akbari 4. CIT 5. DR 6. Guard File By order Sr.Pvt. Secretary, ITAT, Surat Initial Date Draft order verbally dictated by author (JM) 02/03/2022 02/03/2022 Draft placed before author 02 /03/2022 Draft proposed & placed before the second member /03/2022 Draft discussed/approved by Second Member. /03/2022 Approved Draft comes to the Sr.PS/PS 07 /03/2022 Kept for pronouncement on /03/2022 File sent to the Bench Clerk /03/2022 Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order. Draft dictation sheets are attached