B. Seenaiah & Co., (Projects) Ltd, Hyderabad v. Addl. CIT, Range-1, Hyderabad

ITA 1509/HYD/2011 | 2006-2007
Pronouncement Date: 28-09-2011 | Result: Allowed

Appeal Details

RSA Number 150922514 RSA 2011
Assessee PAN ACIPR2957H
Bench Hyderabad
Appeal Number ITA 1509/HYD/2011
Duration Of Justice 1 month(s) 6 day(s)
Appellant B. Seenaiah & Co., (Projects) Ltd, Hyderabad
Respondent Addl. CIT, Range-1, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 28-09-2011
Assessment Year 2006-2007
Appeal Filed On 22-08-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH HYDERABAD BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER AND SMT. ASHA VIJAYA RAGHAVAN JUDICIAL MEMBER ITA NO.1095/HYD/2011 ASSESSMENT YEAR 2006-07 THE ITO WARD NO.8(1) HYDERABAD VS SHRI R. VENKATESWARA RAO HYDERABAD. (PANACIPR 2957 H) APPELLANT RESPONDENT APPELLANT BY : SHRI T. DIWAKAR PRASAD RESPONDENT BY : SHRI A.V. RAGHU RAM DATE OF HEARING : 15.9.2011 DATE OF PRONOUNCEMENT : ORDER PER CHANDRA POOJARI A.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) GUNTUR DATE D 12.4.2011 AND PERTAINS TO THE ASSESSMENT YEAR 2006- 07. 2. THE FIRST GROUND RAISED BY THE REVENUE IN ITS APPEAL IS THAT THE CIT(A) ERRED IN RELYING ON THE REMAND REPO RT WHICH IGNORED THE BASIC EVIDENCE OF THE 3CD REPORT/FORM N O.3CB SUBMITTED BY THE ASSESSEE ALONG WITH THE RETURN WHE REIN THE CHARTERED ACCOUNTANT HAD CERTIFIED THAT HE HAD SEEN THE P&L ACCOUNT AND BALANCE SHEET OF THE ASSESSEE WHICH WERE REPORTEDLY IN AGREEMENT WITH THE BOOKS. HOWEV ER THE ASSESSEE NEITHER ENCLOSED P&L ACCOUNT AND BALANCE S HEET ALONG WITH THE RETURN NOR SUBMITTED THE SAME TO THE ASSESSING OFFICER OR CIT(A) AT ANY STAGE. ITA NO.1095/HYD/2011 SHRI R. VENKATESWARA RAO HYDERABAD 2 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE DERIVES INCOME FROM HOUSE PROPERTY AND OTHER SOURCES FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 31.10.2006 ADMITTING TOTAL INCOME AT RS.16 64 450/- WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER HA S ESTIMATED THE BUSINESS INCOME OF THE ASSESSEE FROM THE TRANSACTIONS IN UNITS OPTIONS IN SECURITIES AND FU TURES @ 1% ON THE TOTAL TURNOVER OF RS.71 54 63 715/- WHICH WORKS OUT TO RS.71 54 637/-. 4. AT THE TIME OF ASSESSMENT PROCEEDINGS DUE TO CONSTRAINT OF TIME THE ASSESSEE COULD NOT FURNISH DETAILS OF PROFIT/LOSS FROM THE TRADING IN SHARES/DERIVATIVES RESULTING IN THE ACIT CIRCLE-5 ESTIMATING A PROFIT OF 1% ON THE TOTAL VOLUME OF TRADING OF RS.71 54 63 715/-. THE ASSESS EE OBTAINED THE DETAILS OF TRADING ACTIVITY WHICH ARE AS FOLLOWS: DESCRIPTION PURCHASE VALUE (IN RS.) SALE VALUE (IN RS.) PROFIT/LOSS (IN RS.) DERIVATE CUMULATIVE 54 71 34 036 54 60 63 685 10 70 351 CASH CUMULATIVE 17 56 52 907 17 48 88 820 4 10 563 4.1. FROM THE AFORESAID DETAILS IT CAN BE SEEN TH AT THE ASSESSEE IN FACT SUFFERED A LOSS OF RS.18 34 438/- IN THE TRADING IN SHARES/DERIVATIVES DURING THE FINANCIAL YEAR 2005-06 RELEVANT TO THE ASSESSMENT YEAR 2006-07 A S AGAINST THE PROFIT OF RS.71 54 637/- ESTIMATED BY T HE ASSESSING OFFICER. THE LEARNED COUNSEL FOR THE ASSE SSEE FURNISHED DETAIL OF STATEMENTS M/S UNICON SECURITIE S PVT. LTD. WHO WAS THE BROKER FOR THE ASSESSEE WHEREIN SC RIP WISE DETAILS OF PROFIT/LOSS HAVE BEEN FURNISHED AND REQU ESTED TO ITA NO.1095/HYD/2011 SHRI R. VENKATESWARA RAO HYDERABAD 3 ADMIT THE SAME AS ADDITIONAL EVIDENCE UNDER RULE 46 A OF THE IT RULES 1961 AND RENDER JUSTICE TO THE ASSESS EE. THERE WAS SUFFICIENT CAUSE ON THE PART OF THE ASSES SEE WHICH PREVENTED HIM TO PRODUCE THIS EVIDENCE DURING THE ASSESSMENT PROCEEDINGS. 4.2. ON ADDITIONAL EVIDENCE FILED BY THE LEARNED C OUNSEL FOR THE ASSESSEE A REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER VIDE LETTER DATED 4.3.2010 HAS SUBMITTED HIS REPORT ALONG WITH EXPLANATION OF THE ASSESSEE. THE RELEVANT PORTION OF THE EXPLANATION SUBMITTED B Y THE ASSESSEE FROM THE ASSESSING OFFICER VIDE HIS LETTE R DATED 1.3.2010 IS EXTRACTED AS UNDER: I SUBMIT THAT I AM NOT A REGULAR PLAYER IN THE STO CK MARKET AND ACTING ON THE ADVICE OF MY ERSTWHILE AUDITOR I PAID SOME AMOUNT DURING THE PREVIOUS YEA R RELEVANT ASSESSMENT YEAR 2006-07 TO THE STOCK BROKE R WHO ASSURED PROFIT ON MY INVESTMENT UNDER THE PORTFOLIO MANAGEMENT SCHEME. I WAS NOT EVEN AWARE OF THE TRANSACTIONS BEING UNDERTAKEN BY MY BROKER I N THE STOCK MARKET. UNFORTUNATELY DUE TO SUDDEN FAL L IN THE STOCK MARKET I MADE SHORT-TERM CAPITAL GAINS O F RS.62 600/- ONLY FROM THE SHARE MARKET TRANSACTIONS INVOLVING ACTUAL DELIVERY OF SCRIPS BOTH IN NSE AND BSE WHICH WAS OFFERED BY ME AS INCOME U/S 111A OF THE INCOME TAX ACT 1961 IN THE RETURN OF INCOME FOR TH E ASSESSMENT YEAR 2006-07. IT MAY BE NOTED HERE THAT MY ERSTWHILE AUDITOR INADVERTENTLY CLAIMED SET OFF OF STT PAID IN RESPECT OF THESE TRANSACTIONS AGAINST T HE TAX PAYABLE BY ME U/S 111A OF THE ACT. NOW I HAVE COME TO KNOW THAT SUCH SET OFF IS AVAILABLE U/S 88E OF ITA NO.1095/HYD/2011 SHRI R. VENKATESWARA RAO HYDERABAD 4 THE ACT ONLY WHERE THE SAID PROFIT IS OFFERED AS IN COME UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS OR PROFESSION. HOWEVER IN RESPECT OF TRANSACTIONS UNDERTAKEN BY MY BROKER IN FUTURE AND OPTIONS I INCURRED SUBSTANTIAL LOSS OF RS.18 34 438/- AND SIN CE THIS LOSS IS IN THE NATURE OF LOSS FROM SPECULATIVE TRANSACTIONS WHICH CANNOT BE SET OFF AGAINST INCOM E UNDER OTHER HEADS MY ERSTWHILE AUDITOR DECIDED NOT TO DISCLOSE THE SAME IN THE RETURN OF INCOME THEREBY DENYING ME THE BENEFIT OF CARRYING FORWARD THE SAME TO SUBSEQUENT ASSESSMENT YEARS FOR SET OFF AGAINST SPECULATIVE GAINS IF ANY IN THOSE YEARS. I HAVE SINCE OBTAINED A STATEMENT FROM SOVEREIGN SECURITIES PRIVATE LIMITED WHO IS MY BROKER WHEREIN SCRIP WISE DETAILS OF TRANSACTIONS UNDERTAKEN BY TH EM ON MY BEHALF IN RESPECT OF FUTURE AND OPTIONS IN SHARES ARE FURNISHED TOGETHER WITH PROFIT LOSS MADE IN EACH TRANSACTION. I AM NOW FURNISHING CONTRACT NOT ES FROM THE BROKER IN SUPPORT OF THESE TRANSACTIONS AS WELL AS A COPY OF MY DE-MAT ACCOUNT FOR THE FINANCIAL YE AR 2005-06 FOR YOUR KIND PERUSAL AND IN ORDER TO ENABL E YOU TO CROSS VERIFY THE SAME WITH THE STATEMENT OF SHARE TRANSACTIONS FURNISHED BY ME BEFORE THE CIT(A ) IN THE APPEAL PROCEEDINGS. 5. THE CIT(A) CONSIDERED THE SUBMISSION OF THE ASS ESSEE AND CALLED FOR THE REMAND REPORT DATED 4.3.2010 WHE REIN THE ASSESSEE STATED AS FOLLOWS: 5.1. SHRI V. SRINATH FCA THE LEARNED COUNSEL FOR THE ASSESSEE APPEARED ON 3.3.2010 AND PRODUCED THE CON TRACT ITA NO.1095/HYD/2011 SHRI R. VENKATESWARA RAO HYDERABAD 5 NOTES ISSUED BY M/S SOVEREIGN NV SECURITIES P LTD. (UNICON INVESTMENT SOLUTIONS) FOR THE SHARE TRANSACTIONS. THE ASSESSEE ALSO FILED A LETTER STATING THAT HE HAS NO T A REGULAR PLAYER IN THE STOCK MARKET AND ALL THE TRANSACTION WERE DONE BY HIS STOCK BROKER WITHOUT HIS KNOWLEDGE. HE ALSO SUBMITTED THAT HE COULD NOT PRODUCE THE CONTRACT NO TES DURING THE COURSE OF ASSESSMENT PROCEEDINGS SINCE T HE SAME WERE LYING WITH THE C A WHO HAD DEALT WITH HI S CASE EARLIER. HOWEVER NO SEPARATE BOOKS OF ACCOUNT WER E PRODUCED FOR VERIFICATION. 5.2: THE CONTRACT NOTES SUBMITTED BY THE ASSESSEE H AVE BEEN VERIFIED ON RANDOM BASIS WITH THE BROKERS STA TEMENT PRODUCED BEFORE THE CIT(A). AS PER THESE CONTRACT NOTES THE TOTAL SALES OF FUTURE AND OPTIONS WAS AT RS.72 09 52 505/- AS AGAINST PURCHASE VALUE OF RS.72 27 86 943. THE ASSESSEE IS ALSO HOLDING SHAR ES OF THE VALUE OF RS.3 53 523/- AND AS SUCH THERE WAS A LOS S OF RS.14 80 914/-. THE DETAILS OF THE LOSSES INCURRED ARE AS UNDER: DESCRIPTION PURCHASE VALUE (IN RS.) SALE VALUE (IN RS.) PROFIT/LOSS (IN RS.) DERIVATE CUMULATIVE 54 71 34 036 54 60 63 685 10 70 351 CASH CUMULATIVE 17 56 52 907 17 48 88 820 ** 4 10 563 TOTAL 72 27 86 941 72 09 52 505 14 80 914/ - ** THE ASSESSEE IS HOLDING SHARES OF RS.3 53 523/- 5.3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE TOTAL TURNOVER OF THE ASSESSEE WAS ADOPTED AT RS.71 54 63 715/- ON THE BASIS OF THE SUMMARY FIELD BY THE ASSESSEE FROM M/S SOVEREIGN NV SECURITIES P LTD. ITA NO.1095/HYD/2011 SHRI R. VENKATESWARA RAO HYDERABAD 6 HOWEVER THE ACTUAL TURNOVER OF THE ASSESSEE AS PER THE DETAILS CONTRACT NOTES SUBMITTED DURING THE APPELLA TE PROCEEDINGS IS RS.72 09 52 505/-. AS DETAILED ABOV E THE TOTAL TRANSACTIONS RESULTED INTO LOSS OF RS.14 80 9 14/-. 5.4. THIS IS ALSO HAD DONE TRANSACTIONS ON ACTUAL DELIVERY OF SHARES. THE TURNOVER OF SUCH TRANSACTIONS IS AB OUT RS.4 65 30 462 82/-. ON THIS TURNOVER THE ASSESSE E HAD ADMITTED THE SHORT TERM CAPITAL GAINS OF RS.6 26 00 0/-. HOWEVER THE ASSESSEE COULD NOT PRODUCE ANY DETAILS REGARDING THE ABOVE TURNOVER EITHER DURING THE COUR SE OF ASSESSMENT PROCEEDINGS OR DURING THE REMAND PROCEED INGS. IT IS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSE SSEE THAT THE ASSESSEE HAD A RIFT WITH THE EARLIER C A WHO I S HOLDING ALL THE DETAILS RELATING TO THE BUSINESS ACTIVITIES . IN VIEW OF THIS THE LEARNED COUNSEL FOR THE ASSESSEE EXPRESSE D HIS INABILITY TO PRODUCE ALL THE DETAILS RELATING TO AL L THE TRANSACTIONS. CONSIDERING THE ABOVE THE LEARNED C OUNSEL FOR THE ASSESSEE REQUESTED THAT THE APPEAL MAY BE D ECIDED ON THE BASIS OF MATERIAL PRODUCED BY THE ASSESSEE D URING THE COURSE OF APPELLATE PROCEEDINGS. 6. THE CIT(A) PLACED RELIANCE ON THE REMAND REPORT AND OBSERVED THAT THE ASSESSEE HAS INCURRED SPECULATION LOSS OF RS.14 80 914/- AND THE ESTIMATION OF INCOME BY ASSE SSING OFFICER AT 1% OF TURNOVER AT RS.71 54 63 715/- WHIC H IS INCORRECT AND ACCORDINGLY DELETED THE SAME AND GIVE N DIRECTION THAT THE SPECULATION LOSS OF RS.14 80 914 /- CANNOT BE CARRIED FORWARD TO FUTURE ASSESSMENT YEARS. IN THE ABOVE FINDINGS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHICH IS BASED ON THE REMAND REPORT FURNISHE D BY THE ASSESSING OFFICER. BEING SO THE REVENUE CANNO T HAVE ITA NO.1095/HYD/2011 SHRI R. VENKATESWARA RAO HYDERABAD 7 ANY GRIEVANCE TO FILE THIS APPEAL ACCORDINGLY THE F IRST GROUND RAISED BY THE REVENUE STANDS DISMISSED. 7. THE NEXT GROUND RAISED BY THE REVENUE IS THAT T HE CIT(A) ERRED IN RELYING ON THE UNTRUE PLEA OF THE A SSESSEE THAT HIS ERSTWHILE AUDITOR I.E. DECISION TO WITHHOL D THE DISCLOSURE OF LOSS FROM THE RETURN CAUSED HIM FORFE ITURE OF STATUTORY BENEFIT OF CARRY FORWARD OF SPECULATIVE L OSS FROM TRANSACTIONS IN FUTURE AND OPTIONS WITHOUT ANY S UPPORTIVE EVIDENCE AND IGNORING THE ASSESSEES CONDUCT IN WIL FULLY SUPPRESSING THE P&L A/C AND BALANCE SHEET FROM THE DEPARTMENTAL AUTHORITIES AT EVERY STAGE. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THIS GROUND IS MISC ONCEIVED. THE CIT(A) HAS GIVEN A SPECIFIC DIRECTION THAT SPEC ULATION LOSS OF RS.14 80 914/- CANNOT BE CARRY FORWARD IN F UTURE ASSESSMENT YEARS. BEING SO THIS GROUND CANNOT RAI SED BY THE REVENUE CANNOT SURVIVE AND THE SAME IS DISMISSE D. 9. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 29.9.2 011 SD/ - (ASHA VIJAYA RAGHAVAN) SD/ - CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT M EMBER DATED THE 29 TH SEPT. 2011 ITA NO.1095/HYD/2011 SHRI R. VENKATESWARA RAO HYDERABAD 8 COPY FORWARDED TO: 1. THE ITO WARD 8(1) D-BLOCK HYDERABAD 2. SHRI R. VENKATESWARA RAO 8-3-720/11 FLAT NO.108 MY HOME MOUNT VIEW APARTMENTS NAVODAYA COLONY YELLAREDDYGUDA HYDERABAD. 3. THE CIT(A) GUNTUR 4. THE CIT HYDERABAD 5. THE DR ITAT HYDERABAD NP/