Smt. Indra Jalan, Kolkata v. ITO, Ward - 29(4), Kolkata, Kolkata

ITA 2177/KOL/2009 | 2005-2006
Pronouncement Date: 13-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 217723514 RSA 2009
Assessee PAN ACKPJ8539P
Bench Kolkata
Appeal Number ITA 2177/KOL/2009
Duration Of Justice 3 month(s) 13 day(s)
Appellant Smt. Indra Jalan, Kolkata
Respondent ITO, Ward - 29(4), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 13-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 13-04-2010
Date Of Final Hearing 08-04-2010
Next Hearing Date 08-04-2010
Assessment Year 2005-2006
Appeal Filed On 31-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH - KOLKATA ( ) BEFORE . . SHRI B.R.MITTAL JUDICIAL MEMBER. /AND . . SHRI C.D. RAO ACCOUNTANT MEM BER . / I.T.A.NO. 2177/KOL/2009 / ASSESSMENT YEAR 2005 - 06 SMT. INDRA JALAN 70 RAJA SANTOSH ROAD KOLKATA 700 027. ACKPJ 8539 P - - - VERSUS - . ITO WARD 29(4) KOLKATA. ( / A PPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.P.BAGADTHEY AR / FOR THE RESPONDENT : / SHRI P.K.MISHRA DR / ORDER . . SHRI B.R.MITTAL JUDICIAL MEMBER. THE ASSESSEE HAS FILED THIS APPEAL FOR THE ASSESSMENT YEAR 2005 - 06 AGAINST ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.1.12.2009. 2. GROUND NO.1 OF THE APPEAL IS AS UNDER : THAT ON THE FACTS AND IN THE CIRCUMSTANCES THE LEARNED CIT(A) ERRED IN LAW IN HOLDING THAT THE NET INTERE ST OF RS.11 24 251 RECEIVED FROM M/S.SOORAJMULL NAGARMULL DURING THE YEAR HAS BEEN RIGHTLY ASSESSED TO TAX EVEN THOUGH THE APPELLANT IS REGULARLY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE FILED HER RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 1.8.2005 DECLARING LOSS OF RS.1 20 140. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AS ASSESSED INCOME OF RS.12 38 400. 4. THE ASSESSEE HAS CONTESTED THE TAXABILITY OF INTEREST INCOME OF RS.11 24 251 UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE HAD ADVANCED A LOAN OF RS. 5 LAKHS TO M/S.SOORAJMULL NAGARMULL IN THE YEAR 1959. DUE TO HEAVY LOSSES THE SAID DEBTOR FIRM NAMELY M/S.SOORAJMULL NAGARMULL COULD NOT REPAY THE LOAN TOGETHER WITH INTEREST. THE AS SESSEE FILED A SUIT AGAINST THE FIRM BEFORE THE HONBLE HIGH COURT AT CALCUTTA RESTRAINING THE FIRM TO SALE SHARES AND DEBENTURES OWNED BY / I.T.A.NO. 2177/KOL/2009 2 IT. HONBLE CALCUTTA HIGH COURT PASSED A DECREE AGAINST THE ABOVE FIRM ON 18.9.1969.HOWEVER THE HONBLE HIGH COURT APPOINTED A RECEIVER AND HE SOLD SOME SHARES AND COLLECTED UNCLAIMED DIVIDENDS OF THE JUDGMENT DEBTOR. OUT OF SALE PROCEEDS THE SAID RECEIVER PAID A SUM OF RS.11 91 271 TO THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. SINCE THE ASSESSEE INCURRE D EXPENDITURE OF RS.67 020 TOWARDS LEGAL FEES THE ASSESSING OFFICER AFTER ALLOWING THE SAID DEDUCTION ASSESSED THE SUM OFRS.11 24 251 UNDER THE HEAD INCOME FROM OTHER SOURCES. IT IS RELEVANT TO STATE THAT THE ASSESSEE HERSELF OFFERED THE SAID INTEREST INCOME OF RS.11 91 27 1 IN THE RETURN FILED AND NO REVISED RETURN WAS FILED BY HER. THE ASSESSEE DISPUTED THE SAID ACTION OF THE ASSESSING OFFICER ONLY BY WAY OF AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY ON THE GROUND THAT THE INTEREST INCOME WAS NOT T AXABLE IN THE ASSESSMENT YEAR UNDER CONSIDERATION BECAUSE THE ASSESSEE HAS FOLLOWED THE MERCANTILE SYSTEM OF ACCOUNTING. THEREFORE THE ASSESSING OFFICER SHOULD HAVE TAXED THE INTEREST INCOME ON THE LOAN ON ACCRUAL BASIS. THE LEARNED CIT(A) AFTER CONSIDE RING THE SUBMISSIONS OF THE ASSESSEE VIDE PARAGRAPH 6 OF THE IMPUGNED ORDER REJECTED THE SAID CONTENTION OF THE ASSESSEE AND HAS HELD THAT THE ASSESSEE HAS RIGHTLY OFFERED THE INTEREST INCOME FOR TAXATION IN THE YEAR OF RECEIPT AND ACCORDINGLY THE ASSESS ING OFFICER WAS JUSTIFIED IN TAXING THE INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE SAID PARAGRAPH 6 OF THE ORDER OF THE LEARNED CIT(A) READS AS UNDER : 6. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. THE APPELLANT HAS FILED HER RETURN OF INCOME FOR A.Y. 2005 - 06 DECLARING LOSS OF RS.1 20 135/ - . ON PERUSAL OF COMPUTATION OF INCOME ENCLOSED WITH RETURN OF INCOME IT IS OBSERVED THAT THE APPELLANT HAS DISCLOS ED LOSS OF RS.13 56 841/ - UNDER THE HEAD BUSINESS INCOME INCOME OF RS.12 03 708/ - UNDER THE HEAD INCOME FROM OTHER SOURCES AND INCOME OF RS.32 998/ - UNDER THE HEAD CAPITAL GAINS. THE INCOME FROM OTHER SOURCES AS DECLARED IN THE RETURN OF INCOME CONS ISTS OF INTEREST FROM M/S. SOORAJMULL NAGARMULL AMOUNTING TO RS.11 91 271/ - AND BANK INTEREST OF RS.12 437/ - . IN THE APPEAL FOR THE FIRST TIME THE APPELLANT HAS CONTENDED THAT THE INTEREST OF RS.11 91 271/ - RECEIVED FROM M/S. SOORAJMULL NAGARMULL WAS NOT TAXABLE IN THE YEAR UNDER CONSIDERATION BECAUSE THE APPELLANT HAS FOLLOWED MERCANTILE SYSTEM / I.T.A.NO. 2177/KOL/2009 3 OF ACCOUNTING AND THEREFORE THE INTEREST RECEIVED IN F.Y. 2004 - 05 SHOULD HAVE BEEN TAXED IN THE RESPECTIVE ASSESSMENT YEARS ON ACCRUAL BASIS. THOUGH THE APPELLANT HAS OFFERED THE AMOUNT FOR TAXATION IN THE YEAR UNDER APPEAL BUT IT WAS NOT TAXABLE IN THIS YEAR. THE APPELLANT HAS RELIED ON SEVERAL JUDICIAL PRONOUNCEMENTS (SUPRA). ON CAREFUL CONSIDERA TIO N OF FACTS OF THE CASE I AM NOT INCLINED TO AGREE WITH THE CONTEN TION OF THE APPELLANT THAT THE INTEREST AMOUNT OF RS.11 91 271/ - WAS NOT TAXABLE IN THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT WAS SPECIFICALLY ASKED TO STATE AS TO WHETHER THE INTEREST INCOME ON THE LOAN GIVEN TO M/S. SOORAJMULL NAGARMULL HAD BEEN OFFERED BY HER IN EARLIER YEARS ON ACCRUAL BASIS. THE REPLY WAS IN NEGATIVE. SINCE THE APPELLANT HERSELF HAS NOT OFFERED THE INTEREST INCOME ON ACCRUAL BASIS IN THE EARLIER ASSESSMENT YEARS THERE IS NO QUESTION OF AD VANCING THE ARGUMENT THAT THE INTEREST RECEIVED IN THE YEAR UNDER CONSIDERATION WAS NOT TAXABLE IN THIS YEAR ON RECEIPT BASIS. I AM OF THE OPINION THAT THE APPELLANT HAS RIGHTLY NOT OFFERED THE INTEREST INCOME FOR TAXATION ON ACCRUAL BASIS BECAUSE THE APPE LLANT HAD FILED A SUIT AGAINST THE FIRM BEFORE THE CALCUTTA HIGH COURT AND ALSO OBTAINED A DECREE. THE HIGH COURT APPOINTED A LIQUIDATOR TO SELL SOME OF THE ASSETS OF THE FIRM TO PAY THE PROCEEDS TO THE CREDITORS OF THE FIRM. SINCE THE PRINCIPAL AMOUNT OF LOAN AS WELL AS INTEREST WAS IN DISPUTE AND ITS RECOVERY WAS DEPENDENT ON THE SALE PROCEEDS OF THE ASSETS OF THE FIRM SOLD BY THE LIQUIDATOR THE INTEREST INCOME WAS NOT TAXABLE ON ACCRUAL BASIS. ACCORDINGLY THE APPELLANT HAS ALSO NOT OFFERED THE INTEREST INCOME IN EARLIER YEARS ON ACCRUAL BASIS. BUT IT DOES NOT MEAN THAT WHEN THE AMOUNT OF INTEREST WAS ACTUALLY RECEIVED BY THE APPELLANT IT WOULD NOT BE TAXABLE IN THE YEAR OF RECEIPTS. THE RELIANCE IS PLACED ON THE DECISIONS IN THE CASES OF C.I.T. VS. RAI GHARH JUTE MILLS LIMITED 132 ITR 702 (CALCUTTA) C.I.T. VS. NASKARPARA JUTE MILLS CO. LIMITED 141 ITR 384 (CALCUTTA) AND C.I.T. VS. BENGAL JUTE MILLS COMPANY LIMITED 165 ITR 631 (CALCUTTA). IN ALL THESE CASES IT HAS BEEN HELD BY THE HONBLE JURISDICTION AL HIGH COURT THAT WHEN A SUIT HAS BEEN FILED AGAINST THE DEBTOR COMPANY FOR RECOVERY OF PRINCIPAL AS WELL AS INTEREST THE INTEREST INCOME COULD NOT BE TAXED ON ACCRUAL BASIS. IN VIEW OF ABOVE THE CLAIM OF THE APPELLANT THAT THE INTEREST INCOME OF RS.11 24 251/ - RECEIVED IN THE YEAR UNDER CONSIDERATION WAS TAXABLE ON ACCRUAL BASIS IS REJECTED. THE APPELLANT HAS RIGHTLY OFFERED THE INTEREST INCOME FOR TAXATION IN THE YEAR OF RECEIPT AND ACCORDINGLY THE A.O. WAS JUSTIFIED IN TAXING THE INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES IN THE YEAR UNDER CONSIDERATION. THE GROUND NO. 1 IS DISMISSED. / I.T.A.NO. 2177/KOL/2009 4 HENCE THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING THE LEARNED AR OF THE ASSESSEE MADE CONTENTIONS ON THE LINE S OF THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A). THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE INTEREST RECEIVED BY THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION PERTAINED TO THE PRECEDING ASSESSMENT YEARS AND SINCE THE ASSESSEE WAS FOLLO WING MERCANTILE SYSTEM OF ACCOUNTING THE ASSESSING OFFICER SHOULD HAVE ASSESSED THE INTEREST INCOME IN THE RESPECTIVE ASSESSMENT YEARS. THE LEARNED AR OF THE ASSESSEE REFERRED TO THE DECISION OF HONBLE APEX COURT IN THE CASE OF LAXMIPAT SINGHANIA V. CIT (72 ITR 291) AND SUBMITTED THAT THE AMOUNT CAN BE TAXED ONLY ON ACCRUAL BASIS AND IS LIABLE TO BE INCLUDED IN THE INCOME OF A PARTICULAR YEAR AND NOT ON THE BASIS OF RECEIPT. ON THE OTHER HAND THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNED CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE GOT A DECREE FROM THE HONBLE CALCUTTA HIGH COURT IN HER FAVOUR IN 1969. T HERE IS ALSO NO DISPUTE TO THE FACT THAT THERE WAS AN APPOINTMENT OF RECEIVER BY THE HONBLE HIGH COURT IN RESPECT OF SHARES AND DEBENTURE S OF THE DEBTOR FIRM M/S.SOORAJMULL NAGARMULL AND THE SHARES AND DEBENTURES WERE SOLD AND OUT OF THE SALE PROCEEDS TH E SAID RECEIVER DISBURSED THE AMOUNT TO THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS SHOWN THE SAID INTEREST INCOME AS HER INCOME IN THE ASSESSMENT YEAR UNDER CONSIDERATION IN THE RETUR N FILED AND THE ASSESSING OFFICER ALSO ASSESSED THE SAME AS INCOME FROM OTHER SOURCES. THERE IS ALSO NO DISPUTE TO THE FAT THAT THE ASSESSEE HAS NOT REVISED HER RETURN TO CONTEND BEFORE THE ASSESSING OFFICER THAT THE SAID INTEREST INCOME DID NOT PERTAIN TO THE ASSESSMENT YEAR UNDER CONSIDERATION BUT PERTAINS TO THE PRECEDING AYS AND SHOULD HAVE BEEN ASSESSED IN THE RESPECTIVE AYS ON ACCRUAL BASIS. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS NOT OFFERED THIS INTEREST INCOME ON ACCRUAL BASIS I N THE PRECEDING ASSESSMENT YEARS. CONSIDERING THE ABOVE FACTS WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW / I.T.A.NO. 2177/KOL/2009 5 TO ASSESS THE INTEREST INCOME RECEIVED BY THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND AFTER ADJUSTING THE EXPENSES INCURRED BY THE ASSESSEE TOWARDS LEGAL FEES PAID OF RS.67 020 AND TO TREAT THE BALANCE AMOUNT OF INTEREST AS INCOME FROM OTHER SOURCES. WE OBSERVE THAT THE ASSESSEE RECEIVED THE ENTIRE DECREED AMOUNT ALONGWITH THE INTERES T AGGREGATING TO RS.11 91 271. WE ARE OF THE CONSIDERED VIEW THAT THE SAID AMOUNT ALSO INCLUDES THE SUM OF RS. 5 LAKHS ADVANCE MADE BY THE ASSESSEE TO THE ABOVE FIRM SOORAJMULL NAGARMULL. THEREFORE THE SAID AMOUNT OF RS.5 LAKHS CANNOT BE CONSIDERED AND AS SESSED AS INTEREST INCOME OF THE ASSESSEE. ACCORDINGLY THIS AMOUNT OF RS. 5 LAKHS IS TO BE DEDUCTED OUT OF THE TOTAL NET AMOUNT OF RS.11 24 251. THEREFORE THE BALANCE AMOUNT OF RS.6 24 251 THE NET INTEREST RECEIVED BY THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION IS TO BE ASSESSED AS INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. WE MAY STATE THAT THE ABOVE FACTS WERE NOT CONTENDED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND THEREFORE THE ENTIRE AMOUNT OF RS.11 24 251 AFTER DEDUCTING LEGAL FEES PAID OF RS.67 020 HAS BEEN ASSESSED AS INTEREST INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. SINCE THE FACTS ARE NOT IN DISPUTE WE MODIFY THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THAT THE AMOUNT OF RS.6 24 251 RECEIVED BY THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION IS TO BE ASSESSED AS INCOME OF THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION AS THE SAID AMOUNT OF INTEREST HAS BEEN CRYSTALLIZED AND RECEIVED BY THE ASSESSEE IN TH E ASSESSMENT YEAR UNDER CONSIDERATION FROM THE COURT RECEIVER APPOINTED BY THE HONBLE CALCUTTA HIGH COURT. THE RELIANCE PLACED BY THE LEARNED AR OF THE ASSESSEE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF LAXMIPAT SINGHANIA V. CIT (72 ITR 291 ) IS NOT RELEVANT TO THE FACTS BEFORE US AS IN THAT CASE THE ISSUE WAS AS TO WHETHER THE ASSESSING OFFICER HAD AN OPTION EITHER TO TAX THE DEEMED INCOME ON THE FOOTING THAT IT HAD ACCRUED AT THE DATE OF DISBURSEMENT OR TO TAX IT AT THE DATE OF ACTUAL RECEI PT OF SHARES. IT WAS HELD THAT IF THE INCOME IS ACCRUED TO THE ASSESSEE AND IS LIABLE TO THE INCLUDED I N THE TOTAL INCOME OF A PARTICULAR YEAR TO IGNORE THE ACCRUAL AND THEREAFTER TO TAX IT AS INCOME OF ANOTHER YEAR ON THE BASIS OF RECEIPT IS NOT OPEN TO THE ITO. 7. IN VIEW OF THE ABOVE GROUNDNO.1 OF THE APPEAL TAKEN BY THE ASSESSEE IS / I.T.A.NO. 2177/KOL/2009 6 ALLOWED IN PART AS INDICATED ABOVE. 8. IN GROUND NO.2 OF THE APPEAL THE ASSESSEE HAS DISPUTED THE ORDER OF THE LEARNED CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.13 56 84 1 CLAIMED BY THE ASSESSEE AS BUSINESS LOSS. 9. THE RELEVANT FACTS ARE THAT THE ASSESSEE IS OF 65 YEARS OF AGE. IN THE ASSESSMENT YEAR UNDER CONSIDERATION FOR THE FIRST TIME IN HER LIFE HAS STATED TO HAVE CARRIED ON THE BUSINESS OF PURCHASE AND SALES OF SU ITING AND SHIRTING. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DEBITED AN AMOUNT OF RS.37 42 000 ON ACCOUNT OF PURCHASES OF SUITING AND SHIRTING AND CLAIMED TO HAVE SOLD AT RS.24 86 121. THUS THERE WAS A LOSS OF RS.12 55 879 AND AFTER CLAIMING CERTA IN EXPENSES THE ASSESSEE DECLARED LOSS FROM BUSINESS AT RS.13 56 841. 10. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE ASSESSEE CARRIED ON BUSINESS ONLY FOR A FEW DAYS AND CONSISTED OF TOTAL SIX PURCHASES AND SIX SALE TRANSACTIO NS. IT STARTED ON 10.2.2005 AND ENDED ON 24.3.2005.THE PAYMENTS FOR PURCHASES AND SALES SQUARED OFF BETWEEN 14.3.2005 TO 24.3.2005. FURTHER THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE PURCHASED GOODS FROM TWO PARTIES AND SOLD THE SAME TWO OTHER PAR TIES WITHIN A SHORT SPAN AND INCURRED HUGE LOSS. THE ASSESSING OFFICER AFTER DISCUSSING DETAILS OF THE TRANSACTIONS AT PAGES 2 TO 4 OF THE ASSESSMENT ORDER HAS STATED THAT THE ASSESSEE TRANSACTED THE PURCHASES WITH NON - ENTITIES. THE TRANSACTIONS WERE MADE NOT BECAUSE OF ANY BUSINESS COMPULSION BUT BECAUSE THEY WERE THE INSTRUMENT IN THE PROCESS OF MANUFACTURE OF BUSINESS LOSS. THE ASSESSING OFFICER HAS STATED THAT ANY PERSON WHO WISHES TO START A REAL BUSINESS WILL HAVE TRANSACTIONS WITH GENUINE BUSINESS M EN AND NOT WITH SOME FISHY CHARACTER WHO EVEN DO NOT HAVE A FIXED PLACE OF BUSINESS. THEREAFTER THE ASSESSING OFFICER HAS ALSO DISCUSSED THE FACTS TO ESTABLISH THAT THE PAYMENTS MADE BY THE ASSESSEE TO ASHOK SA ROGI & SONS ONE OF THE PARTIES FROM WHOM TH E ASSESSEE STATED TO HAVE PURCHASED MATERIALS AGGREGATING RS.24 49 000 AND THE SAID FIRM TRANSFERRED TO THE ACCOUNT OF KAPOORCHAND PUGLIA AND THE ENTIRE AMOUNT WAS WITHDRAWN IN CASH FROM THAT ACCOUNT. THE ASSESSING OFFICER HAS ALSO ASCERTAINED FROM THE BAN K ACCOUNT OF THE PURCHASERS AND SELLERS AND OBSERVED THAT ALL THE CHEQUES WERE ISSUED FROM BANK ACCOUNTS MAINTAINED IN FEDERAL BANK BHAWANIPUR BRANCH. FURTHER IT WAS ASCERTAINED THAT THE INTRODUCER / I.T.A.NO. 2177/KOL/2009 7 TO ALL THE BANK ACCOUNTS WERE SHRI V.K.PATNI OR A.K.JAI N THE REAL OPERATOR AND UNDER WHOSE INDICATION CHEQUES WERE ISSUED AND DEPOSITED IN THE BANK ACCOUNT TO GIVE A PROPER TRANSACTION A LOOK OF GENUINITY. THE ASSESSING OFFICER AFTER DISCUSSING THE ABOVE FACTS HAS STATED THAT THE MODUS OPERANDI OF THE ASSESS EE IS TO CREATE LOSS BY MOVEMENT OF CHEQUES AND EXPLAINING THEM AS SALE PROCEEDS OR COST OF PURCHASE. THE ASSESSING OFFICER HAS ALSO STATED THAT IN THE PRECEDING ASSESSMENT YEAR S THE ASSESSEE HAD A POSITIVE INCOME FROM HOUSE PROPERTY AND THERE WAS NO BUSI NESS CARRIED ON BY THE ASSESSEE. THE AO HAS STATED TO HAVE INCURRED THE LOSS FROM BUSINESS TO SET OFF THE INTEREST INCOME RECEIVED BY THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HAS ALSO STATED THAT THERE IS NO COST OF TR ANSPORTATION LOADING CHARGES BROKERAGE CHARGES OR ANY OTHER INCIDENTAL EXPENSES DEBITED TO THE P & L ACCOUNT. HENCE THE ASSESSING OFFICER DID NOT ACCEPT THE GENUINENESS OF THE SAID LOSS CLAIMED BY THE ASSESSEE AND CONSIDERED THE INCOME UNDER THE HEAD AS NIL. 11. BEING AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 12. BEFORE THE LEARNED CIT(A) IT WAS CONTENDED THAT THE ASSESSING OFFICER DID NOT GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESEE. HOWEVER THE LEARNED CIT(A ) DID NOT FIND SUBSTANCE IN THE SAID SUBMISSION OF THE ASSESSEE AND HAS STATED THAT THE ASSESSING OFFICER CONDUCTED THE ENQUIRIES TO VERIFY THE GENUINENESS OF THE TRANSACTIONS AND ALSO ALLOWED OPPORTUNITY TO THE ASSESSEE TO PROVE THE GENUINENESS OF THE ALL EGED PURCHASES AND SALES TRANSACTIONS OF SUITING AND SHIRTING MATERIALS. THE LEARNED CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER THAT THE BUSINESS LOSS WAS CREATED BY THE ASSESSEE WITH A MOTIVE TO SET OFF A SUBSTANTIAL AMOUNT OF INTEREST RECEI VED BY THE ASSESSEE FROM SOORAJMULL NAGARMULL IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 13. DURING THE COURSE OF HEARING THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW DI D NOT GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE BUSINESS TRANSACTIONS. HE SUBMITTED THAT THE ASSESSEE GENUINELY CARRIED ON THE BUSINESS OF PURCHASE AND SALES OF SUITING AND SHIRTING. THE LEARNED AR OF THE ASSE SSEE SUBMITTED THAT THE ISSUE COULD BE RESTORED / I.T.A.NO. 2177/KOL/2009 8 TO THE ASSESSING OFFICER FOR HIS FRESH CONSIDERATION AND PLACED RELIANCE ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF TIN BOX COMPANY V. COMMISSIONER OF INCOME - TAX [2001] 249 ITR 216 (SC) . HOWEVER T HE LEARNED DR RELIED ON THE ORDER OF THE LEARNED CIT(A) AND JUSTIFIED HIS ORDER. 14. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE CLAIMED LOSS ON ACCOUNT OF PURCHASE OF SUITING AND SHI RTING MATERIAL WHICH CONSIST OF TOTAL SIX PURCHASE AND SIX SALE TRANSACTIONS DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSEE CLAIMED TO HAVE EFFECTED PURCHASES FROM A.K.SARAOGI P.M.SARAOGI AND P.K.SARAOGI AND EFFECTED SALES TO S.L.JAIN AND B ASANT LAL. THE ENTIRE TRANSACTIONS OF PURCHASE AND SALES WERE STARTED ON 10.2.2005 AND ENDED ON 24.3.2005 AND THE PAYMENTS FOR PURCHASE AND SALE SQUARED UP BETWEEN 14.3.2005 TO 24.3.05. THE ASSESSEE HAD NOT DONE SIMILAR BUSINESS OR ANY BUSINESS IN THE PREC EDING AYS OR SUBSEQUENT AYS TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTIONS THE ASSESSING OFFICER CONDUCTED ENQUIRIES AND CAME TO THE POSITIVE CONCLUSION THAT THE PARTIES WITH WHOM THE ASSESSEE ALLEGEDLY TRANSACTED BUSINESS ARE NON ENTITIES. THE ASSESSMENT ORDER IN THIS REGARD IS SELF EXPLANATORY. THE ASSESSING OFFICER HAS CATEGORICALLY OBSERVED THAT THE ASSESSEE HAS NOT CLAIMED ANY COST OF TRANSPORTATION LOADING AND UNLOADING AND BROKERAGE CHARGES OR AN Y OTHER INCIDENTAL EXPENSES DEBITED TO P & L ACCOUNT. TH E ABOVE FINDINGS OF THE ASSESSING OFFICER HAS NOT BEEN DISPUTED BY THE LEARNED AR OF THE ASSESSEE NEITHER BEFORE THE LEARNED CIT(A) NOR BEFORE US. FROM THE DISCUSSIONS MADE BY THE ASSESSING OFFICER I N THIS REGARD IN THE ASSES SMENT ORDER WE FIND THAT HE ALLOWED SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ESTABLISH THE GENUINENESS OF PURCHASES AND SALES. THEREFORE THE CONTENTION OF THE LEARNED AR OF THE ASSESSEE BEFORE US THAT NO ADEQUATE OPPORTUNITY WA S AFFORDED TO THE ASSESSEE HAS NO MERIT . WE CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE ARE OF THE CONSIDERED VIEW THAT THE CONCLUSION OF THE ASSESSING OFFICER THAT THE ALLEGED PURCHASE AND SALE TRANSACTIONS OF SUITING AND SHIRTING MATERIALS IS N OT GENUINE AND THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE CLAIM OF BUSINESS LOSS OF THE ASSESSEE. IN VIEW THEREOF WE DO NO T FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN THIS REGARD . HENCE WE CONFIRM / I.T.A.NO. 2177/KOL/2009 9 THE SAME BY REJECTING GROUND NO.2 OF THE APPEAL OF THE ASSESEE. 15. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 13 /04/2010 SD/ - SD/ - ( . . ) (C.D. RAO) ACCOUNTANT MEMBER ( . . ) ( B.R.MITTAL ) JUDICIAL MEMBER ( ) DATE : 13 /04/2010 - COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : SMT. INDRA JALAN 70 RAJA SANTOSH ROAD KOLKATA 700 027 . 2 / THE RESPONDENT - ITO WARD 29(4) KOLKATA 3. / THE CIT 4. ( )/ THE CIT(A) 5. / DR KOLKATA BENCH 6. GUARD FILE . / TRUE COPY / BY ORDER / DEPUTY REGISTRAR . ( /) H.K.PADHEE / SNR.PRIVATE SECRETARY.