Case Law Details
Poddar Rubber Industries Vs. DCIT (ITAT Kolkata)
The assessee had discharged its primary onus in proving the transaction on F&O by producing the corroborating evidence before the AO/Ld. CIT(A). Both the authorities could not find any infirmity on these documents. However, the AO discarded the primary documents produced by the assessee to establish the veracity of the transaction in F&O, by bringing in the statement of director and accountant of M/s KSPL which was the broker of the assessee in the transaction of F&O. The statement of both Shri Harshvardhan Kayan and Shri Mukesh Agarwal extracted by the AO neither bring out any wrong doings on the part of assessee nor say anything about F&O transactions. It only says about facilitation of bogus LTCG through jamakharchi companies which were their clients. However, if the AO had any doubts lingering in his mind, then he should have summoned these persons and questioned them and un-earthed the truth. Rather than doing so, he simply relied upon the statements of both these persons during survey of a third party and without any incriminating oral statements/documentary evidence or material against the assessee or the F&O transactions carried out by the assessee, based on suspicion only has drawn adverse inference/finding against the assessee which action of both AO as well as Ld CIT(A) cannot be countenanced. Moreover, it is noted that there are other legal infirmities against the statements. It is noted that the AO himself has admitted that the statement of Shri Harshavardhan Kayan as well as that of Shri Mukesh Agarwal has been recorded during survey u/s. 133A of the Act and it is noted that the statement is not incriminating against the assessee since its name or the transaction of F&O has not been negatively commented upon by them. Further, it is trite that the statement recorded during survey u/s. 133A of the Act cannot be the sole basis on which adverse inference can be drawn against the assessee. Moreover, the assessee has been kept in the dark and has not been given the entire copy of the statement of Shri Harshavardhan Kayan as well as that of Shri Mukesh Agarwal; and no opportunity has been granted to the assessee to cross examine Shri Harshavardhan Kayan as well as that of Shri Mukesh Agarwal. Therefore, the veracity of the statements could not be tested, so their statement cannot be relied on as held by the Hon’ble Supreme Court in Andaman Timbers Industries (supra). Therefore, the statement of Shri Harshavardhan Kayan as well as that of Shri Mukesh Agarwal cannot be looked into for drawing an adverse inference against the assessee. And though their statements are not incriminating against the assessee, any way if both their statements reproduced (supra) are kept aside for the legal infirmities, there are no other material against the assessee in respect of its transaction in F&O. In such a scenario, based on the supporting evidence produced by the assessee to validate its transaction of F&O in recognized stock exchange, the loss suffered in the said transaction has to be allowed and it is ordered accordingly.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal is preferred by the assessee against the order of Ld. CIT(A), Guwahati-2, dated 3 1-01-2020 for assessment year 20 14-15.
2. The only ground of appeal raised by the assessee is against the action of the Ld. CIT(A) confirming the addition of Rs.29,65,952/- made by the AO on account of loss claimed by the assessee in Future & Options (in short ‘F&O’).
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