BRIEF FACTS OF THE CASE AND QUESTION OF LAW
This is an appeal filed by assessee against the order of Ld. CIT (A) dated 18/11/2013 for the assessment year 2003-2004.The grounds of assessee was that CIT (A) did not afford the assessee sufficient time and opportunity to make necessary submission and to adduce relevant details and documents to support his case and also in course of assessment proceedings, the Assessing Officer has not conducted or made any enquiry in this regard as to whether the transactions were speculative or business gain.
Question of Law:
Whether the assessee’s appeal is to be directed against the order passed by the CIT (A) -II, Lucknow and restore the matter back to the CIT (A) for fresh decision.
CONTENTION OF THE REVENUE
1. The Revenue supported the orders of the authorities and contended that the Assessing Officer has worked out the business income of the assessee at Rs.26,73,645/- consisting of Rs.17,46,233/- being profit from delivery based trading in shares and Rs.11,04,298/- being commission income and miscellaneous income.
2. The Revenue stated that the assessee has relied on his DEMAT / ledger account appearing in the books of M/s Svarn Financial Services (P) Ltd. available in paper book in which these transactions are not found recorded and based on it and thus it was held as speculative profit.
3. The DEMAT account furnished by the assessee is not reliable and the CIT (A) has rejected the claim of the assessee by making the observation that the profit is also speculative profit, but there is no concrete finding given by CIT (A) that how the profit from share dealing assessed by the Assessing Officer as income of the assessee by rejecting set off of speculative loss is not speculative profit.
4. The Revenue highlighted that the appellant had raised the objection in the grounds of appeal. But during appellate proceedings the issue was not contended, either in written submissions or during the course of the hearing. The A.O. had found these expenses as unverifiable. After considering the written submissions of the appellant, the A.O. had rightly concluded that the appellant had failed to furnish the total volume of work done and payment received, in lieu of commission paid of Rs.1,93,280/-. During appellate proceedings also the appellant has not furnished any evidence to justify the payment of said commission. Moreover the appellant has not made any written submission along with evidences if any for justification of payment of such commission of Rs.1, 93,280/-. Thus, revenue contended that the addition of Rs.1, 93,280/- on account of disallowances of commission paid was rightly made by A.O. and was accordingly dismissed.
CONTENTION OF THE ASSESSEE
1. The contention of the assessee was that the Ld. Commissioner of Income Tax (Appeals) -II, Lucknow erred on facts and in law in conforming the addition of Rs.24, 88,338/- and in not allowing the set off of the same against the speculative gain of Rs.24, 85,229/- only on notions, conjectures and surmises without appreciating the true nature of the transactions & completely ignored the fact that the gain shown in the Trading and Profit &Loss Account was purely speculative in nature being non-delivery based transactions which were clear from the demat accounts, quantitative details filed, contract notes, etc.
2. It was also contended that the Ld. CIT (A) did not afford the appellant sufficient time and opportunity to make necessary submissions or to adduce relevant details and documents to support his case and further even during the course of remand proceedings the AO has also not conducted or made any inquiry as to whether the transactions were speculative or business gain. Further the Ld. CIT (A) grossly erred on facts and in law in conforming the disallowance of Rs. 1, 93,280/- as commission paid during the year without appreciating the fact that the entire details regarding commission paid had duly been filed during the course of assessment proceedings itself and that the same duly vouched and verifiable and the basis of calculation of the same is also available.
HELD BY ITAT, LUCKNOW
After hearing the rival contentions, ITAT held that the as per the Assessment order, the Assessing Officer has noted the submissions of the assessee before him wherein it was submitted by the assessee that the commission payment to the extent of Rs.1,93,280/- and is fully vouched and amenable to complete verification. It was also stated in the assessment order that no further details like the total volume of work done, payments received etc. were made available and therefore, assessing officer came to the conclusion that this expenditure remains unsupported by any positive evidence and therefore, is being disallowed.
It is evident that, what specific information was called for by the Assessing Officer, which was not supplied by the assessee, is not mentioned in the assessment order; hence the issue should go to CIT (A) for fresh decision.
The ITAT, Lucknow cited the above points and upheld the contentions of the assessee and set aside the order of CIT (A) and restored the matter back to the CIT (A) for fresh decision. ITAT directed the CIT (A) should pass necessary order as per law after affording an adequate opportunity of being heard to assessee. The appeal of the assessee stands allowed for statistical purposes.
Analysed by Bhuvaneswari.S