TMI Blog2015 (8) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction” means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips.Prima facie it is clear that Section 43(5)(d) is for trading in derivatives not trading of shares. The assessee claimed that the assessee has traded these shares through broker and through electronics mode, which comes U/s 43(5)(d) of the Act and shall not be deemed to be an speculative transaction, has wrongly interpreted Section 43(5) of the Act. The assessee has not produced any evidence regarding delivery of shares and transactions note, detail of scrap traded during the year under consideration. Therefore, we do not find any reason to intervene in the order of the ld CIT(A).- Decided against assessee. Addition to sundry creditors - CIT(A) deleted addition - Held that:- As mentioned above, the assessee was non-cooperative with the department even there is no copy of replies filed to show that full name, address and PAN of trade creditors were filed before Assessing Officer. The ld CIT(A) was also wrong to accept the assessee’s claim and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatistical purposes. Disallowance of salary expenses - CIT(A) deleted addition - Held that:- The assessee has surrendered during the course of survey proceedings at ₹ 21,93,700/- which includes excess cash of ₹ 20,49,000/- and sundry creditors of ₹ 21,44,700/-, which has been credited in the P&L account and thereafter net income was ₹ 21,94,196/- for the year under consideration. Therefore, order of the ld CIT(A) deserved to be confirmed on this issue. - Decided against revenue. Addition to fixed assets - CIT(A) deleted addition - Held that:- The assessee never had furnished any evidence for purchase of assets before the lower authorities. Books of account were also not produced before the Assessing Officer. The ld CIT(A) also decided the issue on the basis of books of account without referring to the purchase bills. Further the assets transferred from proprietorship concern of Shri Lucky Bathla has not been verified from the balance sheet of Shri Lucky Bathla. The ld CIT(A) has accepted the assessee’s argument without allowing the opportunity to the Assessing Officer, therefore, in the interest of justice, this issue is required to be set aside to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) grossly erred in initiating penalty proceedings U/s 271(1)(c) by treating the loss disallowed by him as concealed income ₹ 11,41,070/-. Ground of ITA No. 561/JP/2012 On the facts and in the circumstances of the case, the ld CIT(A), Kota has erred in:- i) deleting addition of ₹ 14,92,848/- out of total addition of ₹ 18,12,459/- being unexplained sundry creditors in spite of the fact that the assessee has not filed and confirmation of the cash creditors, therefore, genuineness of the transaction any creditworthiness of creditors not proved; ii) deleting disallowance of ₹ 3,44,763/- out of salary expenses since the assessee had not surrendered any part of cash found during the course of survey on account of bogus salary; iii) deleting addition of ₹ 14,83,182/- to be fixed assets despite of the fact that the assessee failed to produce books of account, vouchers etc. in support of investment in fixed assets and could also not explain the sources of this investment. 2. The 1st ground of the assessee s appeal is against deciding the case ex parte U/s 144 of the Income Tax Act, 1961 (hereinafter referred as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght. Thereafter, again notice U/s 142(1) alongwith questionnaire was issued to the assessee on 10/11/2010 fixing the case for hearing on 18/11/2010 which was sent through registered post. On the date of hearing i. E. 18/11/2010, partly submissions were filed by the assessee. Thereafter vide his office letter dated 10/12/2010, the assessee was specifically informed to submit the complete details and information alongwith books of accounts, bills, vouchers and other relevant details/documents which were found at the time of survey, as per Annexure-A. The case was fixed for 16/12/2010. The ld Assessing Officer reproduced the questionnaire issued to the assessee on page 2 to 4 of the assessment order. On 16/12/2010, again partly reply was furnished by the assessee but could not produce books of account, bills, vouchers and other relevant details/documents. Therefore, the assessment proceedings could not be preceded. The ld A. O. had given number of opportunities to the assessee even then a final opportunity was given vide show cause notice U/s 143(2) of the Act was issued on 22/12/2010 fixing the case for hearing on 27/12/2010 on which it was specifically informed that non-compliance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o declared as null and void. All these details required by the Assessing Officer was submitted in detail on 27/12/2010, which has not been considered by him. He relied on the following decisions:- (i) 1978, 115, ITR 524 Supreme Court (ii) 1966, 60 ITR 239 Supreme Court (iii) 1970, 76 ITR 690 Supreme Court. 5. At the outset, the ld DR has vehemently supported the order of the lower authority that the assessee was non-cooperative for two years from the date of first notice issued by the Assessing Officer till the assessment barred by limitation i. E. 30/12/2010. Even the assessee s submission presumed to be correct that he has furnished details before the Assessing Officer on 27/12/2010, it shows that the assessee s intention not to be investigated or scrutinized the case in proper sense of scrutiny. Therefore, this ground may please be dismissed. 6. We have heard the rival contentions of both the parties and perused the material available on the record and gone through the case law. The assessee s attitude was totally non-cooperative with the department as evident from the number of dates for hearing given by the Assessing Officer. The assessee had never produced the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf by the partners of the firm, which were duly signed by Shri Murli Manohar Gupta, one of the partner of the firm and incriminating documents impounded during the course of survey had been returned back on the same date to the assessee. Therefore, the ld Assessing Officer has not found the assessee s reply convincing but beyond the truth. Accordingly he decided the assessee s sale at ₹ 13.25 crores against the sale declared in trading account at ₹ 13,13,70,013/- and recasted the trading account and gross profit was calculated at ₹ 9,48,532/- and the same was added in the income of the assessee. 8. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had decided the assessee s appeal by enhancing the addition at ₹ 1,92,538/- by observing that on verification of books of account, it was noticed by him that the turnover of assessee included sale of shares and stock option (derivatives). The assessee purchased and sold shares of ₹ 8,28,80,996/- and ₹ 7,77,80,690/- the opening stock was nil and closing stock was ₹ 2,75,400/-. The assessee had claimed expenses of ₹ 74,521/- rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) of Securities Contracts (Regulation) Act, 1956 carried out in a recognized stock exchange, shall not be deemed to be an speculative transaction. In the same section eligible transaction was also defined and according to that, transaction carried out electronically on screen based system through a stock broker or sub-broker or such other intermediary registered U/s 12 of SEBI and which is supported by a time stamped contract note issued by such broker or sub-broker or others. The said sale and purchase would be treated as trading of shares (business) and not the speculation transaction. These transactions were done through broker, who has issued the transaction note after charging the commission. In speculative transaction, no transaction note is issued by the broker but he only gives the difference of profit/loss in case of his speculative share transaction. The assessee had shown purchase and sale number of shares with script, therefore, same should not be treated speculative transaction. He alternatively argued that even this is an speculative loss U/s 73, which was not allowed to be set off against the business income U/s 73 of the Act. Therefore, this is a business loss, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Assessing Officer. Therefore, he made addition of ₹ 18,12,459/-. 13. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal partly by observing that in case of creditors having PAN, the Assessing Officer would have verified the details from their case records, more so when the details were asked at the fag-end i. E. on 27/12/2010. The case was getting time barred by 31/12/2010. Regarding creditors without PAN, in his opinion, the burden was heavier on assessee. Considering the above observation, he confirmed addition of ₹ 3,19,616/- and giving relief of ₹ 14,92,848/-. 14. Now both are before us. The ld AR of the assessee has submitted that all these creditors were trade creditors and assessee firm had regular business transaction with them. Merely on the ground of non furnishing of PAN numbers, the action of ld A. O. by treating the sundry creditors as un-genuine was unjustified. The details of sundry creditors was furnished before the ld Assessing Officer vide submission dated 16/12/2010 (point No. 5(ii). He has also drawn our attention on page NO. 123 of the paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument is totally beyond the truth that the Assessing Officer has asked to give the confirmation on 27/12/2010. This time also, he only had given details of sundry creditors, no confirmation with full address was filed by the assessee. The ld Assessing Officer vide letter dated 22/12/2010 (paper book page No. 124) at item No. 4 has again asked the assessee to furnish complete name, address, PAN alongwith confirmation and copy of ledger in support of these sundry creditors. Again the ld CIT(A) as well as the assessee were wrong on fact that the Assessing Officer was asked to file confirmation by show cause notice dated 27/12/2010. On 27/12/2010, the assessee submitted a letter before the ACIT, Circle-, Kota and repeated the same reply in point No. 4 regarding sundry creditors amounting to ₹ 18,12,459/-, therefore, same may be confirmed. 16. We have heard the rival contentions of both the parties and perused the material available on the record. As mentioned above, the assessee was non-cooperative with the department even there is no copy of replies filed to show that full name, address and PAN of trade creditors were filed before Assessing Officer. The ld CIT(A) was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point No. 5), copy annexed with the paper book at page No. 129, copy of ledger account of M/s Gera Medical agencies and TDS deposit challan for above said period has been annexed at sl. No. 156 to 158 of paper book. Thus, merely on the ground of non-production of books of account, such unsecured loan was added to the total income whereas the entire transaction was taking place through bank account and such bank account details etc. are lying with the Assessing Officer, thus without going into the factual aspect of the case, addition of unsecured loan is unjustified in the facts and circumstances of the case. The party was local, the ld Assessing Officer should have enquire this transaction by issuing summon U/s 131 of the Act. The assessee s book of account were computerized which is duly evident from the statement recorded by the departmental authority on 12/10/2007, therefore, same may be deleted. 18. The ld DR vehemently supported the order of the ld CIT(A) and has also drawn our attention on paper book submitted by the assessee that the assessee on 27/12/2010 had submitted that he had received the loan through account payee cheque and deducted TDS and paid to the government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the ld CIT(A), who had confirmed the addition by observing as under:- I have gone through Assessing Officer s finding and assessee submission. The assessee surrendered as sum of 41,93,700/- represent by cash (Rs. 20,49,000/-) and bogus creditors (Rs. 21,44,700/-). Both of these represent cash/income generated from business. In this case assessee generated undisclosed income of ₹ 41,93,700/- out of which it introduced ₹ 21,44,700/- in books of accounts through bogus cash credits and remaining 20,49,000/- was found as excess cash. The Assessing Officer has rightly concluded no expenses can be claimed against undisclosed income as same was net of all the expenses (generated after incurring all the expenses). Moreover, the assessee did not produce crucial evidence (books and documents inventoried during survey) which goes against the assessee. Considering the overall facts, the addition of ₹ 15,12,001/- is confirmed. This ground of appeal is dismissed. 22. Now the assessee is in appeal before us. The ld AR for the assessee submitted that the ld Assessing Officer had not issued any show cause notice before disallowing these expenses. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose meaning thereby he was satisfied with the genuineness of these expenses, but while framing the assessment order the disallowances were made in the arbitrary manner and he was not justified in disallowance of the expenses at the back of the appellant and even without providing reasonable opportunity of hearing to the appellant. All above expenses are necessary in nature of doing business and are not excessively been claimed looking to volume of business. Printout copy of ledger account had been submitted to the Assessing Officer and to the CIT(A) vide submission dated 27/12/2010 and dated 24/1/2012 respectively. He further relied on the decision in the case of Brij Bhushan Lal Parduman Kumar Etc. Vs. CIT (1978) 115 ITR 524 (SC) on ex parte assessment and State of Kerala Vs. C. Velukutty (1966) 60 ITR 239 (SC) on best judgment and State of Orissa Vs. Maharaja Shri B. P. Singh Deo (1970) 76 ITR 690 (SC) on best judgment. Thus, he prayed to delete the addition confirmed by the ld CIT(A). 23. At the outset, the ld DR has vehemently supported the order of the ld CIT(A) and argued that the assessee has not submitted any evidence for claim of Misc. expenses claimed by it. He has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese persons and tried to justify its claim towards salary paid to them. On verification of details, it was found that ₹ 90,000/- salary paid in cash to one Shri Rajesh Soni, who was claimed as purchase manager. An outstanding balance of ₹ 2,19,500/- has also been shown against his name. During the course of survey proceedings, statement of Shri Rajesh Soni was also recorded in which he admitted that his salary has not decided till date and he was getting ₹ 20,000/- per month on account of expenses. Thereafter, the ld Assessing Officer again has given show cause notice on this issue vide letter dated 22/10/2010 to furnish complete details of Shri Rajesh Soni viz address, PAN and confirmation in respect of S/Shri Rajesh Soni, Sonu Kumar, Vatsal Soni, Chouthmal, Manish Kumar and Jitendra Kumar and all other persons to whom salary had been paid. It was replied vide letter dated 27/12/2010 by the assessee that Shri Rajesh Soni was paid salary of ₹ 90,000/- and remaining amount is advanced to him. The ld Assessing Officer considered the assessee s reply and held that in statement of Shri Rajesh Soni, he admitted only salary of ₹ 20,000/- p. M. on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts at ₹ 14,83,182/-. The Assessing Officer asked to furnish complete bills and vouchers alongwith source of investment. It was submitted before the Assessing Officer that these assets were introduced by Shri Lucky Bathla from his proprietorship firm amounting to ₹ 10,90,344/- and to that extent his share capital had been credited in personal capital account, remaining additions were made during the year were computer, fire equipments and car Jen Estilo but no bill vouchers and books of account were produced before the Assessing Officer. Therefore, he made addition of ₹ 14,83,182/-. 31. Being aggrieved by the order of the Assessing Officer, the assessee carried by the matter before the ld CIT(A), who had allowed the appeal by observing that the assets were duly shown in the books of account and balance sheet which can either at item of credit side or debit side making addition under the head income as well as assets would result in double addition, therefore, he deleted the addition. 32. Now the revenue is in appeal before us. The ld DR supported the order of the Assessing Officer and argued that the assessee never submitted the purchase bills, copy of the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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