TMI Blog2016 (4) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... filed his return of income on 04-12-2008 declaring total income at ₹ 1,21,750/-. During the course of assessment proceedings the AO on verification of the bank account extract of the assessee maintained with Kolhapur Mahila Sahakari Bank Limited noticed that the assessee had made transactions totaling to ₹ 58,34,629/-. The AO asked the assessee to explain the source of the deposits made with the bank. However, no reply was received from the assessee. Thereafter the AO issued summon u/s.131 of the I.T. Act and the statement of the assessee was recorded in the presence of his authorized representative. The assessee in his reply to Question No.7 explained about the total transactions as under : Sr.No. Particulars Amount (Rs.) 1 Total transaction with the bank 58,36,420 2 Less : Amount received from Joindre Capital Services Ltd for sale of shares by cheque 20,51,839 Balance 37,84,458 3 Less hand loan taken from Vandana Sarees by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee reiterated the same submissions as made before the AO. In addition it was submitted that the loss suffered by the assessee from share trading business was evident from the cheque payments made to the broker. It was argued that this fact was brought to the notice of the AO in answer to Question Nos. 6,9,10 and 12 of statement recorded. It was argued that during assessment proceedings it was submitted that the assessee had suffered loss of ₹ 13,86,925/- in share trading in the trading of Futures. Thus, there is business loss suffered by the assessee. Relying on the decision of the Delhi Bench of the Tribunal in the case of G.K. Anand Builders Pvt. Ltd. Vs. ITO where it has been held that loss emanating from Futures Option transactions in a recognized stock exchange is to be treated as business loss and not as a loss from speculative transactions, it was argued that the loss suffered by the assessee ought to have been set off against the income assessed on account of unexplained money as the business loss can be set off against the other income. Various decisions were also brought to the notice of the CIT(A). 5. However, the CIT(A) was also not convinced with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid view is supported by the scheme of taxation under the Income-tax Act. Section 2(45) defines total income as the total income referred to in section 5, computed in the manner laid down in this Act . It is relevant to note that the principal charging section 4 makes the total income of the previous year subject to the charge of income-tax. Section 5 defines the scope of total income referred to in the principal charging section. Section 14 classifies the heads of income while sections 15 to 59 provide for its quantification. Chapter VI of the Income-tax Act provides for aggregation of income and set off or carry forward of loss. Thus Chapter VI is in two parts; first part deals with aggregation of income while the second part deals with set off or carry forward of losses. Chapter VI has been placed after Chapter IV and V. It comes into play only after the computation of total income under various heads of income in terms of Chapter IV has been done. Income falling under Chapter VI is taxed by aggregating the same with the income quantified in terms of Chapter IV. Chapter VI is not subservient to Chapter IV. Besides, section 14 allows the taxability of income under spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the unexplained expenditure may be deemed to be the income of such assessee. It follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all on the basis of which the income can be classified under one of the heads of income under section 14 of the Act, it would not be possible to classify such deemed income under any of these heads including income from other sources which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under section 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under any one of those heads by virtue of a satisfactory explanation being given, then these provisions of sections 69, 69A, 69B and 69C will not apply, in which event, the provisions regarding deductions, etc., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is held After setting off losses against the income under the same head, if the net result is still a loss, the assessee can set off the said loss under s. 71 against income of the same year under any other head, except for losses which arise under the head capital gains . The income tax is only one tax and levied on the sum total on the income classified and chargeable under the various heads. Sec. 14 has classified different heads of income and income under each head is separately computed. Income which is computed in accordance with law is one income and it is not a collection of distinct tax levied separately on each heads of income and it is not an aggregate of various taxes computed with reference to each of the different sources separately. There is only one assessment and the same is made after the total income has been ascertained. The assessee is subject to income-tax on his total income though his income under each head may be well below the taxable limit. Hence the loss sustained in any year under any head of income will have to be set off against income under any other head. The A.O. made addition of ₹ 28,50,000/- as undisclosed income under s.69. Once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come which is brought to tax under Chapter VI of the l. T. Act. 16. The appellant has relied all Circular No. 14 (XL-35) dt.11/04/1995 in which the Board has issued instructions that Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a tax payer in every reasonable way, particularly in the matter of claiming Gild securing reliefs and in this regard the Officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicate that some refund or relief is due to him .... I am unable to figure out as to how this circular comes out in favour of the appellant while deciding the issue of whether incomes described under Chapter VI are available for set off u/s.71 of the I.T. Act. 17. In view of the above discussion, I hold that the appellant is not entitled to have set off of so-called business loss against the deemed income brought to tax u/s.69A of the Act. In the result, the grounds of appeal stands dismissed. 6. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : 1. On the facts and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .K. Anand Brothers and Buildwell Pvt. Ltd. Vs. ITO reported in 34 SOT 439 he submitted that the Hon ble Tribunal in the said decision has held that loss arising in Future and Option transaction carried out in a recognized stock exchange is to be treated as a business loss and not a loss in speculation business. He also relied on the decision of Hon ble Gujarat High Court in the case of DCIT Vs. Radhe Developers India Ltd. reported in 329 ITR 1. He accordingly submitted that the loss to the tune of ₹ 13,86,925/- be set off from the income of ₹ 28,94,581/- added by the AO u/s.69A of the Income Tax Act, 1961. 10. The Ld. Departmental Representative on the other hand heavily relied on the order of the AO and the CIT(A). He submitted that the assessee has not disclosed the loss from share trading of Futures in the return of income. The only income shown was from interest income and income from Divya Garments. He submitted that no such transaction in share trading of Futures was there in the preceding year or succeeding year. Therefore, the claim of loss from share trading of Futures is a bogus claim and should not be accepted. Even otherwise also, in view of the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the reasons given therein. Thus, the question that arises is as to whether such business loss can be set off against the income added by the AO u/s.69A of the I.T. Act. 13. We find identical issue had come up before the Hon ble Gujarat High Court in the case of CIT Vs. Shilpa Dyeing Printing Mills Pvt. Ltd. In that case the assessee company was engaged in the business of Dyeing and Printing. During the course of scrutiny the AO noted that the assessee had declared a sum of ₹ 100.98 lakhs on account of excess stock during the course of survey. However, in the return of income, the assessee had set off the said income from the loss of current year. The AO held that income from undisclosed source would not fall under any of the heads of the income and the same has to be taxed separately. He therefore rejected the claim of set off of such income from the loss of current year. The CIT(A) allowed the claim of the assessee by directing the AO to set off current year s business loss against such additional income declared during the course of survey. The Tribunal dismissed the appeal filed by the revenue. On further appeal by the Revenue, the Hon ble High Court dismissed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be set off against income under any other head. In this case, the Assessing Officer made addition of ₹ 28,50,000/- as undisclosed income under Section 69 of the Act. Once the loss is determined, the same should be set off against the income determined under any other head of income. In the assessment, no reasons were given by the Assessing Officer to deny the benefit of Section 71 of the Act. The benefit provided under Section 71 of the Act cannot be denied and the learned Standing Counsel appearing for the Revenue is also unable to explain or give reasons why the assessee is not entitled to the benefit of Section 71 of the Act. The reasons given by the Tribunal are based on valid materials and evidence and the same is in accordance with the provisions of Section 71 of the Act. We find no error or legal infirmity in the impugned order. 9. We may further notice that the decision in case of Fakir Mohmed Haji Hasan Vs. Commissioner of Income Tax (supra) cameup for consideration in case of Deputy Commissioner of Income Tax Vs. Radhe Developers India Ltd. and anr (supra),it was observed as under: The decisions of this Court in the case of Fakir Mohmed Haji Hasan (supra) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om speculative transactions in Para 11 of the appellate order on the one hand while holding that the appellant was not entitled to set-off so called business loss against the deemed income brought to tax u/s.69A of the Act in paras 9 and 17 of the said order, thereby giving a contradictory finding for the loss claimed by the assessee during the course of assessment proceedings, which remained to be claimed in the return of income filed. 2. That That on the facts and in the circumstances of the case, the Ld.CIT(A), Kolhapur had erred in directing the Assessing Officer to treat the loss emanating from future option transactions in a recognized stock exchange as business loss and not loss from speculative transactions when findings were given by him that the assessee was not entitled to set-off such business loss against the deemed income brought to tax u/s.69A of the Act. 3. That That on the facts and in the circumstances of the case, the Ld.CIT(A), Kolhapur had erred in directing the Assessing Officer to allow the business loss to the assessee when such business loss was not at all claimed in the return of income filed but claimed during the course of assessment proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be taken. 19. We have considered the preliminary issue regarding the maintainability of the cross objection filed by the revenue. Admittedly, the hearing of the appeal was fixed for the first time on 31-10-2013. The cross objection has been filed by the revenue on 20-05-2014. We find along with the cross objection an application for condonation of the delay has been filed which has been signed by the CIT-I, Kolhapur and which reads as under : No.KOP/CIT-I/ITO (HQ-I)/ITAT/2014-15/350 Date: 05-05-2015 To The Income Tax Appellate Tribunal, Pune Bench A, Pune Sir, Sub : Request to ITAT, Pune for condonation of delay in filing cross Objections in the case of Shri Anil Nandiram Ahuja, Prop. Divya Garments, Main Road, Gandhinagar, Tal : Panhala, Dist : Sangli A.Y. 2008-09 Reg. Kindly refer to the above, 1. The present appeal was initially directed against the order u/s.143(3) passed by the AO before the CIT(A), Kolhapur. The CIT(A), Kolhapur had dismissed the appeal of the assessee vide order dated 13-08-2012 received in the CIT-I, Kolhapur s office on 05-09-2012. 2. Since the appeal was prima facie in favour of the Revenue, the Department was not requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... azines registered as newspapers with the Department of Posts and entitled to transmit its publications by post under concessional rate of postage, was denied permission to post issues of two of its magazines containing advertisements at concessional rates. The company filed writ petitions which a single judge of the High Court allowed and, on appeal by the Postal Department, this was affirmed by a Division Bench of the High Court by order dated September 11, 2009. The Postal Department preferred appeals to the Supreme Court by way of special leave with a delay of 427 days with applications for condonation of delay in filing the petitions for special leave : Held, dismissing the applications, the Department had itself mentioned in its affidavit and was aware of the date of the judgment of the Division Bench of the High Court as September 11, 2009. Even, according to the deponent, its counsel had applied for the certified copy of the judgment only on January 8, 2010, and the copy was received by the Department on the very same day. There was no explanation for not applying for certified copy of the judgment on September 11, 2009, or at least within a reasonable time. The fact rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 253(4) the AO or the assessee as the case may be, on receipt of notice that an appeal against the order of the CIT(A) has been preferred by the other party, may, notwithstanding that he may not have appealed against said order or any part thereof, within 30 days of the receipt of the notice, file a memorandum of cross objection, verified in the prescribed manner, against any part of the order of the CIT(A). Therefore, under the facts and circumstances of the case since the AO has filed the cross objection, therefore, he only should have filed the petition for condonation of delay. However, in the instant case the AO has not filed any condonation petition and the same has been filed by the CIT-I, Kolhapur. Thus, from the facts narrated above, there is no valid petition filed for condonation of delay. Under these circumstances and in absence of any justifiable reasons explaining the delay in filing the cross objection, the same deserves to be dismissed. Accordingly, the cross objection filed by the revenue is dismissed being barred by limitation. Since we are dismissing the cross objection on this preliminary issue, the grounds of the cross objection are not being adjudicated being a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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