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TMI Blog2017 (11) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... and of Rs. 92,36,713/- by disallowing loss for different reasons?" 3. The brief facts of the case are that the assessee company has shown profits from trading in the figures and options (F&O) and derivatives and also from dealing in shares and securities. The assessee company has shown loss of Rs. 2,82,68,294/- from trading in commodities. During the course of assessment proceeding, the AO required the assessee company to submit further details of brokers through whom the trading in commodities has been done. After ascertaining the said information, the AO had issued summons u/s 131 to 3 brokers to furnish copy of account of the assessee company on the trading done through them. After receiving information, the AO had observed that as per information furnished by the brokers the total loss incurred by the assessee company was Rs. 2,82,42,642/- while it has shown such loss at Rs. 2,82,68,294/- and the said difference of Rs. 25,642/- which has excessive loss claim has been brought to the notice of assessee company and it ws required to explain the same but considering no explanation it was disallowed. 3.1 Thereafter, AO has discussed the modalities of transaction for the broker an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red) Rs.1,01,46,322/- Add: Loss disallowed (Para A) Rs. 25,642/- Loss disallowed (Para B) Rs.15,26,110/- Loss disallowed (Para C) Rs.92,36,713/- Rs. 1,07,88,465/- Rs.2,09,34,787/- 4.1 He contended that CIT(A) & Tribunal have wrongly allowed the expenses. He further contended that view taken by the both the authorities is contrary to law and the view taken by the AO is required to be accepted. 5. Counsel for the respondent contended that all the transactions are routed through the stock exchange and in that event for the genuine loss incurred because of the transaction which is done in the name of other company, the assessee was not liable to discharge liability of vendor. 6. He relied on the following decisions: 6.1 In Jiyajeerao Cotton Mills Ltd. vs. Commissioner of Income Tax and Excess Profits Tax, Bombay (1958) 34 ITR 888(SC) wherein Supreme Court held as under:- "4. At the very outset, the question calls for an answer, does any question of law arise on the order of the Tirbunal ? It is only if it does, that the decision of the Tribunal will be open to consideration by the court under section 66 of the Act. Stating the same propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P Ltd. ITA No.476/2009 decided on 1.8.2017 wherein it has been held as under:- "3. On 25.04.2017, when the matter was argued, we were of the opinion that the issue is covered by the decision of Supreme Court in the case of Jiyajeerao Cotton Mills. Ltd. vs. Commissioner of Income tax and Excess Profits Tax Bombay (1958) 34 ITR 888 (SC) wherein it has been held as under:- 10. It was next contended that if there had been transfer of profits by Jwaladutt Kishanprasad from Cotton Agents Ltd., to J. R. Pillani, Gwalior, that must appear in the accounts of the latter, that those accounts were with the Income-tax Commissioner and under the control of the Department and had been withheld, and that the Tribunal did not advert to this circumstance. This argument lacks substance. Let us presume that the entries in those accounts would show that the dealings took place as contended for by the appellant. But if the arrangement of the appellant with Jwaladutt Kishanprasad was as deposed to by J. R. Pillani, the accounts of the Gwalior firm would have been maintained conformably to that arrangement. By itself, therefore, it would mean little. In this connection, it should be stated according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le force in this. Then again, Durgaprasad Mandalia was asked why he did not place the orders directly with Cotton Agents Ltd., Bombay, or J. R. Pillani, Bombay, and he said that the policy of the appellant was not to do any business in British India. Mr. Kolah argues that there is nothing wrong in business being done in such a way as to escape taxation. No exception can be taken to that statement. Every person is entitled so to arrange his affairs as to avoid taxation but the arrangement must be real and genuine and not a sham or makebelieve, and the question now under consideration is whether the contracts with the brokers were genuine. 12. Turning next to the accounts produced by the appellant, it is seen that the transactions of the three brokers were entered in Kherij Khata, which is said to have been maintained for parties for whom there are small dealings and whose accounts are cleared up in short time. But then, these transactions are not small transactions, nor were they close in a short time. Though the dealings went on for several months and there were several settlements, it was not until the 15th March, 1943, that payments are alleged to have been made to them. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt below that their evidence had not been taken. There is no substance in this contention. 5. However, counsel for the appellant has relied on the judgment rendered by the Delhi High Court in the case of Commissioner of Income Tax Vs. Vipin Batra reported in (2007)293ITR 389 (Delhi) wherein the High Court has observed as under:- 10. In Raymond Woollen Mills Ltd. v. Income-tax Officer and Ors. , the Supreme Court held that what is required to be seen in a case such as this is whether prima facie there was some material before the Assessing Officer on the basis of which he could reopen the case of the assessed. The sufficiency or correctness of the material is not to be considered because it is open to the assessed to prove that the facts assumed by the Assessing Officer in the notice were erroneous. 11. Much earlier, in Phool Chand Bajrang Lal and Anr. v. Income-tax Officer and Anr. , the Supreme Court reviewed the entire case law and concluded that: (a)There must be some specific, reliable and relevant information available with the Assessing Officer. (b) The Assessing Officer must have reasons, which he must record, that income has escaped assessment. (c) The case should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief. 12. This Court also had occasion to deal with the issue of reopening a completed assessment in United Electrical Co. P. Ltd. v. Commissioner of Income-tax and Ors. (2002) 258 ITR 317. This decision has been relied upon by the Tribunal but we find that it is clearly distinguishable because in that case the Division Bench came to the conclusion that the statement on the basis of which reopening was sought was too general and it did not mention any name, much less the name of the assessed. It was, therefore, held that there was no information on record which could provide a foundation for the Assessing Officer's belief that the assessed's transaction was not genuine and that this income had escaped assessment on that account." 6. Counsel for the respondent has relied upon the decision of Punjab and Haryana High Court in the case of Commissioner of Income Tax Vs. Anupam Kapoor reported in (2008) 299ITR 0179 as well as the judgment of the Supreme Court confirming the decision rendered by the Allahabad High Court in the case of Commissioner of Income Tax (Central) Kanpur Vs. Dilbagh Rai Arora arising out of judgment and order dated 15.09.2010 in ITA No.125/2009." 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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