TMI Blog2019 (3) TMI 1465X X X X Extracts X X X X X X X X Extracts X X X X ..... I 1 - SUPREME COURT] as well as in the case of Maneka Gandhi Vs. Union of India [1978 (1) TMI 161 - SUPREME COURT] in which order the law has been laid down that a public authority should discharge his duties in a fair, just and reasonable, manner and the principle of due process of law was recognized by the Hon’ble Supreme Court. So, we uphold the order of the CIT(A) directing the AO to restrict the addition after giving set off of the loss which does not require any interference from our part and so we confirm the same. Addition u/s 14A - HELD THAT:- AO the assessee in its submission dated 10.02.2015 had explained that out of the total STT, sum of ₹ 2,24,983/- was directly attributable to the investments and that the said amount had already been disallowed and added back to the total income. As regards the STT of ₹ 6,84,939/- paid on derivatives, it brought to our notice that the aforesaid amount was erroneously disallowed by the AO presuming it to be as direct expenditure under Rule 8D(2)(i). We note that the AO seems to have not understood that STT was directly & intrinsically related to the activity of trading in derivatives, which yielded only taxable income, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he found that 151 number of cases were recorded as transactions in the exchange in the name of the assessee, the details of which has been reproduced by the AO from page 7 to 12 of the assessment order. After reproducing the details as stated above, the AO was of the opinion that the assessee had purchased derivative of quantity 1827 for value ₹ 9,07,14,400/- and sold quantity of 3402 for value ₹ 17,00,41,537/-. So, the AO observed that there are more sales than purchase, which cannot be possible. The AO took note of the four types of transactions available in the ITS details, which were found to be unaccounted in the books of the assessee, (1) Purchase of ₹ 8,80,86,851/- recorded against which sales of ₹ 7,89,50,506/- resulting in a loss of ₹ 91,36,345/- out of such transactions. (2) Purchase of ₹ 8,16,25,363/- recorded against which no sales recorded. (3) Purchase of ₹ 1,96,39,875/- recorded against which sales of ₹ 2,89,01,716/- recorded resulting m a profit of ₹ 92,61,841/-. (4) Sales of ₹ 4,38,03,828/- recorded against which no purchase found. The Profit/loss generated out of unaccounted transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of ₹ 92,61,841/- was discovered. We note that the assessee is engaged in the business of trading in shares and securities. We note that the assessee also deals in future and options. In the derivative scheme, the profit /loss of future /options is reflected in the P L Account on net basis. In the course of the assessment, the AO had obtained information pertaining to the future transaction conducted by the assessee which incurred loss in a particular set off transactions of ₹ 91,36,345 and a gain of ₹ 92,61,841/-. According to AO, neither profit nor the loss from these transactions was reflected in the books of account. In the appeal, the Ld. CIT(A) allowed the claim of the assessee to set off of the loss of ₹ 91,36,345/- from the unaccounted profit of ₹ 92,11,870/- and accordingly, the undisclosed income was restricted to ₹ 1,76,525/-. The Hon ble Supreme Court in the case of ITO Vs. Ch. Atchaiah 218 ITR 239 (SC) has laid the ratio/principle that under the present Act, the ITO has no option like the one he had under the 1922 Act. The ITO can and the ITO must tax the right person and the right person alone on the right income in the right ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred expenditure on STT of ₹ 2,24,983/- and towards investment, other charges (investments) of ₹ 14,749/- and offered ₹ 2,39,732/- towards disallowance. The AO applying Rule 8D(2)(i) and 8D(2)(iii) made disallowance of ₹ 9,30,504/- and ₹ 27,366/- respectively. Since the assessee offered ₹ 2,39,732/- balance of ₹ 7,17,848/- was disallowed as expenditure u/s. 14A of the Act. On appeal, though assessee challenged the addition made u/s. 14A read with Rule 8D(2)(i), the Ld. CIT(A) has not adjudicated the same and only adjudicated in respect to application of Rule 8D(2)(iii) and relying on the judgment of this Tribunal in REI Agro Ltd. Vs. DCIT (144 ITD 141) has directed the AO to take into consideration 0.5% of the investment in scrips which had yielded dividend income. This action of the Ld. CIT(A) has been challenged by the Revenue. However, the assessee has also filed the Rule 27 application has contended that the AO s action in respect of application under Rule 8D(2)(iii) is fully supported by the assessee. However, brought to our notice that the Ld. CIT(A) while adjudicating the action of AO while disallowing under section 14A read with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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