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TMI Blog2021 (12) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... d circumstances of the case and in law, notice/order of ld. Pr. CIT is manifestly in violation of provisions of section 263 of Act in as much as even if for argument sake, sole allegation that loss Rs. 93,23,384/- is speculation loss (though not admitting) not eligible to set off against normal income is accepted, than also taxable income, tax payable will be same due to set off against huge C/f assessed losses, and as such still there is no loss to revenue, hence order set aside is not erroneous being not prejudicial to interest of revenue. 3. That on the facts and circumstances of the case and In law, ld. Pro CIT completely misdirected himself in invoking provisions of S. 263 because: i) objection that loss Rs. 93,23,384/- day trading is a speculating loss is not correct being against the law & principle of consistency being admitted itself by revenue in earlier years. ii) Alternatively notice/order is violating the settled principle that "where the AO adopted one of the courses possible in law or where two views are possible and he has taken one view with which the Pro Commissioner does not agree, it cannot be treated that the assessment order is erroneous so as to be prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the case was selected for scrutiny was served and in response to the same, the assessee filed all the details. Thereafter, various notices and queries were raised from time to time vide notices dated 24.01.2017 & 15.06.2017 u/s. 142(1) of the Act. Again in response, the assessee filed its detailed reply before the AO. Copies of notices and replies filed by the assessee during the course of assessment proceedings along with copy of audited report and other details have been placed in the paper book. After examining the entire details and detailed scrutiny of the information as was required during the course of hearing, the AO completed the assessment on the returned income vide order dated 25.09.2017 passed 143(3) of the Act. 6. Thereafter, ld. PCIT in his revisionary jurisdiction issued a show-cause notice dated 20.03.2021 u/s. 263 of the Act mainly on the ground that, from the analysis of trade details of shares, it is seen that majority of trades undertaken were of the nature of speculative transaction through day jobbing in which sale and purchase of scrips on same day are matched without taking the delivery of the scrips. Ld. Pr. CIT further observed in his impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other limb of exercising the power u/s. 263, that it is prejudicial to the interest of Revenue, Ld. PCIT held that, assessee has wrongly filed inaccurate particulars of share transactions which were adjusted against the speculative loss after trading to the business loss. Accordingly, he set aside the assessment after observing and holding as under:- "4.7 It is incumbent on the officer to investigate the facts stated in the return, when circumstances would make an enquiry prudent and the word "erroneous" in section 263 includes failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein as assumed to be correct. 4.8 Reliance if also placed on the following case laws: i. Duggal & Co. vs. CIT, (1996) 220 ITR 456, 459 (Del.) ii. Shri Virendra Kumar Gupta vs. CIT in ITA 2595/D/2009 dated 21.01.2011 (ITAT), Delhi 5. It is evident from facts of the present cases, as mentioned in the foregoing paragraphs that the AO accepted the version of the assessee without making any proper independent enquiry or verification whereas it is very well settled law t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedless to say, that while completing a fresh assessment, the assessee may be provided adequate opportunities." 10. Before us, the ld. counsel for the assessee submitted that first of all, here in this case, as per the documents available on record, the notice u/s. 263 was issued only on the basis of audit objection; that the loss claimed by the assessee was speculative loss and capital gain was computed without considering F & O loss. In support, he also filed the copy of letter dated 11.10.2021 written by the Addl. CIT, Special Range, Ghaziabad to Senior Audit Officer. He also placed copy of the audit observations. Thus, he submitted that action under section 263 was initiated on the basis of audit objection and without any application of mind; therefore, same is not sustainable in law. 11. Apart from that, he mentioned that issue of set off of loss is beyond the scope of limited scrutiny for which the case was under scrutiny and ld. Pr. CIT has enlarged the scope in respect of security transaction to change the head of income. He further submitted that on all the issues raised otherwise, AO has raised specific queries and the assessee has submitted all the replies giving entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) 13. Ld. Counsel further submitted that the assessee is being engaged in F & O and day trading since long and in all the earlier years, resultant profit & loss account was always accepted as business income/loss by the department. In support, he also filed statement of assessment proceedings for last four years wherein most of the assessments have been completed u/s. 143(3) of the Act. For the sake of ready reference, the chart is reproduced as under:- Assess- ment Year Business - Gross Day Trading / F&O (as per P&L A/c) Other Business - (As per P&L A/c) Total business income - As per ITR/ computa- tion Salary + HP + Capital Gain + Other sources Net Income (as per ITR) Remark 2011-12 -622,726,906 689,595 39,524,006 75,272,162 29,912,933 Accepted u/s 143(3) 2012-13 -5,944,124 5,179,665 702,259 19,026,805 17,806,210 Accepted u/s 143(3) 2013-14 -9,532,168 1,624,814 -1,413,614 18,013,164 17,386,912 Accepted as per return 2014-15 14,237,415 1,055,947 -35,163 18,553,242 20,495,640 Accepted u/s 143(3) 2015-16 -9,323,384 -1,831,158 90,757 -11,981,580 43,070,999 5,980,000 Accepted u/s 143(3) originally 2016-17 -292,861 -78,786,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing original and alternative computation of income with statement of profit/losses and their set off and carry forward losses. The said computation has been placed on pages 64 to 79 for the A.Y. 2015-16 and similarly for A.Y. 2016-17 at pages 80 to 86 of the paper book. From the perusal of the said document, it is seen that as per the actual computation, the business loss of Rs. 1,91,81,580/- was set off against the income of; a) house property of Rs. 20,52,542/-, b) against income from other sources of Rs. 5,40,403/-; and c) against short term capital gain of Rs. 93,88,635/-. Thus, balance short term capital loss was Rs. 2,91,58,924/- was set off against carry forward loss under the same head 'short term capital gain' against available carried forward short term capital gain of Rs. 4,41,05,508/-. If the amount of Rs. 93,23,384/- is treated as speculation loss then business loss of Rs. 26,58,196/- will get set off against the income from house property of Rs. 20,52,542/-, against income from other sources of Rs. 5,40,403/- and against short term capital gain of Rs. 65,251/-. This will result in balance short term capital gain of Rs. 3,84,32,308/- to be set off against ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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