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TMI Blog2022 (10) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... misinterpreting the true intent & scope of Section 44AD which commences with non obstante clause stating notwithstanding anything to the contrary u/s 28 to 43C while the exclusionary clause u/s 44AD(6)(ii)r.w. Explanation(b)(i),(ii) does not restrict the business transactions namely(i)"commission from real estate business ", (ii) "business from trading in equities and derivatives". (b) Because the law is settled that the fiscal statute has to be construed strictly [SnehEnterprises vs Comm. of Customs (2006) 7 SCC 714 Para 24] and till specifically excluded a wider meaning has to be given to the provisions of the statute hence the narrow interpretation by the CIT(A) is erroneous. 2 Because the action for upholding the addition of Rs 6,91,748/- is being challenged on facts& law and even the quantum of additions are under challenge. 3. (a) Because the action is under challenge on facts & law for upholding the addition of 6,20,100/- treating the same as unexplained money u/s 69A r.w 115BBE while the assessee has himself volunteered to offer the amount for taxation to be written back as an income. (b) In accordance with Section 2(j) & 3 r.w Schedule Part-ll for Suits relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, he noted that since no books of accounts/evidence was produced by the assessee, hence no benefit can be given to the assessee of the loss incurred in derivative transactions. 5. Being aggrieved by the above order of the CIT(A), the assessee has come in appeal before this Tribunal. The ld. Counsel for the assessee in this respect has made the following submissions: "The assessee had reported receipts from four sources u/s 44AD as stated above, whereas assessment order deals with only two sources while ignoring the receipts from other two sources. The Assessing Officer ignored the receipts of Rs 35,16, 210/- from trading in 'Futures and Options' in which assessee had incurred loss of Rs.12,47,996/- even after specifically being pointed out by the assessee vide his letter dated 11.09.2017 (which is even reproduced by A.O in the assessment order at page no. 10). Instead of allowing loss in trading of future and options, Ld AO kept silent on this issue and further erred in treating the same u/s 44AD where income is declared @8%. The AO ignored the receipts of Rs.7,31,050 /- from sale of property. On one hand Ld AO has observed in para 10 of the assessment order that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts not liable to tax and if it has to be taxed then it can only be taxed u/s 68 in the year of receipt of the amount being FY 2008-09. By no stretch of imagination the receipts could be taxed in the year under dispute. The assessee due to lack of knowledge offered the same to tax. Only the interest portion can be disallowed and not the principle amount. This will again reduce the gross receipts u/s 44AD. The Ld AO has added the amount of Rs.620100/-u/s 69A read with section 115BBE but has not adjusted the gross receipts u/s 44AD by this amount. d) Further Commission Income of Rs.6,91,748/- can be brought to tax which is a valid source. The loss of Rs.12,47, 996/- on future and options will be adjusted against the commission income, which will result in nil business income. e) Therefore if Correct & proper assessment is made by the AO, then business income will be reduced to nil and the resultant tax effect will reduce further. The assessee has not tried to evade tax but has ended up paying more taxes due to lack of proper knowledge." 6. The ld. DR, on the other hand, has relied upon the findings of the lower authorities. 7. I have considered the rival submissions and go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of certain income. The Assessing Officer will determine the true and correct income of the assessee under different heads as per the provisions of the Act. The appeal of the assessee is treated as allowed for statistical purposes. 8. ITA No.34/CHANDI/2020 - In this case, the facts and issues are almost identical as that of the appeal of the assessee for assessment year 2015-16 in ITA No.1270/CHANDI/2018. In this appeal, the assessee has declared the gross receipts as under: Sale of land at Patiala 11,87,000 Income sale/purchase/renting of properties 4,73,644/- Forfeiture of advance against land at Ghuman Nagar 3,00,000/- Turnover of future and options 58,56,350/- Total 78,16,994/- The assessee offered tax @6%/8% on presumptive basis on the entire receipts as per the provisions of section 44AD of the Act. The ld. Counsel for the assessee in this respect has made the following submissions: "The ld. A.O while making the assessment made additions of Rs.6,15,000/- u/s 69A r.w.s 115BBE observing that trading liability on account of land sold on GPA cannot be retained by the assessee ignoring that the amount belong to Mrs Hem Lata mother-in law of the assessee. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rightful assessment. We have discussed the anomalies in assessment order above, we also draw 'Your Honors' kind attention to the tax effect if proper & correct treatment is given to all sources of income declared u/s 44AD. a) The total receipts of Rs 58,56,350/- on account of trading in futures and options will be reduced from the total turnover u/s 44AD and Loss of Rs 6,52, 315/- will be adjusted against the current year business income. Moreover, the business income declared u/s 44AD will be reduced by Rs 4,68,508/-. Documents relevant for computing derivative losses are at Paper book page 210-243. b) Retention of money of Rs 6,15,000/- of Mrs Hem Lata mother in law be treated as gift and ignorance of assessee should not become basis for high pitched assessment. c) Further Commission Income of Rs 4,73, 644/- can be brought to tax which is a valid source . The loss of Rs.6,52,315/- on future and options will be adjusted against the commission income, which will result in nil business income. The set off of loss is allowed by CIT (A). d) Therefore if correct &proper assessment is made by the AO, then business income will be reduced to nil and the resultant tax effec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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