TMI Blog2022 (11) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions/credits in the respective capital accounts of the partners, therefore, as stated by the Ld. AR and, rightly so, the assessee remained under a bona-fide belief that no doubts were there in the mind of the A.O in respect of the same. We, thus, finding no infirmity in admission of the aforesaid documentary evidence as additional evidence U/rule 46A of the Income Tax Rules, 1962 by the CIT(Appeals), uphold his action to the said extent. For addition in hand which had been vacated by the CIT(Appeals), we find that the assessee had duly substantiated the respective sources from where both the partners had made addition/credits in their respective capital accounts - we not only principally concur with the view taken by the CIT(Appeals) that no adverse inferences as regards the additions/credits in the capital account of the partners was liable to be drawn in the hands of the assessee firm, but also even otherwise, are of a strong conviction that as the source of the respective addition/credits had duly been confirmed by the respective partners out of their duly explained sources, therefore, on the said count also, no addition was called for in its hand. On the basis of our afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee which is factually incorrect, thereby rendering the decision which is perverse? 6. The order of Ld. CIT(A) is erroneous both in law and on facts. 7. Any other ground that may be adduced at the time of hearing. On the other hand the assessee as a cross-objector has supported the impugned order on the following grounds: 1. That the learned CIT(Appeals) has passed the order by evaluating the evidences produced and after allowing opportunity to the learned Assessing Officer. Prayed that the ld. CIT(A) rightly allowed the relief. 2. That the learned CIT(Appeals) allowed proper opportunity to the A.O to examine the fresh evidences filed which the learned Assessing Officer availed and fixed the case for hearing and the ld. AO examined all the supporting filed as per Application under Rule 46A. 2. Succinctly stated, the assessee firm which is engaged in the business of trading of share/securities and commodities had filed its return of income for the assessment year 2012-13, declaring an income of Rs. Nil. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of the assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... online and could be verified. It was further stated by the assessee that the commodities purchased during a day were sold and if not sold it would be marked to market by applying the rate at the end of the day with the corresponding difference either being debited or credited. It was, thus, the claim of the assessee that the A.O without giving any reason or placing on record any such material which would prove to the contrary, had disallowed its claim of loss from commodity trading of (-) Rs. 2,35,09,276/-. Also, the assessee had assailed the treating of the respective additions in the capital account of the partners, viz. Shri Kshitij Agrawal of Rs. 5.25 lacs (approx.) and M/s. Commodity Mandi Pvt. Ltd. of Rs. 65.16 lacs (approx.) as the unexplained investment of the assessee firm by the A.O. It was the claim of the assessee that though the copy of the capital accounts of both the partners were available with the A.O and also had been filed with her separately, however, she had at point of time in the course of the assessment proceedings called upon the assessee to explain the credits/additions made in the said respective capital accounts. It was the claim of the assessee that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had produced contract notes a/w. compact disk (CD) containing the complete details of commodity purchases/sales transaction that were carried out over the year. It was, thus, the claim of the assessee that the A.O despite verifying the authenticity of the assessee's claim of having suffered loss from commodity trading during the year, had however, failed to make a mention of the same in her remand report. Our attention was drawn by the Ld. AR to the relevant extract of the order sheet entry dated 12.07.2016 of the A.O (in the course of the remand proceeding). It was, thus, the claim of the ld. A.R that as the assessee had duly substantiated its claim of loss suffered from commodity trading during the year, therefore, there was no justification on the part of the A.O in not accepting the same. As regards the treating of the addition made in the partners capital account as undisclosed investment by the A.O, it was submitted by the assessee in its rejoinder that as the A.O in the course of the assessment proceeding had not raised any query on the said issue, therefore, it had remained under a bonafide belief that the A.O was satisfied as regards the respective credits/addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyond our comprehension. On a perusal of the assessment order, it transpires that while for, at Para 2 of the order, the A.O had categorically observed that after considering all the documents and books of accounts etc. which were produced during the course of the assessment proceeding the declared income of the assessee at Rs. Nil was accepted, but after so concluding, she had in all her wisdom proceeded with and assessed the income of the assessee at Rs. 1.51 crore (approx.). For the sake of clarity the relevant observation of the A.O as found at Para 2 of her order is culled out as under: 2. During the course of assessment proceeding, it was submitted that the assessee firm has maintained all books of accounts for its business and the same were audited u/s. 44AB of the Income Tax Act, 1961. All books of accounts were produced for examination. During the course of assessment proceedings, it was submitted that the assessee driving income from trading of shares/securities and commodities etc. these trading is online and all details in respect of purchase and sales are available on net. All the details have been produced and examined during the assessment proceeding. After cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from drawing any inferences on the basis of the same. The CIT(Appeals) on being confronted with the aforesaid peculiar or in fact incomprehensible observations of the A.O, had after considering the documentary evidences which were filed by the assessee before him in support of its claim of loss of commodity trading i.e as additional evidence u/s. 46A of the Income Tax Rules, 1962, had forwarded the same to the A.O and called for a remand report from her. Again, we find that the A.O despite specifically mentioning in her order sheet entry, dated 12.07.2016 (recorded in the course of remand proceeding) that the assessee had produced contract notes, CD containing the details of purchase and sale transactions of commodity trading etc., which were examined by her, had however in her remand report except for objecting to the admission of the documents as additional evidence did not comment on the merits of the assessee's claim of loss from commodity trading. 14. Be that as it may, we find from a perusal of the order of the CIT (Appeals) and the records available before us that the assessee on the basis of supporting documentary evidences, viz. contract notes/bills (on sample bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4.2011. Then on 4.4.2011 it had earned profits of 15,30,736.70 and 30,925.76 in two transactions and loss of Rs. 6742.82 in one transaction. Thereafter similarly it had booked profits and losses both on various dates. Final figure as on 31/03/2012 is loss of Rs. 2,35,09,276/-. The daily figure in the statement of profit/loss tallies with the statement of account on a particular day and is supported by contract note of other particular contract number. Thus the loss claimed is supported by books of accounts and hence the same is to be allowed. In the remand report the AO has not made any comment on the merit or genuineness of the loss incurred by the assessee. Her ground is the loss was disallowed be se assessee did furnish any evidence. At the appellate stage since the assessee has furnished the statements supported by contract notes as additional evidence which was admitted, and the A.O was given an opportunity to examine, there is no reason to sustain the disallowance of loss. The same is therefore allowed. 15. We have given a thoughtful consideration to the aforesaid observation of the CIT(Appeals) and except for the fact, that the CIT(Appeals) though inadvertently had re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital account of the other partner, viz. M/s. Stock Mandi Pvt. Ltd. of Rs. 65,16,985/- during the year under consideration, it transpires that the said partner had also placed on record its confirmation a/w. copy of its bank statement which duly substantiated the source of the aforesaid addition of Rs. 65.16 lacs in its capital account. On the basis of the aforesaid facts, we are of the considered view that no adverse inferences at all were liable to be drawn as regards the aforementioned additions that were made in the capital accounts of the partners of the assessee firm. We further concur with the view taken by the CIT(Appeals) that even if the A.O had any doubts as regards the additions/credits in the capital account of the partners, then, the action was called for in the hands of the partners and not in the case of the assessee firm. Our aforesaid view is duly supported by the judgment of the Hon'ble High Court of Gujarat in the case of Pr. CIT-4 Vs. Vaishnodevi Refoils and Solvex, Tax Appeal No. 846 of 2017 dated 28.11.2017 [SLP of the revenue in the aforesaid case had been dismissed by the Hon'ble Apex Court vide its order passed in SLP (Civil) Diary No(s). 22842/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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