Assessee wins appeal on set-off of business loss from shares against undisclosed income for assessment years 2009-10 to 2011-12.

The Tribunal allowed the assessee's appeal regarding the addition of Rs. 11,11,080/- due to the disallowance of set-off of loss of shares F & O against undisclosed income for the assessment year 2009-10. The Tribunal held that the assessee was entitled to set off the business loss from shares F & O against the undisclosed income. Consequently, the appeal was partly allowed for the assessment years 2009-10 to 2011-12.

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Issues Involved:
1. Reopening of assessment and issuance of notice under Section 148 of the Income Tax Act, 1961.
2. Addition of Rs. 11,11,080/- on account of disallowance of set-off of loss of shares F & O against undisclosed income.

Detailed Analysis:

Issue 1: Reopening of Assessment and Issuance of Notice under Section 148
The first ground raised by the assessee challenged the reopening of assessment and issuance of notice under Section 148 of the Income Tax Act, 1961. However, this ground was not pressed by the assessee during the proceedings. Consequently, this ground was dismissed as not pressed.

Issue 2: Addition of Rs. 11,11,080/- Due to Disallowance of Set-off of Loss of Shares F & O Against Undisclosed Income
The second ground pertained to the addition of Rs. 11,11,080/- due to the disallowance of set-off of loss of shares F & O against undisclosed income. The assessee filed its return of income, which included income from business profits and other sources, and claimed deductions under Chapter VI-A of the Act. The case was reopened, and the assessment was completed under Section 143(3) read with Section 147, disallowing the set-off of loss of shares F & O.

The assessee appealed to the CIT(A), who dismissed the appeal on the grounds of it being filed beyond the statutory time limit without sufficient cause. The assessee argued that the delay was due to medical emergencies and lack of awareness about the provisions of the law, which was supported by an affidavit.

Upon review, the Tribunal found that the assessee had sufficient cause for not filing the appeal in time, referencing the Supreme Court decision in the case of Land Acquisition Collector Vs. MST Kitji. The delay was condoned, and the appeal was admitted.

On the merits, the Tribunal examined the addition made by the Revenue Authorities. The assessee had a total undisclosed income of Rs. 60,28,325/-, which was invested in shares and options trading, resulting in a loss of Rs. 59,64,585/-. The assessee argued that the loss from shares F & O should be considered a business loss under Section 43(5)(d) and set off against the undisclosed income.

The Tribunal referenced several judgments, including:
- CIT Vs. D.P. Sandu Bros. [2005]: Held that Section 14 and Section 56 constitute a complete code for determining the head under which income should be taxed.
- Hon'ble Madras High Court: Emphasized that income tax is levied on total income classified under various heads, allowing for the set-off of losses under Section 71.
- Hon'ble Gujarat High Court: Stated that the Act does not envisage taxing any income under a head not specified in Section 14, supporting the set-off of losses against income under any head.
- Circular No.11/2019: Clarified that the amendment to Section 115BBE(2) was prospective from A.Y. 2013-14 onwards, allowing set-off of losses against undisclosed income for earlier years.

The Tribunal concluded that the assessee was entitled to set off the business loss from shares F & O against the undisclosed income for the assessment year 2009-10. Thus, the solitary ground raised by the assessee was allowed, and the appeal was partly allowed.

Appeals for A.Y. 2010-11 and 2011-12
The facts and circumstances for the assessment years 2010-11 and 2011-12 were identical to those of A.Y. 2009-10. Therefore, the Tribunal's findings and directions for A.Y. 2009-10 were applied mutatis mutandis to these appeals. Consequently, the grounds raised by the assessee in both appeals were partly allowed.

Conclusion
In summary, the three appeals filed by the assessee for the assessment years 2009-10 to 2011-12 were partly allowed. The order was pronounced in the open court on 14-02-2020.

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