AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 821
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....the AO issued summon u/s.131 of the I.T. Act and the statement of the assessee was recorded in the presence of his authorized representative. The assessee in his reply to Question No.7 explained about the total transactions as under : Sr.No. Particulars Amount (Rs.) 1 Total transaction with the bank 58,36,420 2 Less : Amount received from Joindre Capital Services Ltd for sale of shares by cheque 20,51,839 Balance 37,84,458 3 Less hand loan taken from Vandana Sarees by cheque 2,80,000 Total cash deposited 35,04,581 4 Less : Amount withdrawn in cash (Self) utilised for depositing in the account 6,10,000 5 Net cash deposited in Bank 28,94,581 2.1 The assessee explained that he utilized the cash deposited in the bank account for payment towards share trading transactions with Joindre Capital Services Ltd. 2.2 The AO noted that the assessee was repeatedly asked about the source of cash deposited in the bank vide Question Nos. 7, 8, 11 & 12. It was explained by the assessee that he had taken hand loans from relatives but he expressed his inability to state the names of the persons from w....
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....s from speculative transactions, it was argued that the loss suffered by the assessee ought to have been set off against the income assessed on account of unexplained money as the business loss can be set off against the other income. Various decisions were also brought to the notice of the CIT(A). 5. However, the CIT(A) was also not convinced with the explanation given by the assessee and upheld the action of the AO by observing as under : "7. I have considered the submission of the appellant with reference to the facts on record. From the copy of statement issued by Joindre Capital Services Ltd., it is seen that the appellant had suffered share trading (of futures options transaction) loss of Rs. 13,86,925/-. The appellant had funded these transactions through hand loans aggregating to Rs. 28,94,581/- raised from relatives, which remained unexplained. The AO treated it as appellant's income u/s.69A of the I.T. Act. The appellant also suffered a loss of Rs. 13,86,925/- which was not allowed to be set off against the income taxed u/s.69A of the I.T. Act. 8. The issue is whether the loss of Rs. 13,86,925/ - suffered by the appellant can be set off against income....
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....V. It comes into play only after the computation of total income under various heads of income in terms of Chapter IV has been done. Income falling under Chapter VI is taxed by aggregating the same with the income quantified in terms of Chapter IV. Chapter VI is not subservient to Chapter IV. Besides, section 14 allows the taxability of income under specific provisions of the I.T. Act outside Chapter IV. For the reasons aforestated, the income assessable u/s.68 cannot be assessed as income from other sources u/s.56. 15. Thus what is taxed under Chapter IV is income from a known source including income from other sources. A source of income means a specific source from which a particular income springs or arises. Once a source giving rise to a particular income is identified, it has then to be placed under a particular head of income as specified in section 14. Thus income can be taxed under a specific head of income as enumerated in section 14 only when it is possible to peg the same to a known source/head of income. If the nature and source of a particular receipt is not known, it cannot then be pegged to a known source/head of income. Chapter IV contemplates computation ....
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....that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under any one of those heads by virtue of a satisfactory explanation being given, then these provisions of sections 69, 69A, 69B and 69C will not apply, in which event, the provisions regarding deductions, etc., applicable to the relevant head of income under which such income falls will automatically be attracted. The opening words of section 14 "save as otherwise provided by this Act" clearly leave scope for "deemed income" of the nature covered under the scheme of sections 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from "other sources" because the provisions of sections 69, 69A, 69B and 69C treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases....
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....essment and the same is made after the total income has been ascertained. The assessee is subject to income-tax on his total income though his income under each head may be well below the taxable limit. Hence the loss sustained in any year under any head of income will have to be set off against income under any other head. The A.O. made addition of Rs. 28,50,000/- as undisclosed income under s.69. Once the loss is determined, the same should be set off against the income determined under any other head of income. In the assessment, no reasons were given by the A.O. to deny the benefit of s.71. The benefit provided under s. 71 cannot be denied. The reasons given by the Tribunal are based on valid materials and evidence and the same is in accordance with the provisions of s.71. There is no error or legal infirmity in the impugned order. Under these circumstances, no substantial question of law arises for consideration." 13. This decision is applicable in cases where there is some income available under the heads enumerated in Section 14 of the Act for the purpose of set off and not in cases where there is no income which can be taxed under a particular head enumerated in Se....
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....I are available for set off u/s.71 of the I.T. Act. 17. In view of the above discussion, I hold that the appellant is not entitled to have set off of so-called business loss against the deemed income brought to tax u/s.69A of the Act. In the result, the grounds of appeal stands dismissed." 6. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : "1. On the facts and in the circumstances of the case and in law the Ld.CIT(A) is not justified in rejecting the claim of set off of business loss against the income determined. 2. On the facts and in the circumstances of the case and in law the Ld.CIT(A) failed to appreciate that once loss is determined the same should be set off against the income determined and the benefit given by statute cannot be denied." 7. The Ld. Counsel for the assessee submitted that during the year under consideration, the assessee suffered loss of Rs. 13,86,925/- in share trading of futures and options. In his return of income filed, by mistake, inadvertence and lack of proper knowledge, the assessee did not disclose this loss and did not claim set off of the same against his ot....
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....itted that the assessee has not disclosed the loss from share trading of Futures in the return of income. The only income shown was from interest income and income from Divya Garments. He submitted that no such transaction in share trading of Futures was there in the preceding year or succeeding year. Therefore, the claim of loss from share trading of Futures is a bogus claim and should not be accepted. Even otherwise also, in view of the decision of Hon'ble Chattisgrah High Court in the case of Dhanush General Stores Vs. CIT reported in 339 ITR 651 the assessee is not entitled to get the benefit of set off since the same was not declared in the return of income. He also relied on the decisions relied on by the CIT(A). 11. The Ld. Counsel for the assessee in his rejoinder submitted that the reliance placed by the Ld. Departmental Representative on the decision of Hon'ble Chattisgarh High Court in the case of Dhanush General Stores (Supra) is clearly misplaced. Without prejudice to the above and by way of an alternate submission the Ld. Counsel for the assessee submitted that it is a well settled law that in case 2 comparable constructions of statute are possible, then the constr....
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.... and the same has to be taxed separately. He therefore rejected the claim of set off of such income from the loss of current year. The CIT(A) allowed the claim of the assessee by directing the AO to set off current year's business loss against such additional income declared during the course of survey. The Tribunal dismissed the appeal filed by the revenue. On further appeal by the Revenue, the Hon'ble High Court dismissed the appeal filed by the Revenue by observing as under: "7. Before us, learned counsel for the revenue placed strong reliance on the decision in case of Fakir Mohmed Haji Hasan Vs. Commissioner of Income Tax (supra) and submitted that when the income from undisclosed source does not fall in any of the heads specified in Section 14 of the Act, the business loss of the current year could not have been set off against such income. He submitted that in Deputy Commissioner of Income Tax Vs. Radhe Developers India Ltd. and anr (supra) this Court had not, in any manner, disagreed with the view in case of Fakir Mohmed Haji Hasan Vs. Commissioner of Income Tax(supra) and thus, such ratio still hold the field. 8. We, however, find that Section 71 of the A....
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....h the provisions of Section 71 of the Act. We find no error or legal infirmity in the impugned order. 9. We may further notice that the decision in case of Fakir Mohmed Haji Hasan Vs. Commissioner of Income Tax (supra) cameup for consideration in case of Deputy Commissioner of Income Tax Vs. Radhe Developers India Ltd. and anr (supra),it was observed as under: "The decisions of this Court in the case of Fakir Mohmed Haji Hasan (supra) and Krishna Textiles (supra) are neither relevant nor germane to the issue considering the fact that in none of the decisions the Legislative Scheme emanating from conjoint reading of provisions of sections 14 &56 of the Act have been considered. The Apex Court in the case of D.P.Sandu Bros.Chembur P. Ltd.,(supra) has dealt with this very issue while deciding the treatment to be given to a transaction of surrender of tenancy right. The earlier decisions of the Apex Court commencing from case of United Commercial Bank Ltd.Vs. CIT (1957) 32 ITR 688 (SC) have been considered by the Apex Court and, hence, it is not necessary to repeat the same. Suffice it to state that the Act does not envisage taxing any income under any head not specif....
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....ings were given by him that the assessee was not entitled to set-off such business loss against the deemed income brought to tax u/s.69A of the Act. 3. That That on the facts and in the circumstances of the case, the Ld.CIT(A), Kolhapur had erred in directing the Assessing Officer to allow the business loss to the assessee when such business loss was not at all claimed in the return of income filed but claimed during the course of assessment proceedings. 4. That any other ground(s) the department intends to take for the above during the course of appellate proceedings." 16. The Ld. Counsel for the assessee at the outset raised his objection regarding the maintainability of the cross objection filed by the Department. He submitted that the assessee has filed the appeal on 13-08-2012. The hearing of the appeal was fixed for the first time on 31-10-2013. Assuming that the Department received the notice of hearing on 30-10-2013, even then the cross objection is required to be filed within 30 days from the date of such notice intimating the date of hearing of the appeal which in the instant case is 29-11-2012. However, the cross objection has been filed by the reven....
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....i Anil Nandiram Ahuja, Prop. Divya Garments, Main Road, Gandhinagar, Tal : Panhala, Dist : Sangli - A.Y. 2008-09 - Reg. Kindly refer to the above, 1. The present appeal was initially directed against the order u/s.143(3) passed by the AO before the CIT(A), Kolhapur. The CIT(A), Kolhapur had dismissed the appeal of the assessee vide order dated 13-08-2012 received in the CIT-I, Kolhapur's office on 05-09-2012. 2. Since the appeal was prima facie in favour of the Revenue, the Department was not required to prefer an appeal before ITAT. However, the Assessee being aggrieved by the order of the CIT(A), Kolhapur preferred an appeal before ITAT, Pune. 3. However, later on the AO observed that the CIT(A), Kolhapur in the Para 11 of the order has accepted the Assessee's contention in respect of treating the loss emanating from the future options transactions in a recognized stock exchange to be business loss even though the same was not claimed in the return of income by the assessee and also not allowed by the AO. Further the AO also has observed that in Para 17 of the order, the CIT(A) has held that the appellant assessee is not entitled to have set of....
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....cial leave : Held, dismissing the applications, the Department had itself mentioned in its affidavit and was aware of the date of the judgment of the Division Bench of the High Court as September 11, 2009. Even, according to the deponent, its counsel had applied for the certified copy of the judgment only on January 8, 2010, and the copy was received by the Department on the very same day. There was no explanation for not applying for certified copy of the judgment on September 11, 2009, or at least within a reasonable time. The fact remains that the certified copy was applied for only on January 8, 2010, i.e. after a period of nearly four months. Neither the Department nor the person in-charge had filed an explanation for not applying for the certified copy within the prescribed period. The other dates mentioned in the affidavit clearly showed that there was delay at every stage and there was no explanation as to why such delay has occasioned. The Department or the person concerned had not evinced diligence in prosecuting the matter to the court by taking appropriate steps. The persons concerned were well aware or conversant with the issues involved including the prescrib....