TaxTMI 
TaxTMI 
2016 (5) TMI 1219
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....r section 68 of the Act on account of unexplained cash credits of Rs. 25,93,000/- and disallowance of the assessee's claim for short term capital loss of Rs. 17,60,242/-. 2.2 Aggrieved by the order of assessment for A.Y. 2009-10 dated 22.12.2011, the assessee preferred an appeal before the CIT(A)-24, Mumbai. The learned CIT(A) disposed the assessee's appeal vide the impugned order dated 27.03.2014 allowing the assessee partial relief. In the impugned order, the learned CIT(A) upheld the addition of Rs. 25,93,000/- in respect of unexplained cash deposits with Corporation Bank, Mandvi , Mumbai and partly allowed the assessee's claim of loss from futures and options at Rs. 15,03,455/- instead of Rs. 17,60,242/- as business loss under section 43(5) of the Act which is allowed to be set off as per the provisions of section 70 to 79 of the Act. 3. Aggrieved by the order of the CIT(A)-34, Mumbai dated 27.03.2014 for A.Y. 2009-10, the assessee has preferred this appeal before the Tribunal raising the following grounds: - "1. The Ld. Commissioner of Income-tax (Appeals)-24, Mumbai [hereinafter referred as "CIT(A)"] erred in passing the order dated 27.03.2014 confirming the ac....
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.... Term Capital Loss amounting to Rs. 17,60,242/- incurred during the impugned assessment year without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the disallowance of Short Term Capital Loss is not at all justified. Hence, the same may be deleted. (ii) The Ld. CIT(A) failed to appreciate that during the course of the assessment proceedings, the Appellant has furnished all the relevant details called for, to prove the genuineness of Short Term Capital Loss incurred by the Appellant. Thus, disallowance of Short Term Capital Loss amounting to Rs. 17,60,242/- merely on conjectures and surmises is not at all justified. Hence, the same may be deleted. 5. The Appellant denies any liability to pay interest under section 234B and section 234C of the Income tax Act 1961. Hence the same are not leviable. 6. The appellant craves leave to add, alter, amend, delete or rescind any of the grounds of appeal mentioned hereinabove." 4. This appeal was fixed for hearing on various dates. On one occasion, the case was adjourned at the request of the learned D.R. for Revenue and on the other dates of hearing none was present for ....
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....ions in shares for which the turnover was in the range of Rs. 9,18,15,220/-, the short term loss of Rs. 17,60,242/- claimed remained unsubstantiated by supporting evidence. 6.2.1 The learned D.R. referring to the impugned order submitted that the assessee's submissions at para 4.2 thereof was duly considered by the learned CIT(A) while rendering his findings. The learned CIT(A) observed that while the assessee maintained regular books of account for his business concern, M/s. Blue Impex, engaged in the business of exporting goods and got them audited, the transactions of cash deposits in the assessee's account in Corporation Bank, Mandvi, Mumbai and in respect of futures and option transactions were neither disclosed or reflected in his returns of income nor were they got audited inspite of the transactions running into crores of rupees. The learned D.R. submitted that in these circumstances the learned CIT(A) concluded that the assessee's explanation in respect of the cash deposits in the undisclosed bank account in Corporation Bank amounting to Rs. 25,93,000/- was not satisfactory to explain source of the same and therefore upheld the addition thereof. The learned D.R. submitt....
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.... of all, it appears from the records that assessee has maintained two types of accounts, one in the business name of Blue Impex which was engaged in the business of exporting goods to various countries and whose accounts are tax audited by a tax auditor and another set of personal accounts of which transactions are partially reflected in the pass book of savings bank account of assessee with Corporation Bank, Mandvi, Mumbai and these entries/transactions do not figure anywhere in the business books of the assessee in the name of Blue Impex. Assessee has also not got his accounts in respect of future and options transactions as well as share purchase and sale transactions audited from a tax auditor even though the volume of transactions run into crores of rupees. 4.3.4 Assessee has shown cash sales totalling Rs. 25,93,000/- from time to time and these are reflected in the sales register and the total gross sales of Rs. 54,11,64,156/- and net sales of Rs. 50,39,11,658/- are reflected in the P&L Account and the Balance Sheet of the assessee and these are also audited by the auditors. Even though the cash sales of Rs. 25,93,000/- are reflected in the total sales of Rs. 54,11,6....
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.... because 1) these transactions have taken place two or three days before deposits of cash in bank account with CBMM, 2) there are no other cash sates other than these cash sales of Rs. 25,93,000, 3) cash transfer from the business accounts of the assessee are not reflected either as a loan/advance or a reduction in capital with Blue Impex, 4) Share Trading Loss of Rs. 17,60,242/- which occurred on account of trading in shares was not disclosed in the return of income, 5) names of the purchasers of goods are not available with the assessee 6) assessee could have earned more by exporting these goods and assessee has not been able to identify the goods sold. This clearly indicates that assessee has manipulated his accounts and whenever he needed cash, he has disclosed the amount required as cash sales in his business books and immediately gone ahead with transferring cash from his business accounts to his savings account with CBMM, however, these transactions were not reflected in business accounts which were audited by the tax auditor. It is once again repeated that the savings bank account with CBMM does not form part of assessee's business accounts of Blue Impex and the persona....
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....nue supported the finding of the learned CIT(A) in the impugned order in denying the assessee's claim for set off of business loss of Rs. 9,66,297/- against the income of Rs. 25,93,000/- under section 69 of the Act, as no evidence has been brought on record to controvert the findings of the learned CIT(A). 7.3.1 We have heard the learned D.R. at length and perused and carefully considered the impugned order of the learned CIT(A). The learned CIT(A), after considering the submissions of the assessee and relevant provisions of law, has held as under at para 5.1 of the impugned order: - "5.1 Decision:- Assessee has submitted in ground No. 4 of the assessment order that AO has not allowed set off of net business loss of Rs. 9,66,297/- (Business Loss of Rs. 15,03,455- minus Business Profits of Rs. 53,71,580/- against the addition of Rs. 25,93,000/- made under section 68 of I.T. Act, 1961 and the Assessing Officer has erred in denying the same. First of all the income of Rs. 25,93,000/- is assessable to tax under section 69 of I.T. Act, 1961 which is enshrined in chapter VI of I.T. Act, 1961 and each section starting from 68, 69, 69A, 69B and 69D of I.T. Act, 1961 is....
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....d CIT(A) that the assessee's claim for setting off loss of Rs. 9,66,297/- against the income of Rs. 25,93,000/- taxed under section 69 of the Act is not tenable, and consequently dismiss ground No. 2 raised by the assessee. 8. Ground No. 4(1) & (ii) 8.1 In these grounds, the assessee contends that the action of the AO in disallowing the short term capital gains (STCL) of Rs. 17,60,242/- is not justified, as he had furnished all the relevant details to establish the genuineness thereof. 8.2 The learned D.R. supported the finding of the learned CIT(A) in the impugned order in disallowing the STCL of Rs. 2,56,787/- out of Rs. 17,60,242/- claimed by the assessee, as no material evidence has been brought on record to controvert the findings of the learned CIT(A) that the business loss from futures and options is to be treated as Rs. 15,05,455/- and allowed to be set off as per sections 70 to 79 of the Act. 8.3.1 We have heard the learned D.R. for Revenue and perused and carefully considered the material on record. It is seen that the learned CIT(A), after considering the submissions of the assessee, has held as under at paras 6.1 to 6.1.5 of the impugned order: - 6.....
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....iness income from trading at Rs. 5,37,158/- without deducting allowable depreciation u/s. 32 of I.T. Act, 1961 of Rs. 77,164/- and loss from the business of futures and options at Rs. 15,03,455/- in the return of income filed on 22/9/2009 and a refund of Rs. 40,000/- was claimed. Thus, prima facie, assessee had disclosed and claimed loss of Rs. 15,03,455/- from futures and options in the return of income. During the assessment proceedings, assessee's CA had furnished details of Rs. 17,60,242/- in respect of transactions in shares and securities which were not disclosed in the return of income and it is the claim for this loss of short term capital loss of Rs. 17,60,242/- was disallowed by the Assessing Officer. 6.1.4 The transactions in futures and options which resulted in loss of Rs. 15,03,455/- and which was shown as a business loss of Rs. 15,03,455/- in the return of income, were not reflected in the P&L Account and Tax Audit Report which mention only about trading in readymade garments and textiles and only the net profit of Rs. 5,37,157/- is reflected in the P&L Account of the assessee and the so called net loss of Rs. 15,03,455/- in futures and options is also n....
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....oss of Rs. 15,03,455/- reflected in the computation of total income instead of Rs. 17,60,242/- represents nothing but business loss in futures and options and the same is allowed as per the details furnished by the assessee. It is also held that the alternate contention in the assessee's and his representative's submission that loss of Rs. 17,60,242/- is different from the loss of Rs. 15,03,455/- in futures and options, is also not valid because the entries for the same are not reflected anywhere in business accounts which are audited and is also not reflected in the savings account with Corporation Bank, Mandvi, Mumbai, and if it were so, the loss of Rs. 15,03,455/- will be taxable under section 69/69C of I.T. Act, 1961 and, therefore, the alternate contention made during the appellate proceedings is also rejected on facts and in law. 6.1.5 Prima facie, this loss of Rs. 17,60,242/- which was denied as short term capital loss of Rs. 17,60,242/- in the computation of total income worked out by the Assessing Officer in the assessment order, was nothing but the business loss of Rs. 15,03,455/- in futures and options claimed in the return of income with the difference of Rs. 2,56,7....