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2016 (8) TMI 273
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.... under the Companies Act. For the assessment year 2011-2012, the petitioner had filed return of income on 30.8.2011 declaring total income of Rs. 62.46 lacs (rounded off). Such return was taken in scrutiny by the Assessing Officer during which he raised various queries which the petitioner answered. Ultimately, he framed the assessment under section 143(3) of the Income Tax Act ("the Act" for short) on 31.12.2013 determining the total income at Rs. 92.29 lacs (rounded off). To reopen such assessment, the Assessing Officer issued the impugned notice for which he recorded the following reasons : "Assessment for A.Y.2011-12 was finalized U/s. 143(3) of the Act on 31/12/2013 and the total income of Rs. 92,29,714/was assessed Subsequently, it....
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....that the assessee has paid Usance Charges on Silver loan and deducted tax @ 2% of Usance Charges. Assessee has paid Usance charges of Rs. 8,81,018/. Since the Usance charges are nothing but the interest payment, assessee ought to have deducted Tax at source @10% as per provision of section194A of the Act. As the assessee has not complied with the provision of section 194A of the Act by deducting tax @2% instead of 10%, the claim of Usance charges of Rs. 8,81,018/should have been disallowed U/s.40(a)(ia) of the Act. Therefore, the income of Rs. 8,81,018/has escaped assessment within meaning of section 147 of the I. T. Act. During the course of assessment proceedings, it was noticed that assessee has made sales in cash to Shri. Chudasma....
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.... that even if the sale of gold to Shri Chudasama for a sum of Rs. 42.68 lacs is not believed, the fact remains that the assessee had offered such sum for tax as a revenue receipt. There was thus no escapement of income on this score. Counsel lastly contended that all these issues were examined by the Commissioner in exercise of powers under section 263 of the Act for which a notice was issued on 12.2.2016 in which all these three issues were mentioned. Upon the petitioner making a detailed representation, the Commissioner dropped the revisional proceedings by an order dated 22.3.2016. It would thereafter, not be open for the Assessing Officer to reopen the assessment on these very issues. 5. On the other hand, learned counsel Mrs. Bhatt ....
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....urse of assessment proceedings, the Assessing Officer had raised written queries. Under letter dated 7.11.2013, the Assessing Officer called upon the assessee to provide the following details : "8. Copy of ledger a/c with confirmation in respect of MCX Silver Rate Difference. *State whether it is related to speculation business of Bullion Trading." 8. In response to such letter, the assessee under letter dated 25.11.2013 stated as under : "8. Copy Ledger confirmed ledger account of MCX Rate Difference account is enclosed herewith. It is Business loss and not Speculation loss for the reason that the assessee is trading/merchandising in Silver/gold and the loss so suffered is on account of safe guarding the items traded/merchandised ....
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....d like to clarify in furtherance to our earlier submissions that it is a business loss and not a speculation loss for the reason that the assessee is trading/merchandising in Silver/gold and the loss so suffered, is on account of safe guarding the raw materials or merchandise traded by him." 11. It is not necessary to record the entire contents of this letter which are aimed only on the issue why such loss could not be treated as speculative. 12. In the final order of assessment that the Assessing Officer passed, he made no disallowance on this count. It can thus be seen that entire issue of nature of loss suffered by the assessee on sale of gold and silver was examined at length by the Assessing Officer during the original assessment....
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....hat the usance charge is calculated at 1% on the closing balance of silver loan in the respective account. The value appearing in these accounts is the market value at which the loan was obtained in the year 2008. Hence on this value charges @ 1% is charged. We have also annexed the respective silver loan ledger accounts as mentioned above along with the usance charge account for your honour's reference." 16. Thus on the issue of appropriate rate of deduction of tax at source on the usance charges paid by the assessee also, the Assessing Officer had shown sufficient interest in the assessment proceedings. The assessee had made detailed representations why the collection of tax at source as shown by the assessee was in order. Once aga....