TaxTMI 
TaxTMI 
2018 (12) TMI 53
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....,69,431/- on sale of mutual funds which resulted in net loss of Rs. 66,92,169/-. Thus the resultant loss on sale of shares and mutual funds was adjusted against the short term capital gain on fixed assets. The Assessing Officer (AO) furnished the details of the sale of shares and the resultant losses as under : S.No Name of the company Quantity Rate and cost of value Date of purchase/ sale Quantity Rate and sale proceeds Net Loss 1. Golden Herbert (I) Ltd. 1,00,000 @54% Rs. 54 lacs 14.06.2003 06.03.2004 1,00,000 @10% 44 lacs 2. Usha Housing & DevelopMent Co.Ltd. 3,32,700 @9% Rs. 29,94,300 14.06.2003/09.03.2004 3,32,,700 @1% 26,61,600 Total Loss 70,61,600 3. Initially, the AO asked the assessee as to why the loss should not be treated as speculation loss u/s 43(5) of the Income Tax Act, 1961 (hereinafter called as 'Act'). The assessee filed objection for treating the loss as speculation loss stating that Explanation to Section 73 of the Act is not applicable in the assessee's case, since, the transactions were directly done with the parties and no contract note was made and both the scripts traded by th....
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....proceedings or appellate proceedings. Therefore, confirmed the penalty levied by the AO. 6. Aggrieved by the order of the CIT(A), the assessee is in appeal before this Tribunal. During the appeal hearing, the Ld.AR submitted that the assessee is engaged in the business of manufacturing of tubes and pipes. During the previous year relevant to the assessment year 2003-04, the assessee has sold shares of M/s Golden Herbert Ltd. and Usha Housing & Development Co. Ltd., and had incurred a loss of Rs. 70,61,600/-. The Ld.AR further submitted that considering the market expectations, the assessee has made the purchase of shares at higher rate. Since the market rate of shares were falling steeply, the assessee was forced to sell the shares at whatever rate it fetches. The shares were purchased from the share broker and the assessee has furnished the copy of the debit note given by Orphic Investments Pvt.Ltd. dated 14.06.2003 and the account copy from 01.04.2001 to 09.05.2006. The company has sold the shares and copy of the invoice cum delivery note is furnished in the paper book. The assessee has furnished the account copy of R.K.K.R Agencies Pvt. Limited. Similarly in page No.27of t....
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..... 70,61,600/- on purchase and sale of shares. The assessee's main business is manufacturing and sale of tubes. Initially, the AO suspected the transaction as speculation transaction and subsequently having satisfied that there is no speculative transactions in the case of the assessee dropped the issue and suspected the genuineness of the share transactions itself because of the reason that the said transactions were not made through recognized share brokers, even though, both the scripts of the company are listed in the Bombay Stock Exchange. The suspicion is further strengthened by the doubt that the AO could not ascertain how the assessee came to know the intention of buying and selling of shares by the buyers and sellers. Since the companies were listed, the AO found that the assessee ought to have purchased the shares through Stock Exchange or recognized stock broker. Purchase of shares at high price and sale of shares at very low price gave rise to the suspicion the AO. Because of the above suspecting instances, the AO did not believe the purchase and sale of shares as genuine and held that the transactions were sham and accordingly disallowed the loss. The assessee has furni....
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....ourse of assessment proceedings the AO required the assessee to explain the details of speculation profit earned by assessee amounting to Rs. 53,39,463/- but assessee could not file any detail except a certificate dated 05.12.2011 from Nakamichi Securities Ltd. 23A, N. S. Road, Kolkata-700001. The AO served a notice u/s. 133(6) of the Act to Nakamichi Securities Ltd. having its registered office at Mercantile Building, Block A", 0 floor, 9/12, Lal Bazar St., Kolkata-700001. Nakamichi Securities Ltd responded to the notice u/s 133(6) of the Act stating that no such share trading profit was given to the assessee company and they have denied the same. The AO accordingly, added the undisclosed speculation profit to the income of the assessee and adjustment of brought forward speculation loss of the earlier years was disallowed. This was not contested by assessee in appeal and accepted the assessment of the same. 9. In respect to above three items the AO initiated penalty proceedings and penalty was also levied only on the basis that the assessee did not offer any written explanation in response to the notice issued and no evidence was filed contrary to the observation of the A....
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....be. Here in the present case, the assessee has disclosed income from speculation profit only and the case is that he could not prove that this is speculation income or any other income for the want of evidence and merely he has not challenged the quantum addition. Hon'ble Rajasthan High Court in the case of CIT Vs. G. Nemichand (1976) CTR (Raj) 193 held that an assessee may file an appeal against an order of imposition of penalty even though he might not have filed an appeal against the order of assessment. The assessment proceedings are quite distinct and different from penalty proceedings. Although the order of assessment is a good evidence but it is not a conclusive proof that the assessee has concealed the particulars of income. In the present case before us, the AO's levy of penalty is entirely based on the assessment order that the assessee is unable to prove the profit declared in speculation income received to be one from Nakamichi Securities Ltd. in the absence of evidence. In levying penalty the burden is on the revenue to prove that the particular amount is profit not from speculation income but income from other sources against which speculation loss cannot be a....