TaxTMI 
TaxTMI 
2019 (1) TMI 15
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is non genuine on basis of surmises only. 2. The Learned A.O. has interalia held the transaction to be nongenuine on the ground that transaction are done with M/s Vitale Bioscience Ltd. He has relied upon the statement of Mr. Pratik which was not given to assessee and no cross examination was allowed. The learned A.O. and CIT (A) ought to have followed the proper procedure to adhere to the rules of natural justice. He may be directed to do so now. 3. The Learned CIT (A) ought to have held that the order of A.O. is perverse as the A.O. has interalia relied upon statement of Pratik Shah without giving copy of statement and cross examination. 4. The Learned CIT (A) has erred in upholding the charging of interest u/s 234A /234B/234C. 2. The brief facts of the case are that the assessee has shown income from Purchase & Sale of Land and Securities, brokerage & consultation, commodity trading, bank interest & dividend. 3. The assessee owned a land admeasuring 6880 sq Mts at Survey No 262( 692) at village -Bhadaj, Taluka - Ghatlodia (the erstwhile Daskaroi), Ahmadabad which he had bought on 21/10/2011 vide registration no 19001/2011 of Sub Registrar, Ahmed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Average Price of the Bond and Last Traded Price of the Bond being Close to Rs. 100.He has further stated that the price of the Bond as on 01/01/2013 was Rs. 100/- whereas the assessee has shown sale of the bond at Rs. 90.67 only. The A.O. has also stated that summons u/s 131 was issued to the assessee but nobody has attended in response to the said summons. The A.O. has observed that the Bonds have been transferred between three parties on the same day just after the date of issuance of bond. The entire transaction has taken on 1.1.2013 and the receipt and sale of 500 bonds have taken place within a very short duration. He has also observed that all these transactions have been done only at prices which have no cooreiation with the prices mentioned in the Exchange. He has also stated that the assessee had failed to attend the summon. 7. Thereafter the A.O. vide letter dated 2.3.2016 and subsequently vide letter dated 14.3.2016 has issued a show cause as under:- "Your submission on various dates reveal that on 1.1.2013 you have purchased the 500 units (Lot size Rs. 1 Lac Each unit) of 9% BOM LOWER TIER H BONDS (INE457A09199) OFF-market from Fortune Gilts Pvt Ltd at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e is in consonance with the prevailing market rates. Only then the revenue can ensure that there is no suppression of sale value or exaggerated purchase value and there is no consequent leakage of revenue. The assessee is not selling any goods/house hold assets, the price of which can be decided privately by two parties but it is selling an asset which have to be reported to one of the Stock Exchanges of the Country authorized by SEBL." ii To maintain transparency on the Corporate Bonds , the Regulatory Body SEBI vide Circular No. SEBI/CFD/D1L/BOND/1/2006/12/12 dated December 12, 2006 authorized Bombay Stock Exchange Limited (BSE) to set up and maintain a corporate bond reporting platform to capture all information related to trading in corporate bonds as accurately and as close to execution as possible. Subsequently vide circular No. SEBI/CBM/BOND/1/2007/01/03 dated 01.03.2007 has authorized NSE for the similar purpose. It has been ascertained that the transaction has not been reported to the Exchange and the assessee has not fulfilled the statutory obligation as laid down by SEBI, which clearly shows that the intention of the assessee was mala fide from the very....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ges and both purchaser and seller can determine the prices . v. The stand that the price is at Rs. 100/- on NSE ever since 1.1.2013 has not been taken on a arbitrary basis but in a complete transparent manner and anybody can go through the website of the stock exchange where in the Weighted Average price has been seen at Rs. 100/- and there has been no trades in this bond till date . The assessee has sold the bonds on 1,1.2013. The primary onus is on the assessee to specifically justify the valuation of Sale price of Bonds with supporting documentary evidences especially in circumstances where the valuation is lesser than the last traded price shown by the NSE, Specifically when the Bank entries reveal that the assessee had entered into these transactions in almost the same time zone. However as the assessee has not brought any concrete material i.e Valuation report or any evidence which could justify its sale price, the department is not duty bound to justify the ingenuineness of material not produced. vi. Further, upon verification of details called for during the course of assessment proceedings it has been observed that the payment of this loss had been made f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ged by Rakesh Patel into AFPL does not belong to me or my group concerns and the same was provided by some person of Amrapali Group to Shri Rakesh Patel which was finally routed , into AFPL either the same day or within two or three days. I will provide the complete details in this regard within five days." In the statement, the director of Vitale Biotech Ltd, Shri Pratik Shah has admitted that through his concerns that he is engaged in the business of giving accommodation entries on commission basis. Although the said transaction has been admitted in respect of Amrapali Group, it pertinent to note here that Vitale Biotech Ltd has also been held as one of the accommodation entry provider and the case has been centralized subsequent to search proceedings viii. The Transaction was done with the money borrowed of Rs. 15 Crore from Vitale Bioscience Ltd. and within an hour book the loss of Rs. 4,67,50,000/-. The chain of transaction was reflected above and ultimately account had been settled with cross sale of different bonds.to them. ix. Further in the case of CIT vs Durga Prasad More (82 ITR 540), it was held by Hon'ble Apex Court that " it is-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e discerned in an integrated manner. In the present case, the assessee created artificial short term capital loss, and having regard to the material and relevant facts of the case, such make-believe transactions, cannot be taken as genuine trading, in the sale and purchase of shares. Such transactions as are purely preconceived exercise, to evade tax. In tax matters, it is imperative that realities of the transactions are required to be gone into, with view to finding out the true nature of such transactions. Entirety of facts and circumstances of the present case clearly demonstrates, in a terse and telling manner that the whole transactions are not true commercial share transactions but fabricated transactions. Such transactions were mutually self-serving. xiv. In this specific context, it is imperative to state that it is a well settled legal proposition that 'burden of proof is on the assessee as the claim of short term capital loss had been made by them. The assessee, except giving details of such purchase and sale of bonds, failed to prove and establish the genuineness of such bond transactions at the rates as convenient to them having no regard to the real marke....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 4,57,29,090 in security trading and same was adjusted against above gain. The AO has made disallowance of loss arising from security transactions for Rs,4,65,00,000 treating it as non genuine and artificial loss. The appellant has argued that such transactions are genuine transactions and also stated that out of 4 transactions entered during the year, there was loss in one transactions and profit in three transactions and AO has accepted profit transactions which are of similar nature hence there is no justification for not accepting loss transactions. The arguments of appellant and observations of AO are considered but appellant' plea cannot be accepted mainly for following reasons. (i) The AO at para 3.2 has made summary of transactions of bond carried out by appellant. In all the cases, transactions are settled on same day. It is observed that appellant has earned profit on trading of bond of 10.45% GSPC bond and 9.90% IFCI Bond which are purchased from Vital Bioscience Limited and sold to Fortune Gilts Limited whereas appellant has earned loss of Rs. 4,67,50,000 in transaction of 9% BOM Lower Tier Bond 2022 which is purchased from Fortune Gils Pvt. Limited and s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in losses. When entire funds are moved from one party to other party and its cycle is done in 4 minutes gap, why appellant has incurred losses in such transactions by creating manual purchase and sale contracts is not answered by appellant in its written submission. It is pertinent to note that funds of Rs. 4.97 crore was received from EI Dorando Biotech wherein Shri Ajay S Patel is director who is also director in fortune Gilts Pvt. Limited from whom appellant has claimed to have purchased bonds which also prove that even loss incurred by appellant is funded by company in which director is also director in company from which appellant has acquired bonds which also prove that transactions are with close persons and they are inter connected. (iv) The AO has also referred to historical date from website of NSE which show that transactions in above bond has taken place on 01/01/2013 being date on which appellant has incurred losses wherein trade price was Rs. 100 whereas appellant has sold such bond at Rs. 90.67 only. The appellant has not given any reason why appellant has incurred losses in such transactions. It is pertinent to note /that when appellant is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rikh 35 taxman.com 416 and argued that AO was not justified in making disallowance of loss in off market transactions ignoring the profit in similar transactions. The decision has been pursed. The Hon'ble ITAT has given categorical finding that off market transactions were found to be at the market rate whereas in appellant's case, this vital aspect is missing. It is also observed that in present case, entire transaction is squared up in a day rather in four minutes whereas in the case before Hon'ble Ahrnedabad ITAT, the transactions were not squared up in a single day. Thus, said decision is not applicable in present case. So far as choose and pick approach as observed by appellant, it is observed that I have already held that only net loss arising from such off market transactions would be disallowed hence this argument now does not survive. Even in the case of Hon'ble Delhi High court in the case of CIT Vs H.B. Stock Holding Limited 184 Taxman.com 352 relied upon by Appellant, transactions were at market rate and even through stock brokers registered in stock market whereas this is not the case of appellant hence even this decision cannot be made applicable in pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....servation of Justice RanganathMisra (i.e. the majority opinion). In Union of India v AzadiBachaoAndoian: (2003) 263 ITR 706 (SC), the Supreme Court held that the / above view of Justice Chinnappa Reddy was a far cry from the majority opinion and further concluded that the decision in Mcdowell (supra) cannot be read as laying down that every attempt at tax planning was illegitimate and must be ignored. 40. The Supreme Court in AzadiBachaoAndoian (supra) approved the following passage from the decision of the Gujarat High Court in Banyan and Berry v. Commissioner Of Income Tax: (1996) 222 ITR 831 (Guj): "The court nowhere said that every action or inaction on the part of the taxpayer which results in reduction of tax liability to which he may be subjected in future, is to be viewed with suspicion and be treated as a device for avoidance of tax irrespective of legitimacy or genuineness of the act an inference which unfortunately, in our opinion, the Tribunal apparently appears to have drawn from the enunciation made in McDowell's case [19S8] 154 ITR148 (SC). The ratio of any decision has to be understood in the context it has been made. The facts and circumstance....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the facts and circumstances surrounding the transaction". The Court held that if an actual controlling Non- Resident Enterprise (NRE) makes an indirect transfer through abuse of organization form/legal form and without reasonable business purpose, which results in tax avoidance then the Revenue may disregard the form of the arrangement and recharacterize the equity transfer according to its economic substance. The Court accepted the principle that transaction done without reasonable purpose but only for avoidance of legitimate tax by using a corporate form can be ignored. However, in the facts of that case, the Court came to the conclusion that the corporate structure was not created for avoidance of tax but for other genuine business purposes. 45. It follows from the aforesaid decision that in order to examine whether a transaction is a device or a subterfuge the answer to the question whether the transaction has any reasonable business purpose would be a vital consideration. Clearly, the use of corporate form to evade tax would be impermissible and it is, thus, necessary in the facts of the present case to look at the transactions entered into....
X X X X Extracts X X X X
X X X X Extracts X X X X
....intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating." Clearly, the colorable device or a sham transaction would include a transaction and device which purport to show a situation which is much different from the substance of the transaction. In the present case, the transaction of sale of rights entitlement purports to indicate an alienation of a right while in fact at a group level, there has been no alienation of any rights. The transactions have been so executed to ensure that the rights remained within the Jindal Group. The registered office of the company is at office of JSL; the Board of Directors consists of Sajjan Kumar Jindal s/o Shri O.P. Jindal and AnandPrakashGarg (who was an employee of JSL). Such transactions which are for the sole purpose of contriving a loss cannot in our view be described other than a colorable device. 47. in our view, the AO had rightly found the transaction of sale of rights as a transaction for purchasing taxable losses for the purposes of evading tax. It has been argued that the Assessee had in fact relinquished its rights to subscribe to PCDs and the transa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....apital loss which the AO found to be contrived. And, as indicated above, the AO rightly rejected the loss claimed by the Assessee. 50. In view of our decision, the loss claimed by the Assessee was a contrived loss and the transaction of renunciation of rights in question was a colorable device to claim such loss, it is not necessary for us to decide the issue whether such loss could be set off against Assessee's business income. However, as the Counsel have addressed arguments on the said issue, we deem it appropriate to consider the same". Further reliance is placed on decision of Hon'ble Punjab & Haryana High court in the case of Smt. HarjitKaur Vs ACIT 45 taxman.com 186 wherein it is held as under "Section 4 of the Income-tax Act, 1961 - Income - Chargeable as (Tax planning) -Assessment year 2008-09 - Assessee sold land which resulted in short-term capital gain - In same year assessee claimed short-term capital loss on sale of shares of an unlisted company which were purchased in same year - Assessing Officer disallowed said claim of short-term capital loss by treating it as bogus and not genuine - Facts revealed that such trading transactions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee had influence and control at rate of Rs. 2.50 per share and transferred those shares to buyers immediately on 10-7-1992 without receiving sale consideration - Subsequently, assessee had bought back 12,80,000 shares of K at rate of Rs. 2.50 per share on 25-2-1993 and 4-3-1993 -Assessee suffered capital loss on account of sale of shares and it claimed allowance of same under section 45 read with section 48 - Assessing authority disallowed assessee's claim holding that sale and purchase of shares by assessee had been with a view to claim huge loss so as to get benefit of setting it off in future and entire loss was nothing but an arranged book loss - I Commissioner (Appeals) upheld impugned order holding that assessee failed to establish its bona fides in respect of said transactions - Whether decision of assessee-company to sell its total holding to five group companies was against all human probabilities and commercial consideration which otherwise any prudent businessman would not have taken in normal course of business - Held, yes - Whether transactions effected by assessee-company were not bona fide commercial transactions but were sham, bogus, unreal, make-believ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....profit from the land transactions. He has further contended that the A.O. has failed to demonstrate how the statement of Shri P. R. Shah connected with the case of the assessee. He has also stated that A.O. has not provided any kind of material connected with the case of the assessee and not provided any opportunities to cross examine Shri P. R. Shah. He contended that loss was incurred on 01.01.2013 whereas the profit from the land transactions was made on 24.01.2013, therefore, the contention of the A.O. that the loss in the bonds transaction was shown to set off the profit from the land transactions is not correct. He has further stated that on the same date the assessee has made 4 transactions in the bonds but the A.O. has accepted the profit of 3 transactions however has rejected the loss in one transaction. He has contended that there is no prohibition in law for off market transactions. He has also made reference of various pages of paper book. He has stated that as per page no. 36 of paper book in the summon issued to the assessee the A.O. has called mainly details of documents which were submitted by the assessee vide letter dated 22.02.2016 as per page n. 37 of the pap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led on 29/11/2014 showing loss of Rs. 30,68,003/-. The A.O. has made regular assessments u/s. 143(3) of the Act on a total income of Rs. 4,67,30,530/- & Rs. 3,32,26,997/- respectively. While doing so the A.O. disallowed assessee's claim of loss of Rs. 4,65,00,000/- & Rs. 3,62,95,000/- respectively, on account of trading in securities. (iii) Being aggrieved and dissatisfied the appellant preferred an appeal before the Ld. CIT(A), who has restricted the disallowance to Rs. 4,57,29,090/- & Rs. 3,62,95,000/- respectively being loss after netting of against profit earned in similar nature of transaction in securities. (iv) Being aggrieved with the impugned appellate order, the appellant has preferred the present appeal before the Hon'ble Tribunal for getting due justice while deciding the appeal of the appellant. 1. Regarding disallowance of loss of trading in bonds of Rs. 4,57,29,090/- for A.Y. 2013-14 & Rs. 3,62,95,000/-for A.Y. 2014-15(Ground no. 1). 1.1 During the course of assessment proceedings for the year under consideration, the A.O. noticed that the appellant has earned profit on sale of plot of land amounting to Rs. 4,60,34,650/- & ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Managing Director/Administrator of all stock exchanges. In this context , it is submitted that as per item iv at (PBP No.53 of A.Y. 2013-14). Thus, it could be made applicable only to the transactions carried out through the window of stock exchange by any of the persons whether registered intermediaries or otherwise. The circular is thus regarding setting up of platform for members of BSE or NSE. There is no requirement for using referred platform and or reporting by other persons who have not traded through the window of any of the stock exchanges. Thus, the observations of the A.O. by deriving the support from the said circular is unfounded and has no legs to stand on its own. Without prejudice to the above and in the alternate it could be subject matter of SEBI regulations but certainly will have no impact on the income or loss disclosed in audited accounts for the purpose of Income tax Act as the assessment has to be framed as per the provisions of the Act and not otherwise. Further, the CIT(A) has in fact, considered such income as allowable set of against the loss in A.Y. 2013-14 as noted at the end of para 5 of the appellate order; besi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tuation a prudent business decision was taken immediately to raise short term fund to book a minimum loss and save his reputation in the market to survive and earn in future. So far as A.Y. 2013-14 is concerned, it is pertinent to state here that since the assessee has incurred the loss of Rs. 4,65,00,000/- on 01/01/2013 on sale of securities and eventually to recoup this loss, transacted his land and shown an income of Rs. 4,60,34,650/- on 24/01/2013 by entering into an agreement for the land owned by him (kindly refer to para 3.1 of assessment order). Having regards to this aspects of the matter the assessee has in fact shown a positive income even after adjusting the said loss on sale of securities of Rs. 4,65,00,000/- (v) Reasoning of the A.O. That payment of loss had been made from unsecured loans taken from El-Dorado Biotech (P) Ltd., the transaction of El-Dorado Biotech (P) Ltd. with M/s. Vitale Bioscience (P) Ltd. are not genuine as ascertained from DDI(Inv.). Submission of the appellant in rebuttal: It is submitted that the appellant has purchased Bonds/Securities from Fortune Gilts Pvt. Ltd. and sold to M/s. Vitale Bioscience (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss examination, before using the same against the appellant or even without issuing a show cause notice of having his intention to use the same against the assessee. The action of the A.O. is against the principles of natural justice and wholly unfair, in view of decisions in the following cases: Kishanchand Chellaram Vs. ITO 125 ITR 713 (SC) CIT Vs. Pradipkumar Gupta 303 ITR 95 (Delhi) Andaman Timber Industries Vs. CCE 62 Taxman.com 3(SC) CIT Vs. Ramanbhai B. Patel in ITA No. 210 of 2008 (Guj.) Vaishal S. shah & others in ITA No. 1499/2016 (ITAT Ahd) Pratik S. Shah in ITA No. 810 to 815/2015 (ITAT Ahd) Pri. CIT Vs. Chartered Speed Ltd. IT 126 of 2015 (Guj.) (vii) Reasoning of the A.O. That the transactions carried on by the appellant are not genuine and natural transactions, but the appellant resorted to a pre conceived scheme to procure short term capital loss by way of price differential in the said bond transactions, with a view to reducing valid tax liability relying upon judgment of Hon'ble Apex court in the case of Mcdowell and Co. Ltd. Vs. Commercial Tax Officer [154 ITR 148 (SC)] ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... transaction, with regard to ruling in McDowell & Co. Ltd., it may be stated that in the latter decision of this court in Union of India Vs. Azadi Bachao Andolan, it has been held : that a citizen is free to carry on its business within the four corners of the law. That, mere tax planning without any motive to evade taxes through colorable devices is not frowned upon even by the judgment of this court in McDowell's case." (f) Furthermore, the effect of Supreme Court decision in Vodafone International Holdings Vs. Union of India 341 ITR 1 (SC) has been under consideration the earlier decision in McDowell case. Besides, recently in the case of CIT Vs. Shivraj Gupta (2015) 372 ITR 337 (Delhi), the Hon'ble Court has observed as under: "In Vodafone International Holdings B.V. Vs. Union of India 341 ITR 1 (SC), earlier decisions in McDowell and Azadi Bachao Andolan stands explained and illucidated. The precise test enunciated and prescribed as a tenet, negates and disqualifies colorable device, deceit and sham as a legitimate and acceptable tax event. These terms have somewhat ethical and casuistical connections and are the elective text for differentiating tax ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndestine way. Therefore, the transactions carried on by the appellant are genuine and such genuine commercial transactions can never be regarded as non-genuine and/or artificial, as alleged by the A.O. 1.3 Without prejudice to the above it is submitted that at para 4 the A.O. has noted that in the course of assessment proceedings for A.Y. 2013-14, a summons u/s. 131 dated 11/02/2016 was issued to the assessee requiring his presence on 23/02/2016 which remained to be complied with, as alleged. In this connection it is stated that as may be perused from the referred summons (PBP 36) the A.O. had called for the following through the referred summons: Books of account/documents to be produced 1. Copies of all bank accounts statements. 2. Copies of all Demat A/c along with copies of slips issued to depository allowing to transfer the bonds from your account to the buyers a/cs. In response to the above, the assessee has already filed a compliance letter dated 22/02/2016 (PBP 37) whereby the appellant has submitted requisite details. Therefore, the observation of the A.O. that there was non-compliance of the referred summons is wholly ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t-1. 1.4.1 In this context, it is submitted that consistency is a hall mark of the law & justice and in absence of new facts and circumstances, assessment/different treatment could not be made by the A.O. The appellant, for the same proposition, also relies on the Hon'ble Supreme Court's decision in the case of Radhasoami Satsang Vs. CIT 193 ITR 321. This decision of Apex Court together with other judgments of SC have been referred to by Hon'ble Gujarat High Court in the case of Taraben Ramanbhai Patel Vs. ITO 215 ITR 323 (Guj.). The observation of Hon'ble Gujarat High Court may be reproduced from page 330 of the report: "It is no doubt true that the strict rule of doctrine of res Judicata does not apply to proceedings under the Income tax Act. At the same time, it is equally true that unless there is a change of circumstances, the authorities will not depart from previous decision at their sweet will in the absence of material circumstances of reasons for such departure." 1.4.2 Looked into from whatever angle, the action of the A.O. in disallowing the business loss in transactions of purchase and sale of securities, without rejec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....saction of loss is not genuine. The Ld. CIT(A) ought to have seen all the transactions in totality without selecting the transaction on pick and choose method. The Ld.CIT(A) has not given his own independent finding nor he has detected any infirmity with regard to 4th security transaction done with said parties and in the same nature. Such inconsistency is not permissible in the law. Needless to state that in the concluding para on page no. 27 of the appellate order the Ld. CIT(A) has accepted the three transactions which resulted into profit and has granted relief out of gross disallowance made by the A.O. and the disallowance is restricted to that extent. Therefore, the reasoning of the Ld. CIT(A) is devoid of any merit. (ii) Reason recorded by Ld. CIT(A): That as observed, Fortune Guilts (P) Ltd. and Vitale Bioscience Ltd. have shown loss in their account meaning thereby when appellant has been incurring huge losses, it must be gain to other party. Submission of the appellant in rebuttal: The observation of the Ld. CIT(A) is devoid of any merit since it is based on presumption and assumption only. It is submitted that both the entitie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n that this argument of A.O. has not at all dealt with is factually incorrect since during the course of assessment proceedings, the appellant vide his letter dated 08/03/2016 (PBP 46) & (PBP 23-24) respectively has duly complied with the query of the A.O. stating that all the transactions are routed through Demat account and the transfer of funds have been made or received through on-line banking, which proves that the transactions having taken place in sort span are genuine. (c) And further as per paragraph 1.2 (iv) above on recoupment of loss for A.Y. 2013-14. Further, the agreement which has resulted into an income of Rs. 4,60,34,650/- in A.Y. 2013-14 was terminated and the same piece of land was sold at a higher consideration in A.Y. 2014-15 and shown additional profit of Rs. 3,30,80,000/- as recorded in para 5.1 of the assessment order (v) Reason recorded by Ld. CIT(A): That in compliance to summons issued to the appellant to appear before him on 23/02/2016, the appellant failed to attend and later is asking from cross examination of third party when he himself failed appear before A.O. in response to summons. Submission of the appellant in rebuttal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the decision in the case of Signature Hotels (P) Ltd. Vs. ITO 338 ITR 51 (Delhi). In the said case, proceedings were initiated on the basis of report from the D.I. (Inv.) that credit entry in the account of the assessee was accommodation entry only, and the A.O. made addition without examining the evidence and without causing independent inquiries. On appeal, the HC. Held ; "That the re-assessment proceedings were initiated on the basis of information received from D.I. that the assessee had introduced money as stated in the Annexure. The Annexure was not a pointer and did not indicate escapement of income. Further, the A.O. did not apply his own mind to information and examined the basis and material of the information. There was no dispute that the assessee company had substantial paid up capital and allotted PAN. Thus, it could not be a fictious person. The re-assessment proceedings were not valid and liable to be quashed." (e) In the case of the assessee, it is un-disputed fact that the assessment proceedings are by and large on the basis of so-called information from D.I. (Inv.) Ahmedabd, allegedly stating that said Shri Pratik R. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the context that decision in Mcdowell case cannot be read as laying down that every attempt at tax planning was illegitimate and must be ignored, referring to decisions of Hon'ble Apex court in Azadi Bachao Andolan, Vodafone International holdings and decision of Hon'ble Gujarat High Court in Banyan and Berry. (b) The decision in the case of Smt. Harjit Kaur is also not applicable to the case of the appellant since in that case shares sold were related to unlisted company, which resulted in short term capital loss on sale of shares. Whereas, in the appellant's case the appellant has carried on transactions of purchase and sale of securities namely Bonds and the appellant is a trader showing profit/loss in such trading, and not claiming short term capital loss. (c) The decision in the case of Edward Keventer is also not applicable to the case of the appellant since the facts of the referred case are quite distinguishable. (d) Without prejudice to the above, it is settled position in law that the ratio of any decision has to be understood in the context it has been made. (ix) Reason recorded by Ld. CIT(A): That Pratik R. Shah....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 131 was issued on 11/02/2016 (PBP 36) for A.Y.2013-14. In response to which the appellant has already submitted a fairly detailed compliance under letter dated 22/02/2016.(PBP 37) Further, in the last para thereof, the assessee has intimated his new postal address with a request to make further communication at the said address. However, the A.O. used to address subsequent correspondence at his old address. (PBP 43) The term of reference in the referred summons was altogether different. (h) Lastly, With regard to observation of the Ld. CIT(A)as to non-filing of confirmation of all the parties, it is submitted that the remark of the Ld. CIT(A) is factually incorrect the appellant has already submitted confirmations of all the parties. (PBP 18-30) & (PBP 23-24) for A.Y. 2013-14 & 2014-15 respectively. 1.6 In view of the above stated peculiar facts of the appellant's case there is no justification in rejecting the claim of the appellant for set off loss trading in bond against income from land dealing. The orders of the authorities below are liable to be quashed and set aside and the Hon'ble Tribunal may be pleased to hold so. 15. On the other h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsactions of trading in bonds the assessee has earned profit of Rs. 10,20,910/- in three transactions and he incurred gross loss of Rs. 4,67,50,000/- in the rest transaction. All the securities purchase and sales are routed through Demat Account and payments are settled through on-line transfer of funds though net banking. Bank statements and copies of deal confirmations of all the transactions were filed before the A.O. The A.O. has accepted the result of profit in case of other three securities traded during the year but he has drawn adverse inference with regard to transactions of 9% BOM lower tire bonds 2022. It is observed the A.O. has neither fully investigated nor brought any material on record to prove that the transactions are bogus. It is also explained that the assessee has squared up the deal which otherwise would have resulted in locking up of huge fund for a longer time and particularly in view of the fact that such long term fund was not available at the disposal and by non-honoring he would have been declared insolvent. 18. We have noticed that the assessee have provided all the details related to the trading in securities during the course of assessment proceedi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the course of such assessment proceedings the A.O. had issued show cause notices/order sheet entry and on the basis of appellant's written submissions filed under letters dated 26/10/2010 & 24/11/2011 respectively, the book results for the referred assessment years have been accepted without drawing any adverse inference. Needless to state that business loss of Rs. 50,54,456/- in A.Y. 2008-09 has been accepted by the A.O. after detailed scrutiny and on the basis of material produced before the A.O., while passing assessment order u/s. 143(3). Similarly, while passing the assessment order for A.Y. 2009-10, the book result has been accepted in toto. 21. The the Hon'ble Supreme Court's decision in the case of Radhasoami Satsang Vs. CIT 193 ITR 321. This decision of Apex Court together with other judgments of SC have been referred to by Hon'ble Gujarat High Court in the case of Taraben Ramanbhai Patel Vs. ITO 215 ITR 323 (Guj.). The observation of Hon'ble Gujarat High Court may be reproduced from page 330 of the report: "It is no doubt true that the strict rule of doctrine of res Judicata does not apply to proceedings under the Income tax Act. At th....