TaxTMI 
TaxTMI 
2019 (6) TMI 1125
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....14-15. 4 CASE OF THE REVENUE MAY BE SUMMARISED AS UNDER: 4.1 In the case on hand, the Return of Income for the A.Y.2013-14 was efiled by the assessee on 20/09/2013, declaring total income at Rs. 2,30,530/. During the assessment proceedings, the A.O. noticed that the assessee owned a land admeasuring 6880 sq mts. at Survey No 262( 692) at village Bhadaj, Taluka Ghatlodia (the erstwhile Daskaroi), Ahmedabad which he purchased on 21/10/2011 vide registration no. 19001/2011 of the Sub Registrar, Ahmedabad 2, Adalaj. The cost of the land in the Profit & Loss account shown by the assessee was Rs. 1,58,85,350/which during the year had been sold at Rs. 6,19,20,000/. The sale was made on 24/01/2013 through the Development Agreement registered by the Sub Registrar, Ahmedabad 8, Sola vide Registration No. 485/2013, As such, the assessee earned business profit of Rs. 4,60,34,650/( 6,19,20,000 1,58,85,350/ ) on this transaction. However this profit was almost nullified by debiting his P&L Account by showing Purchase of Securities for Rs. 1,04,42,33,893/and credited the P&L against the sale of the securities for Rs. 99,85,04,803/. Thus the assessee had shown loss of Rs. 4,57,29,090/( 104,42,....
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....g dissatisfied with the order passed by the C.I.T.(A), the assessee preferred further appeals before the Appellate Tribunal. The Appellate Tribunal, by its common impugned order for the assessment year 2013-14 and 201415, allowed the appeals of the assessee holding that although the Assessing Officer entertained a serious doubt as regards the genuineness of the transactions, yet such doubt was not fortified with some concrete materials to take the view that the transactions were bogus. 6 Being dissatisfied with the order passed by the Appellate Tribunal, the Revenue is here before this Court with this appeal. 7 The Revenue has proposed the following two substantial questions of law in the memorandum of the appeal: "[A] Whether on the facts and circumstances of the case, different Appellate Tribunal has erred in deleting disallowance of loss on sale of securities of Rs. 4,57,29,090/? [B] Whether on the facts and circumstances of the case, the Appellate Tribunal has erred in holding that the transaction in securities has no nexus and corelation with the deal in land transaction?" 8 The grounds of challenge raised in the memorandum of the appeal to the order passed by the ....
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....ale Biotech Ltd has also been held as one of the accommodation entry provider and the case has been centralized subsequent to search proceedings. [vii] 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. [viii] In view of the facts discussed above, it is to submit that in the present case, there is an obvious and plain transaction of tax evasion by the assessee. The facts of the instant case clearly reveals that such trading transactions of purchase and sale of bonds had not been effected, for commercial purpose but to create artificial loss, with a view to reducing tax liability. Considering the same, the decision of the Appellate Tribunal is erroneous." 9 We have heard Ms. Mauna Bhatt, the learned senior standing counsel appearing for the Revenue and Mr. S.N. Soparkar, the learned senior counsel appearing for the respondent - assessee. 10 The Tribunal, while allowing the appeals filed by the assessee, observed as under: "16 We have gone through th....
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....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 looking 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 nonhonoring 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 proceedings to the Assessing Officer. We have further noticed that the assessing Officer has not examined/investigated the transactions in order to prove that the transactions were bogus and not genuine. The A.O. has not contradicted the claim of the assessee that there was no prohibition on carrying out off market transactions . The A.O. has referred the statement of Shri Prakik R. Shah that Vitale Biotech Ltd. has provided entries in respect of Amarpali Group but the A.O. has not provided any c....
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....ing assessment order u/s. 143(3). Similarly, while passing the assessment order for A.V. 200910, 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 Ramanbhaí 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. " 22 The assessee has already filed a compliance letter dated 22/02/2016 (PBP 37) by the submitting the requisite details. F or alleged noncompliance of the summons, the A.O. has neither issued any show cause notice nor imposed penalty u/s. 272A(l)(c) of the Act. The assessee has also provided his ....
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....t, every moment the price remains fluctuating which cannot be fixed by any authority established under the law. The assessee conversely squared up the deal which otherwise would have resulted in locking up of huge fund for a long time and particularly in view of the fact that such longer term fund was not available at the disposal and by nonhonoring he would have been declared insolvent. Thus, in such a situation a prudent business decision was taken immediately to raise short term fund to book a minimum loss and save his reputation in the market and to survive and earn in future. So far as the assessment year 2013-14 is concerned, it is pertinent to state here that since the assessee had incurred the loss of Rs. 4,65,00,000/on 01/01/2013 on the 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 (para 3.1 of assessment order). The learned senior counsel submitted that the assessee had in fact shown a positive income even after adjusting the said loss on sale of securities of Rs. 4,60,00,000/. 13 Having heard the learned counsel appearing for the par....
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....ties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest Court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law." 19. Similarly, in Santosh Hazari Vs. Purushottam Tiwari [2001] 3 SCC 179 a three judge Bench of this Court observed that: "A point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be "substantial" a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law "involving in the case" there must be first a foundation for it laid in the pleadings and the question should emerge from the su....
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....e conclusive and are not open to review under the limited jurisdiction of the High Court on a reference except on a misdirection in law in the process of arriving at them, or on the ground that there was no evidence on which they could be reached, that the conclusion drawn on proved facts or facts as found on evidence is, however, a different matter and that may raise a question of law or a mixed question of law and fact, and that the question whether a certain receipt is realisation of a capital asset, or revenue from trade or business, or from a transaction viewed as an adventure in the nature of trade belongs to the latter category. 17 In Commissioner of Incometax v. Rajasthan Mines Ltd., [1970] 78 I.T.R 45 (S.C.), the Supreme Court again laid down that it is open to the parties to challenge a conclusion of fact drawn by the Tribunal on the ground that it is not supported by any legal evidence or that the impugned conclusion drawn from the relevant facts is not rationally possible, and that if such a plea is established, the court has to consider whether the conclusion in question is not perverse and should not, therefore, be set aside. 18 Viscount Simonds in Benmax v. Austi....
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....hat the goods were sold at a concessional rate. The Income Tax Officer sought to tax the assessee therein after computing the profits earned by that firm on the basis of the market price of the goods, sold and not the actual price at which those goods were sold. The assessee challenged the said basis. The Tribunal upheld the contention of the assessee. It came to the conclusion that the assesses had, in reality, made no profits at all. The High Court agreed with the conclusion reached by the Tribunal. It opined that in the absence of any evidence to show either that the sales were sham transactions or that the market prices were in fact paid by the purchasers, the mere fact that the goods were sold a,, a concessional rate to benefit the purchasers at the expense of the company would not entitle the Incometax department to assess the difference between the market price and the price paid by the purchasers, as profits, of the company. A somewhat similar question came up for consideration before this Court in Commissioner of Income Tax, Gujarat vs. A. Raman and Co. [1968] 67 ITR 11. It is unnecessary of set out the facts of that case and it is sufficient to refer to the relevant ob....
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....same through the left hand. According to him there is no difference between the assessee and its subsidiary and, therefore, when the assessee tries to make profits through its subsidiary, we must presume that the profits were made by the assessee itself. In support of that contention he sought to place reliance on the decision of the House of Lords in Sharkey (Inspector of Taxes) v. Wernher [1962] 44 ITR 6. Therein, the assessee was a breeder of horses. She also had racing stables. She transferred. some horses from her stud to the stables. In so doing she debited in her accounts only the cost of breeding the horses and not their market price. The question arose, whether in computing her income the market price of those horses or merely the cost of breeding them should be taken into consideration. The House of Lords upheld the contention of the Revenue by majority that in computing the profits of the assessee the market price of those horses should be taken into consideration. The ratio of this decision is similar to the ratio of the decision of this Court in Dooar's Tea Co. Ltd. vs. Commissioner of Agricultural Incometax, West Bengal, [1962] 44 ITR 6. Therein, a tea garden owne....