TaxTMI 
TaxTMI 
2020 (10) TMI 621
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....r tax without any restrictions. 2. On the facts and in the circumstance of the case and in law, the Ld.CIT(A) has erred in law and on facts in holding that such assessment or reassessment u/s 153A of the I T Act, 1961 is to be restricted only to the incriminating materials found during the search. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 5,00,00,000/- made by the AO on account of loss on sale of shares of Amrapali Capital & Finance Services Ltd. (ACFSL). 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts without appreciating the facts that the assessee himself admitted that the purchase and sales shown in audited books of accounts are mere unilateral book/paper entries and no actual purchase and sale transactions have been carried out as mentioned in para 5.1 of said assessment order." 3. Briefly stated, the assessee company filed its return of income for AY 2010-11 under s.139(1) of the Act on 28.09.2010 declaring total income at Rs.Nil. A search under s. 132 of the Act was conducted on Amrapal....
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..../ 2012. There is no reference to any books of accounts, documents or incriminating material seized and belonging to the appellant for the assessment year under consideration. The particular of income and i ts related transactions are duly recorded in the statutorily audited books of account f i led with the returns of income and the A. O. has made addition out of the same and no other addition on the basis of incriminating material or admission made by the appellant is made. In the absence of any incriminating material found, no additions can be made while making assessment u/ s. 153A of the Act, as the appellant had f i led original return of income on 30. 9. 2008 and assessment proceedings were not pending on the date of search, so as to abate. The appellant' s case has been found covered by following binding judgements :- (i) CIT Vs. Kabul Chawla [ 2015] Taxcorp DT 61778 (Del. HC) (ii) Intas Pharmaceutical Vs. DCIT in IT (SS) A no. 807- 809/ Ahd./ 2010 (Ahd. ITAT) (iii) Jay Infrastructure & Properties Pvt. Ltd, Vs. ACIT in ITA No. 2169/ Ahd./ 2011 (Ahd. ITAT) (iv) Vijaykumar D. Agrawal Vs. DCIT in IT (SS) A. No. l 53- 156/ Ahd./ 2012 (Ahd.....
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....owards any averment made on behalf of the AO in the remand report on absence of incriminating material, the learned AR however could not demonstrate such facts to the satisfaction of the Tribunal. 9. We have carefully considered the rival submissions. The short question present for adjudication is whether it is open to the AO to disallow loss claimed on sale of shares in the current proceedings under s.153A of the Act in the context of the facts of the case. The jurisdiction to invoke the provisions of S. 153A per se is not in challenge having regard to the search action. What is in challenge is whether impugned additions/ disallowances made dehors the incriminating material is permissible as per the scheme of assessment embodied in S. 153A of the Act. It is the case of the assessee that the return of income filed prior to search under s.153A of the Act had stood concluded and was not pending at the time of search. It is thus the case of assessee that the AO was prohibited from making additions/ disallowances unconnected to the material found in the course of search in an such unabated assessment. 9.1 In this regard, we firstly observe that assessment order is silent towards ....
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....in the submissions of the assessee before AO which went unnoticed by the CIT(A). For the sake of easy reference, the submissions as reproduced in para 5.1 of the assessment order is extracted hereunder: "(a) At the outset, i t is submitted that in the audited accounts, the working used are Loss from F&O activity. However, i t may be noted that the words [ F&O] used were inadvertently written on account of copy and paste function and was a bonafide mistake. The correct words are " Loss from Share Trading". This is to emphasize the fact that mere words would not change the nomenclature of the transaction, which in the instant case is share trading loss. (b) The investment in shares of ACFSL has been converted into stock in trade as on 01.04.2010 and therefore treated as loss on sale of such shares has been treated as business loss during the year. (c) It is further submitted that the entries of purchase and sale as shown in the audited accounts on which profit of Rs. 5,02,25,000 /- has been shown are mere unilateral book/ paper entries and no actual purchase and sale transactions have been carried out. That apart, it may be noted that no purchase and sales ....
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....tion' by the assessee and consequently characterized as 'business loss' as per the scheme of the Act. On the contrary, the loss arising on ordinary share transaction, needs to be tested on the touchstone of deeming fiction embedded in Explanation to Section 73 of the Act to determine whether the impugned loss is speculative in nature and thus to be treated on a different tangent. As per the averments of the Assessee by way of it submissions, the share trading transactions have the attributes of ordinary transactions in contrast to derivative transactions enjoying a different legal status in view of exceptions carved out in S. 43(5) of the Act. Hence, the issue needs to be examined by the CIT(A) from this perspective as well which may call for some factual verifications. 9.6 As narrated, the controversy involved is complex and cannot be stereotyped by applying the judicial precedents summarily in the wake of very peculiar facts existing in the present case as narrated above. The Assessee has claimed lack of economic substance in the share transactions arising on purchase and sale of shares as recorded in the books. In our view, the plea of assessee towards absence of any incrimin....