TaxTMI 
TaxTMI 
2022 (11) TMI 326
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....se, the Ld. CIT(A) was justified in deleting the addition of Rs. 65,16,985/- being addition made to partners capital account when the assessee could not give satisfactory explanation on the same before the AO and could not bring any supporting evidence on record. 3. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 5,25,000/- being credit made to partners capital account when the assessee could not give satisfactory explanation on the same before the AO and could not bring any supporting evidence on record. 4. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in accepting the fresh evidence produced by the assessee without allowing AO, proper opportunity to examine the same, thereby violating the provision on law under Rule 46 of I.T Rules. 5. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) has erred by giving a finding which is contrary to the evidence on record, as the Ld. CIT(A) has accepted the submission of the assessee which is factually incorrect, thereby rendering the decision which is perverse? 6. The order of....
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....of incorrect observations drawn adverse inferences and assessed its income at Rs. 1.51 crore (approx.). It was submitted by the assessee that though the assessee in the course of the assessment proceedings had duly substantiated its claim of loss in commodity trading of (-) Rs. 2,35,09,276.90/- on the basis of supporting documentary evidences, viz. (i) contract notes issued by M/s. Commodity Mandi Pvt. Ltd. (on sample basis); (ii) copy of account of the assessee with M/s. Commodity Mandi Pvt. Ltd.; (iii). the details of daily transaction etc. before the A.O, however, the latter had most arbitrarily and in fact, in contradiction of her own observations drawn adverse inferences and concluded that as the assessee had failed to substantiate its claim of loss on the basis of supporting documentary evidence, therefore, the same was not to be accepted. The assessee in order to buttress its aforesaid claim had filed before the CIT(Appeals) contract note (sample copies) for 1st April 2011, and also submitted that all its sales and purchase transaction were available online and could be verified. It was further stated by the assessee that the commodities purchased during a day were sold and ....
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....the original assessment proceedings had failed to come forth with documentary evidences to substantiate its claim of loss from commodity trading, therefore, the same should not be admitted as additional evidences u/Rule 46A of the Income-Tax Rules, 1962. 6. As regards the treating of the addition made in the capital account of the partners during the year under consideration, it was submitted by the A.O that as the assessee had failed to come forth with any satisfactory reply on the said issue, therefore, she was constrained to make addition of the respective amounts by treating the same as undisclosed investments in the hands of the assessee firm. 7. The assessee in its rejoinder to the aforesaid "remand report" refuted the observation of the A.O that it had even in the course of the remand proceeding failed to produce on record any documentary evidence to substantiate its claim of loss from commodity trading. On the contrary, it was the claim of the assessee that the A.O in the order sheet entry dated 12.07.2016 had categorically stated that the assessee had produced contract notes a/w. compact disk (CD) containing the complete details of commodity purchases/sales transaction t....
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....ade from their respective duly explained sources, therefore, the onus that was cast upon the assessee was duly discharged. Apart from that the CIT(Appeals) was of the view that if there was any doubt about the explanation filed by the assessee as regards the addition/credits in the respective capital account of the partners then, action was to be taken in the case of the partners and not in the hands of the assessee firm. Accordingly, the CIT(Appeals) on the basis of his aforesaid observations allowed the appeal of the assessee. 9. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 10. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR in support of his aforesaid contentions. 11. We may at the outset observe that the basis and the manner in which the present assessment had been framed is beyond our comprehension. On a perusal of the assessment order, it transpires that while for, at Para 2 of the order, the A.O had categorical....
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....whom major transactions were carried out by the assessee a/w. copy of its account in the books of the aforementioned company and the details of the purchase/sales transaction were produced before the A.O. Although, the A.O as observed by us hereinabove had initially categorically stated in the body of the assessment order that the returned income of the assessee was being accepted by her after examining the details in respect of purchase/sales of share/securities and commodities, documents and books of accounts etc. as were produced by the assessee before her, but thereafter she had in absolute contradiction of her aforesaid observation concluded, that as the assessee could not furnish all the relevant bills and vouchers in support of its aforesaid transactions, therefore, its unsubstantiated claim of loss from commodity trading could not be accepted and was liable to be disallowed. 13. As the aforesaid adverse inferences drawn by the A.O are seriously self-contradictory, and thus, do not inspire any confidence, therefore, we refrain from drawing any inferences on the basis of the same. The CIT(Appeals) on being confronted with the aforesaid peculiar or in fact incomprehensible ob....
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....ing documents before the AO. This fact has also been mentioned in the assessment order. It has also been acknowledged that -all transaction in the commodity trade are done on-line, details are available on Net. If this being so, the AO has erred in disallowing the loss when the books of accounts were produced. A report was called from the AO. In the remand report the AO stated that assessee was asked to explain the loss on 11/02/2014 (this date should be 11/02/2015) but assessee did not furnish any evidence. The appellant has stated that no such query was raised. Ongoing through the order sheet dt was asked to explain the loss. Still the assessee has furnished statement of loss/profit, statement of accounts and contract note during appeal. Statement of loss/profit contains the figure of net result of daily transaction. As per this statement on certain dates there are loss and on other dates there are profits. For example, on 1.4.2011 assessee had booked loss of Rs. 4,23,601.44 and Rs. 1946.71. It incurred losses upto 3.4.2011. Then on 4.4.2011 it had earned profits of 15,30,736.70 and 30,925.76 in two transactions and loss of Rs. 6742.82 in one transaction. Thereafter similarly ....
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.... partners, therefore, as stated by the Ld. AR and, rightly so, the assessee remained under a bona-fide belief that no doubts were there in the mind of the A.O in respect of the same. We, thus, finding no infirmity in admission of the aforesaid documentary evidence as additional evidence U/rule 46A of the Income Tax Rules, 1962 by the CIT(Appeals), uphold his action to the said extent. 17. As regards the merits of the aforesaid addition in hand which had been vacated by the CIT(Appeals), we find that the assessee had duly substantiated the respective sources from where both the partners had made addition/credits in their respective capital accounts. As regards the addition made in the capital account of Shri Kshitij Agrawal of Rs. 5.25 lacs (approx.), it transpires that the assessee in the course of the remand proceedings had placed on record confirmation of the partners a/w. copy of his bank statement evidencing the source out of which the said addition/credits was made by him. Coming to the addition made in the capital account of the other partner, viz. M/s. Stock Mandi Pvt. Ltd. of Rs. 65,16,985/- during the year under consideration, it transpires that the said partner had also ....