TaxTMI 
TaxTMI 
2023 (2) TMI 455
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....ossly erred in rejecting the contention of the appellant and sustaining impugned addition of Rs.18,50,000/- on account of appellant's claim of bad debt, when the same is wholly unwarranted. 3. The facts in brief are that the assessee in the present case is an individual and claimed to be engaged in the activity of advertisement under the name and style of 'ADCOM advertising. Besides this, the assessee also claimed that he has been engaged in the business activity of share trading, future and options and speculative business. As per the assessee, he was maintaining separate books of accounts for both the activities. However, the assessee in the return of income filed and statement of income furnished has classified the income from the share trading/future and options/speculative activities under the head other sources along with the other income. 3.1 Nevertheless, the assessee during the assessment proceedings has submitted: i. That the activities of share trading/future and options/speculative transaction represents the business activity of the assessee and therefore the same should not be treated as income from other sources. ii. He (the assessee) is not well versed with t....
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....,000.00 ii. Other expenses Rs. 13,53,121.00 iii. MCX trading loss Rs. 2,73,39,075.00 4.4 As per the AO, the bad debts are representing only the money transactions without having any business relation. Likewise, the loss i.e. MCX trading loss of Rs. 2,73,39,075.00 has been shown by the assessee just to avoid tax liability on the income and to match the amount of profits shown in the income tax return. Accordingly, the AO rejected the claim of the assessee and framed the assessment in the manner as detailed below: The income of the assessee is, therefore, determined on the basis of information collected from the share brokers through whom the assessee has made share transaction. During the year under account the assessee has derived the income of Rs. 3,05,78,785/- from share trading under different categories which is treated as his undisclosed income. Separate penalty proceedings u/s. 271(1)(c) for concealment of income is initiated. Separate penalty proceedings u/s. 271B of the Income-tax Act, 1961 is also initiated for failure of the part of the assessee to get his books of accounts audited u/s. 44AB of the Act. Since the turnover of the assessee in share transaction exc....
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....unting to Rs. 15,25,765.00 were incurred by the assessee in the course of the business. All these expenses were duly disclosed in the profit and loss account. The copies of the ledgers of the brokers were also furnished during the assessment proceedings. As such, these expenses are allowable under the provisions of section 37(1) of the Act. 6.4 It was also submitted that there was a loss of Rs. 2,73,39,075.00 on account of the transactions carried out on the national multi-commodity exchange which are representing the future and option transaction. The confirmation from the broker was also furnished during the assessment proceedings. However, the AO without issuing any show cause notice or cross verification has not allowed the same as deduction while computing the income under the head business and profession from the activity of F and O transaction/speculative transactions. 6.5 The assessee also filed the reconciliation of the income declared by him viz a viz the income computed by the AO and accordingly claimed that all the transactions, as noted by the AO in the assessment order, were duly disclosed in the income tax return. 7. The learned CIT-A on the issue of limited scrut....
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.... current debtor as already discuss and the appellant would not get benefit of the case of TRF Ltd. 323 ITR 397(SC) atleast in this year. v In my opinion, none of the four amounts claimed as bad debt can be held as bad debt as per criteria approved by different judicial orders. The contention of the appellant is rejected. The Ground No.3 is dismissed. 7.3 The learned CIT-A with respect to the other expenses of Rs. 15,27,765.00 has allowed the ground of appeal of the assessee by observing as under: From these details available on record, it is noticed that the amount Of(tm)* * Rs.15,25,765/- is debited towards other charges/indirect expenses which are charged by the respective brokers and reflected in the report & ledger A/c issued by respective brokers which are on record (PBP Nos.116 to 119). The appellant has also submitted the details of entity wise transactions under his subsequent submission dated 10.12.2019, vide Annexure-4, which reveals true and correct affairs of the nature of the appellant's claim. I have carefully gone through the relevant details so placed on record. It is my opinion that the impugned expenditure has been incurred wholly and exclusively for the p....
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....through the relevant details so placed on record. It is seen that the AO has rejected the claim solely for reasons that it was not claimed unequivocally in original return of income. The claim of appellant however is duly supported by regularly maintained books of account. Full details are placed on record before the Assessing Officer and the Assessing Officer without carrying out any independent enquiry has rejected the claim saying that it was after thought. The decision of the AO is not formed on correct facts brought on record. The claim of the appellant is logical and legal in the eyes of law. The AO is therefore, directed to allow the claim of bad debt of Rs.2,37,39,075/-. The ground no. 5 is allowed. 8. Being aggrieved by the order of the learned CIT-A, both the assessee and the Revenue are in appeal before us. The assessee is in appeal against the confirmation of the disallowance of Rs. 18,50,000.00 only whereas the revenue is in appeal against the relief granted by the ld. CIT-A in ITA 137/AHD/2020. The relevant grounds in the appeal of the Revenue stand as under: The Ld.CIT(A) has erred in law and in facts and in circumstances of the case by deleting the addition of R....
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....efore the AO has verified the same during the assessment proceedings. Accordingly the learner DR, the AO has not exceeded the jurisdiction in the assessment proceedings. 12. Both the learned AR and the DR before us vehemently supported the order of the authorities below to the extent favourable to them. 13. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the AO received the information from Edelweiss Broking Ltd. wherein it was found that there were certain incomes received by the assessee which was not disclosed in the income tax return whereas the assessee has filed the profit and loss account to demonstrate that all the incomes as discussed above have been shown therein. However, the assessee has claimed certain expenses as reflected in the profit and loss account against the alleged income added by the AO. The net result of such income shown in the profit & loss account was Rs. 5,13,057.13 which was also inclusive of interest income. Out of such income, a sum of Rs. 3,58,981.00 only was representing from the share activities/derivative which was duly admitted by the AO and therefore, he was pleased to....
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....crutiny' and other is 'Complete Scrutiny'. The assessees concerned have duly been intimated about their cases falling either in 'Limited scrutiny' or 'Complete Scrutiny' through notices issued under section 143(2) of the Income-tax Act, 1961 ('Act'). The procedure for handling 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142(1) of the Act in 'Limited Scrutiny' cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny. Further, the scope of enquiry shall be restricted to the 'Limited Scrutiny' issues? " c. These cases shall be completed expeditiously in a limited number of hearings. d. During the course of assessment proceedings in 'limited Scrutiny' cases, if it comes to the notice of the Assessing Officer that there is potential escapement of income exceeding Rs. five lakhs (for metro charges, the monetary limit shall be Rs. ten lakhs) requiring substantial verification on any other issue(s), then, the case may b....
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....ansaction. It is classified generally as the business activity. Likewise, the activity of trading/ dealing in derivatives involves buying and selling of the contracts that grants the right and the obligation to the party to purchase and sale the underlying assets before the expiry of the specific time mentioned therein. Generally, such activity is qualified as business activity with the sub- division of speculative and non speculative category. In the trading/ dealing of derivative, no delivery is taken by either of the party. Thus it has to be classified as speculative in nature but certain exceptions have been provided under the provisions of section 43(2)(d) of the Act wherein certain transactions have been classified, though of derivative nature, as non-speculative activities. Thus, it appears that the transactions in dealing of shares/securities and derivatives are distinct and independent to each other. Therefore, it cannot be said that the short-term capital gain shown by the assessee is in the category of derivative transaction for which the proceedings under section 143(3) of the Act were initiated. In other words, we note that the scope of the proceedings in the instant s....
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....yond the power of the Assessing Officer in limited scrutiny cases. So, it was considered appropriate to remit the issue relating to allowance of depreciation in respect of the plinth to the file of the Assessing Officer for the purpose of fresh decision in accordance with law. Since the notice under section 143(2)(i ) was issued for limited scrutiny, the Assessing Officer was precluded from considering any other issue while making the assessment under section 143(3) under limited scrutiny. The decision of the Commissioner (Appeals) in considering the other claim of the assessee not covered in the notice issued under section 143(2)(i) for limited scrutiny was contrary to the provisions of the Act and, accordingly, was set aside. 13.8 In view of the above and after considering the facts in totality as discussed above, we are not convinced with the finding of the authorities below. As such the entire issue should have been limited to the extent of the dispute raised in the notice under section 143(2) of the Act for the limited scrutiny but the AO in the present case has exceeded his jurisdiction as discussed above. Thus, the issue raised by the assessee in the CO is partly allowed. ....